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Do You Belong In The Stock Market?

Tyler Durden's picture


Submitted by Economic Noise blog,

How bad have markets been recently? If you are watching them day by day or week by week recently, they seem severe. Is this reaction because we have been spoiled and expect markets to always go up? Or, is something else going on?

This chart shows SPY from January 2012 to the present. Each bar represents a week of activity:


Looking at the chart does not indicate anything out of the ordinary. The recent price pattern is consistent with those experienced over much of the last two-plus years — at least thus far.

The chart should dispel the notion that something out of the ordinary is occurring. Recent performance is in line with at least five other comparable dips during this period. But, should we assure ourselves in this fashion?

It may be comforting to look and say that nothing extraordinary has happened in the last couple of weeks. Thus far that is visually correct, at least for prices. The previous dips are comforting to the extent that they were brief interruptions in an upward trend. What if the current downtrend continues this week? What if it is the beginning of a new, longer-term trend downward? What if it is the early beginnings of bear market?

Will we look back at this point and say it was merely a dip? Or will we look back and recognize it as the beginning of a bear market? Or will it just be a “normal” 10 – 15% correction (pundits always use the term “normal” to describe most downturns — after all, they don’t want you running away).

No one knows where markets will go from here, although here are a few troubling issues that should be considered:

  • The Federal Reserve has announced and begun executing a taper strategy. I think they will reverse that, but what if they don’t?
  • Volume has been dropping since August of last year. Markets may be running out of buyers, at least at these levels.
  • International trends are working against equity markets. Ukraine is heating up again. Iran, Syria and other spots around the world represent threats to the US. Additionally, attacks on the dollar to dethrone it as the world’s currency are quietly underway.
  • China’s growth has slowed dramatically and there is the real possibility that much of their capital has been squandered in centrally-planned investments that will not survive a slowdown.
  • More troublesome than anything, however, is the dismal economic conditions. There has been no recovery, at least nothing that approaches a traditional one. All efforts have failed and now seem ineffective.
  • Stimuli are not forever. When they don’t work, the tendency is to double-down. That has happened, arguably several times. Resources are finite, although fiat currency is not. At some point the entire stimulus effort will be (if it has not already been) seen as a colossal failure that has seriously harmed the future of the country.
  • Inflation is inevitable if current policies continue. Economic and/or governmental collapse is possible if they don’t.

A man can drive himself crazy pondering these and other negatives. For those old enough to remember investing when it used to be investing, it seemed so much simpler. Put some money in stocks or mutual funds and forget about it. Let American ingenuity and a growing economy increase your savings/investment while you concentrated on more important things like your family and job. Th0se days are long gone in the casino that we call markets. 

Buy and hold seems to be crazy in light of the economic and financial dangers. Participating in markets at all is riskier than most would like. But, government financial repression has made it impossible to get returns elsewhere. Recently, equity markets have been the only game in town. Some day, likely sooner than most of us anticipate, the stock market bubble will burst.

There may be more upside from here, but I believe it is undersized relative to the potential downside.

If you want or need to participate in today’s markets, don’t use the techniques and strategies that worked for your father and grandfather. Today, investing is no longer investing but short-term trading. In markets like these, investors are going to get fleeced.

Within the last fourteen years, there have been two major market corrections, both of which saw drops of 55% from their highs. That, or more, is the potential for what lies ahead. For those who went through these markets, it was not enjoyable. A friend told me that he, fortunately, was talked into staying in these markets and recovering his losses. His “advisers” told him to stay. They will do so again next time, but next time the government is unlikely to be able to re-inflate the stock market bubble.

To put into perspective how lucky he was, it took 25 years for the Dow Jones to recover to its pre-crash highs after the Great Depression. Likewise, the Dow hit an intraday high of 1,000 in 1962 but never closed above 1,000 until about twenty years later.

You must decide whether these markets are for you, but if you do you had better be very agile and ready to run when the time comes. Unfortunately, most of us believe that we can get out before the disaster. History shows that thinking to be mostly wrong.

Whether recent market behavior proves to be merely a dip in the chart is almost irrelevant. The country and financial markets are nearing what could very well be an existential event.

Do not be investing like your father or grandfather. Markets today are more like casinos than a way to invest in American growth. Unfortunately, the Federal Reserve has made it impossible to go elsewhere other than your mattress.


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Mon, 04/14/2014 - 11:19 | 4656917 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

How can you predict rigged casinos except the simple fact that the house always wins?

