George... re: financials & brokers...
George; never in history has credit & debt been expanded so rapidly, or so recklessly - it's as simple as that.
The concentrated derivative exposure by a very small number of major US banks - creates a potential Banking Crisis of unprecedented consequence.
Greenspan has allready warned them - NOT to expect another Longterm Capital-esque type of bailout. - that warning has gone unheeded; because they realize their is no choice but to bail them out; or face an unprecedented US & Global Equity market implosion. - nearly a game of "Black Mail-Chicken" imho... who will blink first ?
Sadly; Greenspan is basically telling them - he can't bail them out; because the derivative positions have reached unprecedented leverage - where they can NOT be bailed out.
The manipulation & support of this incredibly complex & unprecedented Bull Market expansion has gone to levels whereby it's unmanageable on a downside crisis basis imho.
What will the downside catalyst be, when will it be ?
... who knows ? - it's usually by surprise; it was Russia, Brazil, LTC, the Mexican Peso - will it be $50 Oil ? a Collapse/Crisis of 4,5 major Banks via their Gold Derivative positions , an exodus from the Dollar, the account deficit ?
Money has irrationally flowed from sector to sector - creating irrational subsector strength in this market; the "hot potato" game has moved from dot.com IPO's, Incubator stocks, portals, B2B, B2C,biotechs,utilities, Semi's, opticals, financials etc... the money flows, then outflows & parabolic upside moves then parabolic corrections should be a 5 Alarm Red Alert to the average investor here imho.
When the markets reacts with immediate 50% haircuts to bellwether stocks - something is obviously wrong with valuation multiples... if this is not proof of irrational valuations in the market; I don't know what possibly would be ?
That prior post that shows the charts & potential parabolic downside correction to the BioTech & Networking Sectors speaks volumes.
The stats on the Derivative positons of Chase, Citi, JP Morgan, Deutsche et al - is beyond irrational, it is unprecedented leverage and we aren't even talking about the "Gold derivatives" here....
The money supply & unprecedented debt expansion will all come home to roost & I wouldn't touch the financials here.
What would happen to the brokers in "any" significant US equity correction ? - they are irrational here. When did Goldman choose to go public & when did they chose to do a secondary ?
It's just my personal opinion; but other than for short-term trading opps; I would be planning my disciplined exit completely from the equity markets - excepting the potential blow-off top in the Oilpatch stocks created by a potential peak-demand season Oil Spike.
It's just my personal opinion; but I think by late Q2 2001 - this all comes home to roost.
The "only" true defensive area in this market is Gold/Silver & PM stocks; cash and perhaps TIPS...and imho - it's time to play defense and the Gold & PM stocks represent the Fearsome Foursome & the Purple People Eaters....
History has shown us there are times to where NOT being in equities is the only way to sustain capital and history is about to teach a new generation an old lesson imho.
Why can't the masses see this historic momentum oriented, parabolic - new valuation multiple, new paradigm - Fed/ESF - money supply & credit expansion created/supported Bubble for what it is ?
Insanity even within true "new paradigms" is still insanity, by any other name. |
