According to Marc Faber, the US stock market conditions are almost exactly like what they were in 1987. In that year, markets reached a high on August 25th, and then crashed in October. On Black Monday (October 19, 1987), both the S&P 500 and the DJIA lost more than 20% of their value. When it was all over, the stock market had lost 36% from its August 25 high.
“In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought,” Faber said on Thursday’s “Futures Now.” “The final rally into Aug. 25 occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks.”
Faber says that’s exactly where we find ourselves this August.
“If you look at the last two days,” Faber said, referring to Tuesday and Wednesday, “it’s remarkable. We are close to the all-time high, at 1,709 on the S&P, and yet yesterday and the day before, there were 170 new 52-week lows. That’s a very high figure.” – CNBC
Pay attention to this.
When times are uncertain, you need to be defensive in your investment strategy.
We have been getting quite a few signals indicating that there are serious problems ahead of us. Corporate insiders have been recently selling their own company stocks at a rate of 45 to 1. Both Dr. Jim Willie and Max Keiser have been reporting that Deutsche Bank is in serious, serious trouble and is only staying afloat due to superhuman effort.
From USAWatchdog.com, we have this interview:
Dr. Jim Willie, Publisher of “The Hat Trick Letter,” says, “We’re leading up to a big event. We are having breakdowns in numerous structural elements of the financial system. We’re seeing a chain reaction of breakdown events in progress.” Fed Chief Ben Bernanke talked about tapering the money printing to buy bonds two months ago. Dr Willie contends, “The ‘taper talk’ was a stress test to find out what in the world would break down, and the answer was everything!” Dr. Willie predicts, “In the United States, we are going to have shortages across the board, and that includes gold and silver. Just think food and gasoline. That’s when the riots are going to start. You are going to see out of control chaos and the government stepping in to restore order. . . . Shortages and price inflation are going to drive people out of their minds.” – USAWatchdog.com
Furthermore, the financial history of September and October is an ominous indicator. There have been more crashes happening during those two months than at any other period of time in financial history. Remember also that when a crash begins, it’s ALWAYS too late to exit the market. You MUST exit ahead of time.
Does this mean that you will miss opportunities?
Absolutely. Trying to ‘win them all’ is a recipe for losing everything. Just remember the number one rule in investing: Don’t Lose Money.
Again, in difficult investing conditions, smart investors move to a defensive strategy.
Do your own research and decide for yourself.
(Remember that there’s a lot of Kool-Aid drinking going on in the mainstream financial media.)
Here’s the Marc Faber interview on CNBC:
Here’s the Jim Willie interview on USAWatchdog.com:
Notice where Jim Willie moved to. He’s here.
Jim is a very smart cookie.
How about you?