Mon, 04/14/2014 - 11:20 | 4656923 Charles The Ham...
Charles The Hammer Martel's picture

counting cards?

Mon, 04/14/2014 - 11:25 | 4656953 pods
pods's picture

I misread it as "Do you belong TO the stock market."

That would be a more interesting article.


Mon, 04/14/2014 - 11:28 | 4656966 icanhasbailout
icanhasbailout's picture

Markets are already past the "existential event". We're in waiting for the consequences phase now.

Mon, 04/14/2014 - 11:35 | 4656990 StupidEarthlings
StupidEarthlings's picture

Yeah..I wish I cld get my 401 cash and buy suttin of value. Sadly my company policy is that you cant take it out til ya no longer work here.

So I can just grab the popcorn and watch when the time comes.

Extra salt n butter please.

Mon, 04/14/2014 - 11:43 | 4657023 Manthong
Manthong's picture

that's .gov policy

I'd borrow against it if possible in the plan or pay the penalty, close the f'r out and get the earned wealth out the system before they take steal it from you to pay some Ukrainians gaz bill..

..but I am not an investment advisor.. more of an un-visor.  

Mon, 04/14/2014 - 12:51 | 4657335 zaphod
zaphod's picture

Of course you belong in the stock market.

As long as you have inside information from the FED on which way they will blow the wind you'll be fine. Everyone has this, what you don't?

Mon, 04/14/2014 - 13:54 | 4657522 mjcOH1
mjcOH1's picture

"Unfortunately, the Federal Reserve has made it impossible to go elsewhere other than your mattress."



Mon, 04/14/2014 - 16:37 | 4658159 Kirk2NCC1701
Kirk2NCC1701's picture

<---- I belong in the Stack Market

<---- I belong in the Stock Market

Of course, most sheeple are in the Flock Market.

Mon, 04/14/2014 - 13:11 | 4657394 N2OJoe
N2OJoe's picture

I used to work in the electrical union. When I noticed the slow death they were bringing on themselves, (around the time I started waking up in general) I went AWOL, found work elsewhere, AND cashed out my retirement money, paid the penalty, and now have an off-the-books, un touchable stack at the bottom of a deep body of water somewhere.

TLDR: Let it burn!

Mon, 04/14/2014 - 11:50 | 4657050 TruthTalker
TruthTalker's picture

Transfer to a gold IRA -  you can even transfer to one where you hold the gold

Mon, 04/14/2014 - 13:10 | 4657227 Manthong
Manthong's picture

Consider howsomever, that an IRA is still an unsecured loan to a financial institution and if the SHTF there.  the janitor will get paid before you.

If you are comfy with the essentials of the institution (not a money center or “systemically” important/vulnerable theft front ), and its deposit insurance,  keep your earned wealth in the government controlled system.

My druthers tend towards getting everything out of the corrupt structure.

Mon, 04/14/2014 - 12:30 | 4657247 slightlyskeptical
slightlyskeptical's picture

You can always move it out of equities and into a short term bond fund. or if your plan offers retirement target funds go with the one with earliest date. You may still have some losses but they will be muted when compared to equity losses if the scenario you envision occurs.

BTW I hate it when people come on here and say they have no choice but to be in stocks in their 401k. If you don't know how to get more conservative call the advisor of the plan and ask then how to do this. A good plan for someone with your sentiment is to do the above but continue to let your contribution go into stocks and take advantage of the ongoing/coming volatility.

Mon, 04/14/2014 - 11:35 | 4656991 Manthong
Manthong's picture

Revolver.. six holes in the cylinder.. one with a round in it.

Spin..  click.

OK.. your turn..

Mon, 04/14/2014 - 18:17 | 4658496 LooseLee
LooseLee's picture

And so are the MF's who 'engineered it'

Mon, 04/14/2014 - 13:57 | 4657541 A Nanny Moose
A Nanny Moose's picture

Indeed! In Soviet USSA, the market trades you. Now get back to work, tax livestock.

Mon, 04/14/2014 - 11:21 | 4656922 NDXTrader
NDXTrader's picture

The Fed and TPTB have set up the perfect scenerio for those who are paying attention and are prepared. They have artificially propped up the prices of paper assets while suppressing the price of real, hard assets. That presents a real opportunity - one the Chinese are evidently taking advantage of

Mon, 04/14/2014 - 11:23 | 4656943 Charles The Ham...
Charles The Hammer Martel's picture

what do you recommend? I'm thinking of hoarding silver. Then again the rare earth metals in old cell phones might prove to be a very interesting market in the foreseeable future. Buy Gold mall kiosk markets are saturated, buy old cell phones and computers and silver and copper and... market is just beginning. I would still like to hear your take on it though.

