More must reading from my friend on Wall Street>
Before 1970, few were interested in the stock market or Mutual Funds. To
become financially informed you read; The Wall Street Journal, Business Week,
Fortune and Forbes.
The roots of the coming Depression lies in the Johnson Administration
trying to have both "guns and butter," by pursuing both the "GREAT SOCIETY"
and the war in Viet Nam. This led to inflation in the dollar. When Nixon was
elected, he continued the war but was forced to separate the dollar from gold
on August 15, 1971, when the excessive creation of paper money (caused by war
expenditures), by the banking system forced his hand because, otherwise, he
would be in violation of the Federal Reserve Act of 1913.
Nixon imposed wage and price controls stating, "We are all Keynesians
now." Subsequently, because of the weakening purchasing power of the dollar,
the Arabs embargoed oil in 1973 because of the low price. The government got
more involved with the economy, bailing out Chrysler in 1979. Then Louis
Rukeyser launched PBS Wall Street Week followed in 1980 by CNN producing the
Nightly Business Report on national Television, Lou Dobbs's Moneyline.
President Reagan was elected on a more capitalist spending outlook and
in August 1982 the great "Bull Run," began. This ended with the great
financial "bubble" of 1994-2000 that sucked in the public like sheep to be
sheared by the sharks of Wall Street.
The public discovered Mutual Funds as the easy road to riches and they
put all their money into the stock market, directly or indirectly through
pension funds.
It couldn't be done without the great "blow up job" accomplished by the
financial media.
The growth of the Internet, online investing, global trading,
contributed. Public media hype, propaganda taken to its ultimate in
sophistication and the innate psychological make up of human beings desiring
to "get rich quick," is as insatiable as sex with a beauty. Greed and fear
swung the pendulum and the media contributed by loquacious lunacy. In the
end, especially with Internet stocks, it came down to "pure gambling."
In the 1980s Bloomberg made a fortune leasing computer terminals
offering timely financial news, more sophisticated than the method used by
the "Rothschilds' back in the early 19th century (carrier pigeons) to stay
ahead of "the crowd."
In the 1990s popular sites to feed the public mania for financial news
was met by The Street. Com, CBS Marketwatch.com, investor chat rooms on
websites and Silicon Investor.
Insatiable inside dope filled the media outlets in all its complexity;
newspapers, magazines, books, mass mailings, talk shows, TV and the Internet.
Advertising propaganda was fine tuned by business management's and Mutual
Fund Management's to pump up stocks, for performance purposes and in the case
of "insiders," for stock option cash in.
Everybody was going to get rich quick and retire early. Everyone wanted
a piece of the action.
Investment cash rose from 13 billion in 1990 to 230 billion at the end
of the decade. Fifty percent of American households invested in the market.
The market became politicized. Eleven million public traders went on line.
When stock guru Abby Joseph Cohen spoke, people listened. It was really a
Clinton market that rose some 8,000 points after he got in.
With the market rising like a "rocket," even the most incompetent
portfolio manager ended up looking good. From 1993 to 1998 Mutual Funds
doubled from 2,500 to 5,000.
It was the greatest "bull market" in the history of the world since the
invention of the Joint Stock Company, permitting the public to "get in on a
good thing." People bought paper stock certificates backed by rumor, hype,
phony earnings hopes and dreams. Stocks were pushed by immoral Security
Analysts. They fed greedy Wall Street sharks. It was an illusion, a house of
cards, build by fools. Self swerving statements pushed by individuals on the
public media, sucked people in.
The new financial glamour stars talked on TV, Bob Pisani, Sue Herera,
Joe Kernen, Maria Bartiromo, Art Cashin, Ron Insana, all sincere reporters,
telling it as it is to the information starved listening public. Stock prices
moved up and down by hormone-crazed stock traders giving orders o the floor
of the exchange where some 3,000 member companies, traders and specialists
take orders with aching feet. It's all too human.
Analysis of the Situation
THE DEPTH, BREADTH, TREND AND MOMENTUM OF STOCKS ON THE NEW YORK STOCK
EXCHANGE TURNED DOWN on Friday for the first time in a significant way since
the beginning of the year 2001, coupled with rising volume. A bearish sign.
Calculation of the Alternatives
You can wait another two days, Monday and Tuesday, to see if the
downtrend is confirmed, then riding down the rollercoaster to unknown depths,
or get out now. If you are still in this market, you are a real gambler, so
gamblers rules apply. You place your bet and take your chance with lady luck.
Conclusion
With all equity markets some fifty percent overvalued at the present
time, even with this past years decline taken into account, it is the height
of financial insanity to continue this game with all your investable cash.
Long term bonds is not the answer, because I am more worried about inflation
not deflation in the future because of how politicians act in the face of
economic crisis. I suggest part of your cash in gold coins and gold stocks
and take a wait and see attitude. The coming war in the Middle East should
drastically affect the price of energy and the cost of living of people both
employed and unemployed.
September 09, 1001 James Miller
James Miller received a direct Presidential appointment to the United
States Naval Academy by President Harry S. Truman and graduated with the
class of 1951. As electrical Division Officer, he was responsible for the
creation of heat, light and power aboard a large Aircraft Carrier.
After resigning his commission, he studied business and law at Cornell
University and is a member of the Class of 1958, Johnson Graduate School of
Business and the Class of 1959, Cornell Law School. He completed courses for
his Ph.D. in Banking and Finance in the evening division of the Graduate
School of Business, New York University, where he met Ludwig Von Mises,
leader of the Austrian School of Economics.
He owned seats on and was a member of both the New York Mercantile
Exchange and the National Stock Exchange. He is a member of the New York
Society of Security Analysts, the Association for Investment Management
Research, the Rent Stabilization Association and holds a fellowship in the
Life Insurance Management Association. He was a former Investment Advisor to
the Vatican in Rome.
He manages both businesses and real estate in New York City and is the
author of the book "A Key To Financial Survival."
The fact that he lives in New York City has sharpened his instincts for
survival. |
