What happened, then? In mid-July, the dollar began to strengthen, due to central bank intervention. And the price of oil fell. Both changes were rapid, even abrupt. A surprise? No, not really.

I expected the dollar to strengthen, and I said so. And I expected the price of oil to decline from the $140s to about $100-110 per barrel, with a possible excursion down into the $90s per barrel. I actually thought that a stronger dollar and declining oil prices would be “good” for the overall world economy, because this would leave more money in the pockets of consumers — especially energy users.

But now in hindsight, it appears that the run-up in oil prices from 2007-mid-2008 sapped household and consumer income across the world. The oil run-up and simultaneous dollar devaluation were enough to trigger the mortgage crash. Of course, the mortgage crash was coming, and it was always just going to be a question of causation. Now it’s up to history to assign naming rights to the meltdown.

Not Just a Chest Cold — a Case of Tuberculosis

Let me use a different analogy. The dollar decline and energy run-up did not give just a chest cold to the world’s credit-driven economy. The yearlong decline of the dollar and rising oil price gave the world economy a case of tuberculosis. And it’s a strain of TB that is resistant to all the usual antibiotics.

So here we are. The world economy is sick. And I mean really sick. The markets are coughing up blood. None of the usual remedies will work. There’s no magic pill. From here on out, it’s trial and error. It’s hit or miss. And the prognosis is grim.

Investment Pain

Let’s get back to whether or not to sell your stocks.

First, I’m certain that it’s painful for you to watch your investments decline. You worked hard for the money with which you bought stocks over the years. And now the value of those stocks is falling. It just stinks.

This market meltdown is not like Goldilocks sneaking into your kitchen and eating your porridge. No, this is like Goldilocks breaking into your house and burning the place down using magnesium flares as accelerants. Years of hard work are just turning into smoke and ashes right before your eyes.

I have to say that declining markets are plenty painful for me. It hurts twice as much because I edit Outstanding Investments. That is, I have both money AND a reputation at stake in this process. Agora Financial does not give out personal investment advice. But the last thing I want to do is offer up a bum steer when it comes to helping you make your financial decisions.

That’s why I’m asking you to join my Outstanding Investments crew. We are sitting on incredible value, and the market will soon figure it out. I urge you to check it out here if you even slightly lost on what to do.

Tomorrow, I will send you a few words about where the smart money should go…

Source: Welcome to Murphy’s Market

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