Mon, 04/14/2014 - 11:24 | 4656952 SilverIsKing
SilverIsKing's picture

How much, and what kinds of, metals are retrievable from the devices?

Mon, 04/14/2014 - 11:35 | 4656987 Charles The Ham...
Charles The Hammer Martel's picture

Retrievability is something I would need to research further. Currently only 1 percent of cell phones are recycled, I'm not sure how much of the rare earths are there, but I do know that the scarcity of the vital elements needed for a smart phone is getting higher and higher every day. see here...

Dysprosium is used in hybrid vehicles and there are about 2 lbs of it in every prius. I'm not sure where one would find the price average for these elements but if I had a hunch, China has been keeping them low for years now and when their one mine runs dry... God only knows how expensive an old iphone will be. Just speculation though.

Mon, 04/14/2014 - 14:58 | 4657722 Bemused Observer
Bemused Observer's picture

Old cell phones? I know they contain a small amount of PM, but is it really worth the time/trouble to be picking shit outta old devices with tweezers? Unless you're talking about a really large number of devices...

Much better to attend as many of your local estate and yard sales...Most have some jewelry items for sale, and a surprisingly large number of sellers are NOT at all careful. You routinely find old gold rings, necklaces, etc, 10-18 k. I generally amass a couple of ounces every spring/summer, and I don't go nearly as often as I COULD...

Last year I got a civil war era belt buckle for 50 cents. It was 18 karat gold, and weighed nearly 40 grams...And this is not an atypical find.

Mon, 04/14/2014 - 11:31 | 4656973 NDXTrader
NDXTrader's picture

I recommend buying S&P 500 proxies and setting your stops at the 200 day moving average - they won't let it fall through there unless they lose control. That's minimal risk from here and when they do lose control you're out. Every month take your "winnings" and buy all the gold and/or silver you can. Rinse and repeat

Mon, 04/14/2014 - 12:16 | 4657195 SIOP
SIOP's picture

" ....buying S&P 500 proxies and setting your stops at the 200 day moving average - they won't let it fall through there unless they lose control..... "

I like that, simple and easy, I've been wondering where to put my stops at, thank you.

Mon, 04/14/2014 - 11:20 | 4656925 i_call_you_my_base
i_call_you_my_base's picture

All you need is to answer this simple question:

"Are you an insider with access to the rigging?"

If the answer is no, the answer to whether you should be in the stock market is 'no'.

Mon, 04/14/2014 - 11:21 | 4656927 HRamos_3
HRamos_3's picture

Easy, just do the opposite of what is being said here.

Mon, 04/14/2014 - 11:26 | 4656955 SilverIsKing
SilverIsKing's picture

So, per your instructions, if I do the opposite of what you just said, I should do exactly what is said here.

Mon, 04/14/2014 - 12:11 | 4657168 HRamos_3
HRamos_3's picture

Yes, just don't jump of a high place.

Mon, 04/14/2014 - 11:21 | 4656928 MFL8240
MFL8240's picture

Do You Belong In The Stock Market?

Yes, if you are one of the bozy.  No, if you are an all American working class stiff paying for their bailouts they have the tools and will rob you of your money!

Mon, 04/14/2014 - 18:26 | 4658524 LooseLee
LooseLee's picture

 Most (if not ALL) of the 'boyz' (pussies that they are) will be hanging from lampposts before this is over. No chance to spend that ill-gotten fiat gain they thought they were so smart rigging away from the honest Joe....Sad days a comin' if you're a FRAUDSTER....

Mon, 04/14/2014 - 11:31 | 4656932 JustObserving
JustObserving's picture

Within the last fourteen years, there have been two major market corrections, both of which saw drops of 55% from their highs

But then they invented HFT computers which gave the Fed and its minions unprecedented powers in manipulating prices.  That has been a game changer.

So stock prices levitate and gold and silver stay nicely controlled.  In fact, silver is down 65% in inflation adjusted terms from May 1, 2011 even as the Fed has printed trillions. If you mathematically analyze silver prices, you can conclude with virtual certainty that silver prices are manipulated.

If you don't know that markets are manipulated continuously in the land of the free, you may want to check if you can fog a mirror.


