FIRST PUBLISHED ON 2/10/2010
In today's video we examine the crash of 1929 and the similarities to Dow 2010. This video is not meant to scare anyone, but to educate investors and traders of the possibilities that may exist in today's market.
We could be, repeat, could be very close to a tipping point similar to that of 1930 when the Dow had ended a 50% correction to the upside. This years Dow pattern was a 62% correction (see current chart on Dow). I invite you to watch this video and see if it makes sense to you.
As always our videos are free to watch and there are no registration requirements. If you agree or disagree with this video please feel free to comment on our blog.
Every success,
Adam Hewison
President, INO.com
Co-creator, MarketClub
Mahmoud. What is the accumulated public debt as a percentage of GDP?
Adam... I'm so glad you are heralding this warning. Yes, not to scare, but to protect investors from unnecessary losses.
What do you believe will be necessary to see the markets continue up after a minor pullback, rather than dive into a continued correction (or is it too late)?
Cheers! Some excellent work.... I'll be in touch with your staff shortly.
What are the dangers of using a leverage ETF like VXX to short the S& P. Is just high risk high reward.
Ernie,
Thanks for your feedback.
As long as you are aware that leverage cuts both ways I see no problem in using leveraged investment instruments.
All the best,
Adam
I think this one is appropriate I hope you do too.
"One generation passeth away, and another generation cometh, but the earth abideth forever. The sun also ariseth, and the sun goeth down, and hasteth to his place where he arose. The wind geoth down and hasteth to his place wheRe he arose. The wind goeth towards the south, and turneth about unto the north; it whirleth about continually, and the wind returneth again according to his circuits. All the rivers run into the sea; yet the sea is not full; unto the flow from whence the rivers come, thither they return again.... THE THING THAT HATH BEEN, IT IS THAT SHALL BE; AND THAT WHICH IS DONE IS THAT WHICH SHALL BE DONE; AND THERE IS NO NEW THING UNDER THE SUN.
Geordie Rob,
I agree, there is nothing new under the sun.
All the best,
Adam
The difference between now and 1930 is the liquidity(provided by the US government) and the fast computers of the big banks. Was the 1000 point drop on that Thursday a warning by the big banks in regard to government regulation(which is coming anyway)? What about the plunge protection team-if you read Larry Levin he has wondered about some of the activity in the futures equity index markets to the upside? When things start to fall to pieces such as Europe and their problems where do investors run to but US treasuries which in a round about way just provide more liquidity to the US financial market. I am not saying that this market cannot go down-it already made a good start to the downside;however at this point in time where is a good place for money with so much floating around in the form of government debt-I guess in the short run a mattress might work but the return will not provide a person anything to buy food with!!! One other item I do question and I wonder if the impact is being realized and that is whats floating around in the Gulf of Mexico-I think this is really serious. Think something along the lines of both being long and short and making it work with inverse funds, options, and dividend stocks(I am not sure about balance sheet cash-seems like the companies with the debt are on the gravy train-big banks).
David,
Thank you for your insightful views.
The big item on my list is PERCEPTION. Mob mentality is what I am looking at right now.
All the best,
Adam
Here in australia the powers that be have killed the goose that laid the golden egg. Previous deputy P.M Peter costello described this as "rooting the branch and the roots".Period!The avalnche was brewing in Europe and USA and we have simply plunged the knife into poor miners with the spade and shovels here.Are we going to compete with
the foreign big miners?I read about bolshevism.Is this all a balls up?
Naomi!
I don't know any single private investor who is still in the market!
I actually hazarded a guess this week would be bad months ago. Unfortunately, by an amazing coincidence I was just too right. Now Europe's continued dithering around in a faultily constructed house of cards has cemented the picture I had then.
The markets are so volatile right now that when then drop they can drop up to 4% or more a day.
My guess is the markets might go up today and Monday but by Wednesday next week the downtrend will resume.
