Careful Out There! Sharks are in the water......

Constant data is coming out that 2014 is going to be another "resilient" year. Take this write up from USA Today - Can mighty Wall Street Bull keep charging in 2014? or this recent work from Forbes - Will the Bull Market extend in 2104?. As much as I would like to say and  make money in a Bull market, I am more concerned that we will see a very rocky market built on Algorithmic Trading - Algorithmic Trading that kills the normal investor.

If you are a Bonehead Investor you know my motto - Day Trading is great for the day... But trying to time the market with computers doing the work now, you will get killed. This goes back to my picks for 2104. I am hell bent on VNQ and EDF to protect my money in this kind of a rocky market. (VNQ & EDV). I pick these two positions to protect in the event of a market pull back and more important a Federal Reserve surprise. If we look at the data on housing today and the true unemployment number you can quickly see why I have protected my money in these investments. Housing Market - February Housing. Unemployment - Unemployment.

Don't get caught up in the noise of the talking heads and  your broker. Defend your money yourself with good education and an understanding of the market. Be a Bonehead investor and win!

The Bailout.

Well it is getting close to the hour of the bailout. Will it happen? Most likely yes. Will it matter? In my humble opinion it will not. The damage has been done.

For those of you who follow me you know my greatest fear is that the average US citizen has zero savings. Most, in fact, about 96% of the US can't make it a week without a paycheck. How will this bailout help them. It won't.

Once and only if the few banks that will be around can get back to lending, the lending requirements will be like climbing Mt. Everest. Think about this for a moment. The average US consumer credit score is between 690 to 720. Banks were charging huge interest rates to these consumers when they could lend. What do you think it will be like when they start lending again? The average consumer will not qualify for a loan. This will soon be a painful wake up call for America.

To compound this problem the consumers who do have credit are now being notified that their credit lines are closed and until they can pay what they owe they have no available credit. So what is the consumer to do? No credit and no savings makes for a messy problem. Food, gas, heat, shelter all cost money.

The capital market has a unique ability to flush out bad planning really quickly. The US has been in a bad planning mode for sometime now. The warning bell rang 13 months ago and we ignored the ominous signs that the financial markets were in trouble. Readers this is bad. Very bad.

So now what. My predictions:

• Bailout goes through, barely
• FDIC limit raised to $250k and why? Who has $250k in cash laying around......
• Banks either gobble each other up or we see massive bank failures
  
• Mark to market kills accrued value. Assets will be significantly reduced across the board
  
• The treasury lines and discount window will not be enough to tie banks over or cover "toxic" debt
  
• Financial markets will freeze up again in about 25 days. Enough time to attempt to flush "toxic" bad debt
  
• Short selling banned for another 30 days
  
• More panic sell off by the average 401k holder and small time investor
  
• DOW 7300
  
• Money Markets hit .96 cents for $1. Money Markets will be a thing of the past very soon
  
• Hedge Funds will collapse and then the fun really starts.....
• Once market goes into free fall we will see massive layoff's
  
• Layoff's will have to be funded by State Unemployment
• States will now rush to Federal Government for bridge loans to stabilize their businesses
• Federal Government will have no money to lend
  
• Next, study the history of October 29th, 1929

Our leaders failed the US citizen. But we really failed ourselves by not taking responsibility and live within our means. Good luck.

End of 2007. Thank God. Predictions for 2008

Well 2007 is all but over and thank God. Can you fricking believe the Subprime issue and the CDO's? Only in the capitalist economy can you be a CEO of CITI, ML, BS or any of the other rip off firms and burn your clients and employee's and still walk out with millions of dollars.

I have told you all over and over again these investment houses are the biggest ripoff's ever created. Hell their own analysts read my blogs all the time and steal thoughts that I have. Ain't that right the house of ML? Caught you two times.

Anyway I will be coming out with how well I did for 2007. Looks like I beat the top traders again. I am still waiting on a job offer from Bear and Goldie. Right now let's look at 2008.

Predictions:

Defense Stocks will be the way to go again. I will post my favorites in January.

Energy - This will be huge for 2008. We can expect to see India come on line and China burning up as much oil as possible. The USA still has no clue how bad off we are and continue to burn fuel like it will never run out. I hope the USA likes $4 dollar per gallon gas soon. Buy energy now.

Gold - Say goodbye to the highs of $800 and say hello to $900 to $1200 per ounce. Buy it now.

Consumer Spending - Well your house is now worth 20% less, you have a mortgage that is resetting, you got a 3% raise and your healthcare cost just went up. You credit cards are maxed to the hills, you can't claim bankruptcy and your bills are due. Consumer spending will be crap for 2008.

Inflation - Up. How much? Depends on what the Fed's do. The M1 rate is a fricking comic book so predicting this is a bear. My guess is that we jump from 4.31% (todays rate) to 6%. Get ready to move your cash to CD's.

Banking - This will be fun to watch. I am guessing that we will see a few major banks fold and have to be purchased by other big banks to bail them out. Of course the Fed's will be behind this move. First to go? Countrywide.

Fed Fund Rates? Cut again by 25 points in January. Will have to cut again right after that. We should see a 50 point cut by March.

GDP - Negative growth Q1 and Q2. Up last quarter of year.

2008 Election - Democrats win and win big. Hail to the woman......

Super Bowl Champs - Patriots of course!

Until January, stay warm!