Mon, 04/14/2014 - 11:57 | 4657092 Kaiser Sousa
Kaiser Sousa's picture

"If you mathematically analyze silver prices, you can conclude with virtual certainty that silver prices are manipulated."

and on that note, cue the sideways trading @ $19.99 for the rest of the day after the london dump in the last hour of on it..

Mon, 04/14/2014 - 12:09 | 4657157 JustObserving
JustObserving's picture

Any halfway decent mathematician can analyze silver price data over the last 3 years and conclude with more than 99.99% certainty that silver prices are manipulated.

I guess we will have to wait for a Michael Lewis book to reveal this scam.

Keep in mind that mathematically speaking, the problem of manipulating a few markets is trivial compared to the problem of spying on everyone in this world which the NSA has solved.  Besides, the free money from manipulated markets funds all your illegal espionage activities lavishly and you can hire the best talent.

Mon, 04/14/2014 - 12:12 | 4657178 wearef_ckedwith...
wearef_ckedwithnohope's picture

15% Cash

15% Vanguard large cap index fund

15% Vanguard mid cap index fund

15% Vanguard small cap index fund

15% physical gold

15% for leisure time activities (you know)

10% for total fuckin' around emergency stuff


BTW, no cheaper passive money manager than Vanguard, so you get less fu_cked in market crash.

Mon, 04/14/2014 - 11:22 | 4656935 larry david
larry david's picture

Article is decent but no mention of gold?


A friend said the same thing to me over the weekend. "Money under the mattress isn't practical for most people!" I guess these people haven't heard of gold either. Oh well. More metals for me. 

Mon, 04/14/2014 - 11:23 | 4656944 LawsofPhysics
LawsofPhysics's picture

When fraud is the status quo, possession is the law.

That is all...

Mon, 04/14/2014 - 11:27 | 4656962 free_lunch
free_lunch's picture

If I could print my own money unlimited, I would keep buying until I owned everything. And if anybody got suspicious I would say "I'm supporting the economy for the benefit of the peoples"

Mon, 04/14/2014 - 11:28 | 4656965 Oh regional Indian
Oh regional Indian's picture

Cash See Now?

Cash See No!

Dealer+House+Hired Sharp+masochistic tendency = The ruin of many

I've seen the far-easterners in Vegas....holy smackerel!

The MAfia has been running Wall Street for a long time, of course they set it up as a casino.

Check this out, the great DTCC expose that wasn't, but is one of the KEYS!



Mon, 04/14/2014 - 11:29 | 4656968 q99x2
q99x2's picture

Everybody with half a brain belongs in the stock market. If you look at the chart you can see that all you have to do is BTFD.

Mon, 04/14/2014 - 11:46 | 4656969 Ham-bone
Ham-bone's picture

this article and it's ilk seem to be written by folks who simply can't adjust to the "new reality" that we no longer have traditional "markets" or that we now have unlimited dollars created to chase an ever larger debt base...the central planners have gone from referees in a game to now filling out both starting rosters.  The "investors" simply play a bit role from the bench now.  This is a centrally planned economy and financial world...with all the problems that go along with central planning.

Simply look @ the US treasury market to see that the "market" is dead.  Since the Fed announced it's taper, Treasury yields are going down while markets maintain.  "Foreigners" have steped in to maintain the bid despite this not being in their interest as "investors"...thus, "foreign" purchases of Treasury debt are not "investments" but purchased by unknown parties for non-investment reasons.  Sounds like non-market actors in a non-market - simply centrally selected rates and propaganda around all these "market" indicators of strength and wealth.

Interest rates will go ever lower, stawks will go higher, RE will become only more expensive...none of these are good or moral or right but in a centrally directed global ecoonomy these things must happen and so they will.  No crash or loss of control is likely any time soon.

Mon, 04/14/2014 - 12:24 | 4657228 Flux
Flux's picture


And on this note, Warren Buffet might not be the doddering old grandpa this article would characterize him as:

In fact, for his wife (and her future trustee) he has the following plan:

"What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit…My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors…"

I'm not sure it's fashionable to be quoting Buffet on this site, but maybe he knows something.


Mon, 04/14/2014 - 11:31 | 4656976 yrbmegr
yrbmegr's picture

The US is due for an existential crisis.  Constitutional republics, being unstable, tend to have them with some frequency.  In the US, it seems to be about every 80 years or so.

Mon, 04/14/2014 - 11:36 | 4656993 Itchy and Scratchy
Itchy and Scratchy's picture

Only if I can be high frequency front-runned!

