Dead Cat Bounce and the 50% rule - Robert Kiyosaki
Mon, 15/02/2010 - 03:13
Interesting article for all you bearish types....follow the link for the diagrams...
http://finance.yahoo.com/banking-budgeting/article/108837/dead-cat
Dead Cat
by Robert Kiyosaki
Friday, February 12, 2010
Dow 5,000 in 2010?
In my last column I predicted a “dead cat bounce” in the stock market and a possible Dow plunge to 5,000 this year. Obviously, many readers mocked my prediction.
But understanding the dead cat bounce is vital, especially in today's market.
Simply put, a dead cat bounce looks like Diagram 1 below:
The market crashes, rebounds, and runs out of steam, then crashes again…unfortunately, and possibly, to a lower low.
When professional investors observe a dead cat forming, many will begin to sell. If their selling leads to a panic, the stock market goes even lower.
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Is Gold in a Bubble?
When you factor in inflation and devaluation of the U.S. dollar, $850 gold in 1980 is $2,500 an ounce in today’s dollars. In other words, gold might be at 50% at $1,200, which is the highest of highs. Could there be a run to $2,500?
Your personal answer to that question will depend upon how confident you are in Fed Chairman Ben Bernanke, President Obama, and Wall Street. If you have faith in our leaders of commerce, don’t buy gold. If you do not have faith in them, maybe you should buy gold or silver.
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The Lost Decade
The people I am most concerned about are the average investors who have bought their financial planner’s advice of “Invest for the long term in a well-diversified portfolio of stocks, bonds, and mutual funds.”
Many investors are calling the past 10 years The Lost Decade. That means those who invested for the long term in stocks, bonds, mutual funds, and cash are long-term losers. Japan has been in a Lost Two Decades.
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Over the next few months, it is important to watch both the Dow and gold. As I write, the Dow is around 10,000 and gold is at $1,000. If the Dow breaks 7,286, the 2002 low, and continues down below 6,547, the 2009 low, watch out below. If 6,547 is broken and gold passes $2,500 an ounce, you'll have even more to worry about
Steve: Edited for copyright
Mon, 15/02/2010 - 10:24
#2
One to go with that
The Last Man Standing
Richard Russell snippet
Dow Theory Letters
posted Feb 15, 2010
http://www.321gold.com/editorials/russell/russell021510.html
Quote:
A hundred years ago gold and silver were the only items accepted as money. Paper money was carried around because it was convenient as opposed to gold and silver, which are heavy. Besides, if you had any doubt about your paper, you could turn it in at any national bank for gold, "the dollar was as good as gold." Furthermore, the dollar was backed by one of the strongest and most prosperous nations on earth.Today the dollar is backed only by "the full faith and credit of the United States," the greatest debtor the world has ever seen. Questions are now arising about the credit-worthiness of sovereign debt. Many analysts believe that the US will never, ever, be able to pay off its debt, which is now not only rising but is compounding.
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I think and ponder and wonder. I believe current unsustainable debt is literally "eating up" the world. This should end in both deflation plus monetary inflation through the production of junk, fiat money. Ultimately, the survivor, the "last man standing" will be gold. Ironically, Americans have lost or forgotten the meaning of gold. Which is why only a tiny percentage of Americans now own any gold.Americans have totally forgotten the meaning of gold and silver. I prove it to myself every day. I buy something in a store and present a gold one ounce coin as payment. Invariably, the clerk looks at the coin and replies, "We can't take that. What is it anyway?" Sad, and rather ominous.
Thanks Mike.
It does annoy me the laziness of writers who just quote the "inflation adjusted" price using the official CPI, which any informed person will know is fiddled.
1980 $850 = $2500 now ? No.
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