Today, we’re taking a different tack with Notes. Let’s call it the “what if” issue. You know what we think about the rally in stocks and the green shoots optimism on TV. To us, at least, it’s bunk.
Mr Market, however, has obviously been forgetting to read his daily dose of Notes. As personal income levels plummet (down 1.3% in June) and consumer bankruptcies soared year-on-year 34%, cash has been steadily piling into stocks.
All that can be heard on Wall Street right now is the sound of euphoria. Waves and waves of it as stocks climb to almost 50% off their lows. This is the kind of noise we’re talking about.
So where are we now in the 19th month of the recession/depression? Perhaps not where we expected we’d be. The Dow finished its best gain for July since 1989. The index was up 8.6%. The S&P 500 also had a good month. It finished up 7.4%.
On Wednesday we warned readers of a coming blow-up of the Chinese economy, calling it a “tinderbox waiting to catch a fire.” The problem, of course, is that the US is not the only country hell bent on ‘stimulating’ its economy back to life. Communist China is at it too!
Another underground investor mowing down the green shoots is Doug Casey of Casey Research. We know Doug well. He owns land in Argentina’s Salta province. And he’s a frequent visitor of Notes HQ.
Green shoots are okay if you’re a gardener. But what if you’re an investor? Here at Notes believe investors must realists about the markets. As we like to say: “Hope for the best, but prepare for the worst.”
What the heck is going on? The Dow has just had its best weekly performance since March 2000. CNBC is full of whopping and high-fiving. The Obama administration is breathing an audible sigh of relief. And mom and pop investors all across the US are no doubt considering putting more of their savings back into the market.
Warren Buffett’s Berkshire Hathaway Inc (NYSE:BRK.A) is finally starting to offload its 20% stake in ratings agency Moody’s Corporation (NYSE.MCO).
One of our central beliefs here at Notes is that the game of investing is rigged. And it’s rigged against you, dear reader.