Mon, 04/14/2014 - 11:39 | 4657001 Dubaibanker
Dubaibanker's picture

Millions are jobless....but markets go up....companies go bust...but markets go up....GDP goes down...but markets go up.....currencies go down...but markets go up.....millions have been displaced and thousands killed across Middle East, then Latin America, then Europe and now Ukraine...but markets go up......fraud is coming out of every single bank and financial institution except very rare few...but markets go up......QE is ending and free money will finish by next year...but markets are going up......terrorism, protests and riots are rampant around the world in more countries than ever before...but markets go up.....globalisation is ending....but markets go up......most companies can barely get bank lending but are issuing bonds and keeping cash on balance sheet and not expanding or doing capex...but markets go up....insider trading, algos, ponzi schemes rule the planet...but markets go up......millions of retirees in western countries get 0% on their deposits...but markets go up.....countries and large corporates get downgraded but markets go up....cities go bankrupt but markets go up.....cities in Ukraine want freedom by referendum and voting which is a democratic process but US does not support them even though it wants to bring freedom and democracy everywhere...and markets go up....

It is commonsense when a country or company gets downgraded like Greece or US or anyone else that interest rates must rise to reflect the increased risk....this is basic Economics when will rates go up to reflect the risk? How can Greek and Portuguese markets issue bonds at lower rates than last 2 years when they are worse off, their economy is 20% to 25% lower than 5 years ago in GDP size, they have been downgraded to C rating from AA levels and thousands are protesting due to unemployment which leads to demand destruction of everything and austerity rules the day with massive debt increases but they can issue bonds at lower rates.

Is there anything that can bring these moronic markets down? When will logic get applicable to stock and bond markets?

Mon, 04/14/2014 - 11:47 | 4657033 free_lunch
free_lunch's picture

Welcome in the matrix, where everything is scripted. I've read the script, it does not end well for most of us..

Mon, 04/14/2014 - 11:40 | 4657008 what's that smell
what&#039;s that smell's picture

You must decide whether these markets are for you, but if you do you had better be very agile and ready to run when the time comes...


the time has come; buy the flipping dip!


i think i smell a bottom....

Mon, 04/14/2014 - 18:31 | 4658535 LooseLee
LooseLee's picture

I thibk you smell a PINKO COMMIE...

Mon, 04/14/2014 - 11:40 | 4657010 whirlybird rules
whirlybird rules's picture

Eventually yes!  In the meantime, all of us "smart" people have taken it in the nuts for betting against the new normal. I've had my ass handed to me three time in the last five years going short.  I've been far more productive growing vegeatbles!... which! is a good thing, because when this shit is over, the only people who are going to eat are the super rich and the people who grow their own food!

Mon, 04/14/2014 - 13:07 | 4657381 JR
JR's picture

The Great Depression changed the nation forever; and it was the New Deal programs that prolonged the depression throughout. The 1930s set the stage for the great expansion of government activity that made people dependent on government for aid and security.

Then along came the second great surge in government programs from 1965-1966 under President Lyndon Johnson. America now is undergoing its third great surge in welfare state collectivism under President Barack Obama with his socialist masterpiece, Obamacare.

Combine Obamacare with the Greenspan/Bernanke inflationary depression, and where will the authority of the federal government over the American economy end this time around?

My friends in San Jose all have escape routes planned should food riots begin. The great danger in metropolitan areas is that the density of population, the possible lack of police coverage, and transportation problems of all kinds from freeways to rapid transit create the danger of attacks by roaming gangs looking for food.  

Clarence B. Carson explains the plight of an urban population in the 1930s Great Depression:

“The impact of prolonged depression was heightened by an increasing dependence of so many Americans on the market. In an earlier America, even a prolonged depression would not have had so widespread and deep impact. Most people had not only been farmers but also subsistence farmers in many cases, depending hardly at all on the market.

“Many grew their own food, got most of their fuel for heating from cutting wood, made their own clothes, and bought only what they could not produce themselves. Even those farmers who produced primarily for the market and bought extensively in the market could, in a pinch, provide for most of their needs on their farms.