The fundamentals are REALLY BAD. Get them straight from the horse's mouth, i.e. someone who predicted the whole housing bubble bursting and credit crunch and who has no wares to sell:
http://www.cnbc.com/id/15840232?video=1499492692&play=1
Good luck.
There's some sort of metric out there that comes from the CME and it has shown that, yes, many of the retail investors have high-tailed it out of the market.
I had my 401K in the money market for most of last year and all of this year. About a month ago I was feeling like a heel but not after last Thursday. I may have failed to nail the top but my retirement nest egg is precious to me.
Yes, in an IRA you can buy SH to short the market 1 to 1 ratio.
Paul,
Many thanks for your insights. I appreciate your analysis.
Wow, quite a bounce off a ''Double Bottom'' for 5-Feb. this morning,
but will it hold or is this just a ''Dead Cat Bounce'' ??
I'm watching the 3-Day Triangle very closing to see if I go neutral
on my short of the SPY.
An appropriate poem for the day by William Butler Yeats.
Turning and turning in the widening gyre
The falcon cannot hear the falconer,
Things fall apart; the center cannot hold;
Mere anarchy is loosed upon the world,
The blood dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Maybe excessively gloomy, but ominous none the less.
BK
Bob,
Thank you for adding some poetry to our blog.
All the best,
Adam
Hi Adam,
Thanks for posted video! I was asking you about this video around a month ago or so, as I saw it ones and lost it in my emails. Thanks a lot! I beliave in history as well, and I beliave if market goes below 10.000, it will be magor decline till the previous magor bottom.
Have a god weekend!!!
Iho
Hi, Adam,
Thanks for your informative video. As a novice, but one who is learning a lot from Market Club, I would like to avoid the disastrous hit I took in 2008. I am retired with no pension, just my investments in an IRA consisting of mutual funds and bonds. I don't think I am permitted to short the market, so what do I do if the worst occurs. Do I get out of the mutual funds and go into cash? Do I go into gold, and if so, how? Buy gold through an ETF? I don't know if you are permitted to answer these kinds of questions, but if you are, please help me because you are one of the few people I trust.
Naomi,
Thank you for your feedback.
I am not sure what's going to happen in the future however I do believe in being prepared for the future no matter what happens.
If your investments are in an IRA account there is a way to go short the market with an ETF. The symbol for this ETF is SH. It is not a leveraged ETF and it tracks the SP500 market.
You may want to consider that ETF for protecting your capital should the market go down.
That is not a recommendation.
All the best,
Adam
The video makes sense. I was born in 1940, so I am not a baby boomer. What surprises me is that so few people seem to be aware of what's happening. And those who are aware are acting like it doesn't matter. After the government has misspent funds for many decades, everyone believes that nothing bad can happen. And they think that all these problems can be solved with words, just by talking about them. As you know, history teaches some interesting lessons, not all of which are pleasant. I guess the American public will wake up eventually. The only question is how much they will need to be deprived of before they realize that their well-being depends on themselves, not on government. Adam, thank you for your fine work.
Robert: Your comments are great and hit the point exactly. How long can our younger generations remain totally out of it ?
Robert,
Amen. I was born in 1935 when the veterines of the depression and later WWII. In some locations and for some people, getting enough food was a problem. In the rural area where I grew up, my family was relatively comfortable. Expectations were VERY different than today.
Modern methods allow far greater productivity today and with some attitude adjustment the younger generation will be OK. But the fact that interest on our national debt is beginning to exceed GDP means that lifestyles will have to adjust.
There will, no doubt, be an audible weeping and wailing associated with that adjustment.
I am assuming that, however, that life will go on and investment in the means of providing real goods to the populace will be a viable investment area.
Good Luck!
Adam,
Approximately where would the red monthly kick in on the s&p?
Marvin,
Shouldn't the S&P 500 move below 10,044 you should consider that to be a major negative signal.
That is where I am going to pull the trigger and get short long-term.
All the best,
Adam