“By the 1930s, indeed well before, this situation had changed dramatically. A majority of Americans now lived in towns and cities, and had little or no means of providing for most of their livelihood from their own resources. A majority of the work force was now employed by others, either directly, as in self-employment, or indirectly through employers who paid them wages or salaries for what they produced. Farmers, too, had grown increasingly dependent on the market, specializing in producing one or a few goods to be sold mostly to others…

“Prolonged depression left many of those dependent on the market exposed, or at least revealed in an unpleasant way to them the potential difficulties attending dependence on the market. When jobs became hard to find, some were without a job, and those who still had jobs feared they would lose them… As the situation did not greatly improve and sometimes worsened from year to year, it was easy to give way to despair. Those in debt often saw little hope of paying their debts…

“Communists, of course, had a ready-made explanation for the ills of America…”

As did Franklin D. Roosevelt, 1933:

I am prepared under my constitutional duty to recommend the measure that a stricken Nation in the midst of a stricken world may require….But in the event that Congress shall fail to take one of these…courses….I shall not evade the clear course of duty that will then confront me. I shall ask Congress for the broad Executive power that would be given to me if we were in fact invaded by a foreign foe.

Says Carson: “The stock market crash in October of 1929 was the critical event in the beginning of the deflation which produced the depression.”

Mon, 04/14/2014 - 11:41 | 4657014 Dr. Engali
Dr. Engali's picture

The stock market is a policy tool and until that changes  take advantage of the free "money" as long as you are aware that the currency you are currently gambling with can vaporize at a moment's notice. If you have disposable currency then put it to work in what is left of this bastardized market and buy tangibles with your profits.

Mon, 04/14/2014 - 11:43 | 4657022 eddiebe
eddiebe's picture

Sorry, putting cash under your mattress isn't an option either, and the bastards have firm control over gold and silver: 

Looks like we're fucked no matter what unless someone can finally stand up to the mob and say ENUFF!

Wed, 04/16/2014 - 14:48 | 4657026 Comte d'herblay
Comte d&#039;herblay's picture

Depends on the definition of 'do you belong'.

If you simply bought the fucking dips, and sold the fucking spikes, you would be like the guy who has two girlfriends, one built like Sofia Vergara, and the other like Charlize Theron, Kerri Russell, Keira Knightley, Natalie Portman, or Gwyneth Paltrow.

You can't really make yup your mind which of the two you want to spend the rest of your life with, so alternate between the two, enjoying the company and other pulchritudinous assets of the one, and the cerebral, and the facial ones of the others (and send Sean Penn packing back to Madonna).

 And if you watch yourself carefully, you can do this for years. 

IF you had just done it the last three weeks you would belong to (at least) the top 40%.

J B T Mfing D

J S T Mfing S.

fer krissakes.....

and Sell the dollar at 81, buy it at 78 and change. 

Rock and roll....

You will belong then to the ages.

Mon, 04/14/2014 - 11:49 | 4657029 Carl Popper
Carl Popper's picture

Dumbfuck the fed wants you to go to your mattress.   They take a five percent non hedonically adjusted cut each year.


Diversify.    You can be the bagholder as the fed slowly inflates away this mountain of debt.   Not me.


Mon, 04/14/2014 - 11:46 | 4657030 DOGGONE
DOGGONE's picture

Here is the truth: The Public Be Suckered

Mon, 04/14/2014 - 12:05 | 4657132 JR
JR's picture

A friend of mine drew out his company-managed 401(k) proceeds for the past six years. Sans the IRS penalty, the company calculated his total return at 16% over 6 years, i.e., 2.67%.

Mon, 04/14/2014 - 13:10 | 4657387 Carl Popper
Carl Popper's picture

Still a better return than cash under the mattress.


But have a little cash under the mattress too, and dont take your gold out boating.


Gold and boats don't mix

Mon, 04/14/2014 - 11:47 | 4657034 JR
JR's picture

A handy tool for investors who want to determine the annualized returns of the S&P 500 and stock market returns over a specific time period is the online Date Range calculator provided by

“This calculator lets you find the annualized growth rate of the S&P 500 over the date range you specify; you'll find that the CAGR is usually about a percent or two less than the simple average.”

For instance, calculating the Date Range from Jan. 1, 2000 to Dec 31, 2012 the “average” return of the S&P 500 is 3.45%; the annualized return (=True CAGR) is 1.61%; i.e., the dollar grew to $1.23. Adjusted for inflation the annualized return is -0.79; the $1.00 grew to $0.90.

Calculate Jan 1, 2000 - Dec 31, 2013 and the “average” return is 5.52%; the annualized return 3.55%; and the dollar grew to $1.63.  Adjusted for inflation the annualized return is 1.17%; and the dollar grew to $1.18.

Here’s the site’s explanation of Compound Annual Growth Rate (Annualized Return):

A problem with talking about average investment returns is that there is real ambiguity about what people mean by "average". For example, if you had an investment that went up 100% one year and then came down 50% the next, you certainly wouldn't say that you had an average return of 25% = (100% - 50%)/2, because your principal is back where it started: your real annualized gain is zero.

In this example, the 25% is the simple average, or "arithmetic mean". The zero percent that you really got is the "geometric mean", also called the "annualized return", or the "CAGR" for Compound Annual Growth Rate.

Volatile investments are frequently stated in terms of the simple average, rather than the CAGR that you actually get. (Bad news: the CAGR is smaller.)

CAGR of the Stock Market

 (In the case of stock market returns, if you plug in the results of the first calculator you'll find that the approximation isn't exact, but it's still pretty good.)

The most significant pattern is this:

Over the very long run, the stock market has had an inflation-adjusted annualized return rate of between six and seven percent.

Another pattern: while stocks have certainly beaten inflation over the long run, they've done poorly within the high-inflation periods themselves: try the inflation-adjusted returns for 1916-1918, 1946-1947, and 1973-1981.

Mon, 04/14/2014 - 11:50 | 4657045 Kaiser Sousa
Kaiser Sousa's picture

hope everybody is enjoying Silver once again being capped right at that phony paper price of $20 as it has now been for almost a year...

how more obvious can they be..

funny how always at the close in London there seems to be last minute selling to push it below...

Mon, 04/14/2014 - 11:56 | 4657083 SMC
SMC's picture

I think the matress is a doomed strategy unless you are short kindling for your fireplace.

Consider a frugal debt-free life, as energy independent as possible and focus on accquiring and utilizing productive assets such as farmland with sufficient access to fresh water, livestock, quality equipment and tools.

Also, accquire knowlege and experience as if your life depends on it, because it does.

Mon, 04/14/2014 - 12:05 | 4657133 Comte d'herblay
Comte d&#039;herblay's picture

This 'advice' is exactly like the kind of advice you get from your wife when you, in order to save a couple hundred FRNs,  attempt to fix the 220 electircal circuit that powers your clothes dryer so she can dry her panties. 

As you melt the pliers you stuck into the Main Box, and wind up on your ass, if not dead, she comes down the stairs and says, "Maybe we should call the electrician". 

Mon, 04/14/2014 - 13:34 | 4657472 Iam_Silverman
Iam_Silverman's picture

"she comes down the stairs and says, "Maybe we should call the electrician". "

Funny, whenever my wife thinks I'm dead, she calls the pool boy.

Mon, 04/14/2014 - 12:10 | 4657167 I Write Code
I Write Code's picture

The market overall is more open and honest than ever before.

The economic prospects are another matter, but if we have to do "duck and cover" exercises every morning it's because of the macroeconomy, not the markets.

Every duffer today has online access to near real-time prices, can trade with a reputable firm at very low trade rates, and is much better off than in even the 1970s or 1980s, much less previous decades.

If all the stock prices are being propped up by unelected Washington bureaucrats, again, that is not the fault of the exchanges, at least not exactly.

And as you say, we have no f'ing choice in the matter.

Mon, 04/14/2014 - 12:23 | 4657224 moneybots
moneybots's picture

"Inflation is inevitable if current policies continue. Economic and/or governmental collapse is possible if they don’t."


Collapse will come anyway.  All booms end in a bust.

Mon, 04/14/2014 - 12:23 | 4657226 lasvegaspersona
lasvegaspersona's picture

Gold bullion can also be considered by the rational investor.

It probably won't go much higher until things break, but it really can't go much lower without causing a terminal event....a run on physical in the third world.

Mon, 04/14/2014 - 12:25 | 4657233 Oldrepublic
Oldrepublic's picture

From David Stockman

Healthy Correction in the Stock Market?


No—the mother of all financial bubbles is beginning to crack, says David Stockman.

Mon, 04/14/2014 - 12:31 | 4657248 frank650
frank650's picture

True, it took 25 years to acheive the previous levels, but this does not factor in dividends.

Mon, 04/14/2014 - 12:49 | 4657327 Jack Burton
Jack Burton's picture

I bailed out in 2007 and did keep all my gains. Since then the Federal Reserve has raped me up the ass with a telephone pole on a daily basis. I was always told "Don't fight the Fed", that has been good advice for some years now.

Mon, 04/14/2014 - 12:59 | 4657352 elwind45
elwind45's picture

IT so damn hard not to be in the market! Every dip is like the end of the world and every rally is different this time scalper's dream? And bonds wow nobody thinks bonds have a chance in hell to rally and yet some bond trader is giving up his ghosts about how the Fed is out of control and inflation is thru the roof and he cant explain why bonds keep going up and short rates continue to be anchored?

Mon, 04/14/2014 - 13:01 | 4657359 SheepDog-One
SheepDog-One's picture

Yes but, this time it's different! It's the age of instant gratification and all markets are supposed to gain around 1% daily or something is wrong....but no worries, if it drops a bit today it will be more than made up for tomorrow.

Mon, 04/14/2014 - 13:03 | 4657367 elwind45
elwind45's picture

Its funny how its not working at the Fed yet they are out of control

Mon, 04/14/2014 - 13:09 | 4657388 elwind45
elwind45's picture

You are right about 2000 tech meltdown it was like someONE rang a bell BILL GATES ding dong and 2007 it was a wholesale liquidation of the AIG stock portfolio by the Fed taking down AIG. Ever wonder why AIG was taken out so fast? Now a brand new catalyst is being hunted for and its a new president and several years away!

Mon, 04/14/2014 - 13:15 | 4657407 elwind45
elwind45's picture

Gold? How in hell is Putin going to continue his rampage without selling a little shiny? Or China and its deflation trade selling gold? I have some gold but not enough for the border guards to come looking for it! You do know deflation and inflation sound alike but are opposites?

Mon, 04/14/2014 - 13:32 | 4657466 Iam_Silverman
Iam_Silverman's picture

Ahhh, CRAP!

Stocks, STOCKS!  The stinking article I read last week said to buy STOCKS!  Dammit, I had borrowed my wife's reading glasses that day.  I bought STORKS instead.

Am I screwed?  Does anyone know what they taste like?  Chicken with a hint of fish?

Mon, 04/14/2014 - 13:41 | 4657492 devilsdictionary
devilsdictionary's picture

On the inflation-adjusted basis, the DJIA 30 is not particularly distant the long term normal. Neither is S&P 500.

Hint: when talking of inflation, I don't mean CPI, of course.

Mon, 04/14/2014 - 14:04 | 4657567 Bemused Observer
Bemused Observer's picture

I bought stocks in March of 2009, for the first time in my life. I rapidly more than doubled my money, then sold everything. (Of course, "doubled my money" means I doubled the pitiful small amount I was able to afford to 'invest'...but still. It did double.)

I should clarify too, that it was both the first, and LAST time, I will enter that market. I've been watching this thing for several years now, and it MAKES NO SENSE! How do any of you DO it? What do you base your decisions on? None of the stats they release seem to reflect reality..."Inflation is low!"...Really? Then you find out they aren't counting food, energy, know, the stuff you HAVE to buy. But, because evidently, the price of Hello Kitty ankle socks has remained stable, inflation is not a problem for the consumer.

Unemployment is declining...Really? Then you find out that they aren't counting the ones who have given up looking for work, and that they don't consider the ones who are chronically UNDEREMPLOYED. As if those people just disappear from the equation because they choose not to see them. Or as if having folks go from making 100 thousand a year to earning minimum wage at part-time hours isn't going to have a deleterious effect on the economy, hey, they're WORKING, right?

These people are creating their own reality here. Just like a schizophrenic off his meds...


Mon, 04/14/2014 - 14:05 | 4657570 Kelley
Kelley's picture

The PM market is also treacherous.

JP Morgan holds 76% of the Silver Shorts 

Because apparently gold underwear was just too gay while manipulating the sh!t out of the PM market. 

"According to analysis by Ted Butler, JPMorgan holds an astounding 76% of the total Commercial net short position (110 million troy ounces)."

Mon, 04/14/2014 - 14:17 | 4657602 AdvancingTime
AdvancingTime's picture

Currently I see anyone bullish on this market viewing any pullback as a buying opportunity and sure the market will continue to rise as way to optimistic. Often the people following this mantra feel invincible.

After a good run it is strong in the nature of the human animal to double-down. We tend to get careless at a market top and ignore when a market turns or begins to take large swings. 

Those of us who have had the misfortune of losing a lot of money fast will tell you we never saw it coming or that it got far worse than we envisioned in even our worse case scenario. More on how you can lose it all in the article below.

Mon, 04/14/2014 - 14:32 | 4657650 Hannibal
Hannibal's picture

More agents and equipment arriving at the Bundy Ranch It’s NOT over. Get the word out folks.

Do NOT follow this link or you will be banned from the site!