WHEN BAD THINGS HAPPEN TO BAD STOCK-MARKET INVESTORS
The long knives were out; and Mr. American stock market took a beating, on Friday, that it was long needing:
The Dow Jones Index was down 530.994 points; the NASDAQ index sunk another 171.49 points; and the S&P 500 hemorrhaged 64.84 more points.
The moral of this depressing stock-market story?
The (cancerous) global economic meltdown is metastasizing – resulting in disastrous market crashes around the world, including the once soaring and now crash-diving Shanghai index and the Brazilian BOVESPA index.
Add to that the ramping up of sovereign debt (pseudo money printing) by the Fed, and its equivalents in Europe, Asia & South America – to rescue plummeting stock markets & currencies – and you have the recipe for global economic disaster, possibly lasting for the next two decades!
Well that's my opinion anyway (but then again, what do I know ... I thought Hillary Clinton did use a cloth & a bucket full of "Mr. Clean" to scrub her server!)
In fact, based on what I have learned about historical stock-market & economic cycles, through my own past research, I’m expecting a global economic crash of significant proportions – creating rising costs of living, in the United States in particular, along with declining incomes and soaring tax burdens for most American citizens.
And based on what happened, historically, during previous economic implosions like this, we could possibly expect a rise in anti-government sentiments, expressed in extremist movements on the left & the right of the political spectrum.
Throw in the riots & looting that have accompanied similar past economic disasters like this – along with the rise of armed extremist militia groups and/or radical college protest movements – and you have the recipe for social anarchy and the “push back” by government through:
(1) repression of “dissenters” via background checks;
(2) intimidation of these “dangerous” elements by the IRS and other “justice” agencies; and
(3) wholesale expansion of the government’s monitoring of suspected domestic “opponents”.
In other words, a world in which President Richard Nixon, of Watergate fame, would have felt quite comfortable.
Not to mention President Barack Obama’s kitchen cabinet (can you say “Eric Holder, George Soros & Valerie Jarrett”, boys and girls?).
So, in my opinion (wrong as it often is), a literal economic global Armageddon may be a fact of life, in a matter of months or perhaps years.
And if we’re all lucky, then yours truly will be proven wrong; and I will be most happy to eat humble pie.
First, since the social sciences are my beat, let’s try and look at this looming problem for the world (in my opinion, that is) from a social-cultural perspective.
But first let’s quote some poetry, suggested two years ago by a leading economist, to sum up the problem:
“Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the center cannot hold;
Mere anarchy is loosed upon the world,
The blood?dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.”
— The Second Coming, 1st Stanza … William Butler Yeats addressing the September 12, 1919 meeting of the German Workers’ Party
And there’s no better a poetic prediction of global Armageddon that I can think of (though I’m no poetry maven).
But first, just a reminder that my unfailing recent lament – expressed on my Twitter “StockTwits” investment posts – was that a massive stock-market crash was looming in the United States [and in the light of what happened Friday, perhaps I have some prophetic abilities that I wasn’t aware of previously]:
And that’s despite all the great profits experienced by today’s foolish & reality-denying U.S. stock-market investors -- until Friday that is.
Profits occurring only because of the continued “artificial” low-interest-rate policies created by the “Fed” (first by Dr. Bernanke and now Ms. Yellen).
And my cautionary warning now?
Hold onto your hats & wallets, folks!
Because, in my opinion, Fed quantitative easing is still just around the corner (perhaps as early as next January); and that’s when the proverbial (pardon the expletive) S*H*I*T hits the fan.
When that finally happens, global stock markets will crash again; and hyper-inflation will wipe out the savings of everyone but greedy crony capitalists like George Soros, Valerie Jarrett and the rest of the green-energy gang (who brought you the government-subsidized Solyndra bailout in the U.S.).
Hence, thanks to Barack Obama and Ms. Yellen, there will finally be income equality in America…
But it will be equal impoverishment for all Americans, except the privileged & spoiled elitists who inflicted this economy policy on the rest of us.
According to Societe Generale's respected strategist Albert Edwards (who is also bearish like myself), central banks in the Western world have set the scene for an "even bigger version" of the 2007-2008 global financial crisis.
In a research note, on Thursday, Edwards said that China's intervention to stabilize its volatile stock market was part of a larger global story, in which "rock bottom" interest rates and large fiscal deficits -- in "the western world" -- were pushing the global economy towards a fall.
"QE (quantitative easing) will be stepped up to such a pace that you will hear the roar of the printing presses from Mars," Edwards prophesied:
"I have not one scintilla of doubt that the western central banks have set us up for an even bigger version of the 2008 Great Financial Crisis."
And for those who are not familiar with such jargon, QE has been a mainstay for several major central banks in the wake of historically underwhelming world-wide economic growth, with “artificial” money created to buy assets like government bonds -- helping to inject liquidity into markets with the aim of stimulating the broader economy.
Given his forecast step up in money-printing, Edwards said that GOLD, which tends to perform well during periods of high inflation, was a "must-have" safe-haven investment – the ultimate “reserve currency” since pre-biblical times.
Being a “gold-bug” myself, I would echo Mr. Edward’s recommendation – except with one cautionary note:
Despite rising substantively in the last week, I still believe that gold futures and mining stocks will still crash one more time before next spring.
So please be patient and wait for this final precious-metals implosion; and then begin slowly “accumulating” gold & silver assets on periodic stock market dips.
In the meatime, I have one other market sector which I do believe is worth looking at it the coming months: water utilities!
In fact, look what happened on Friday, despite even previous market “outperformers”, such as Facebook & Netflix, tanking:
The price of shares in MIDDLESEX WATER COMPANY (NASDAQ: $MSEX) went UP!
Historically, the only consumer sector in which to hold stocks -- during the worst of economic times -- is water utilities [one bit of "wisdom" I've retained from past global stock market disasters that occurred in my "youngster" years].
I invested in these kind of consumer utility stocks many moons ago, and never lost a penny.
So maybe it's worth starting to "accumulate" cash-rich, dividend-paying water utilities on future market dips.
And below I have cut & pasted the top water-utilites of 2015, as suggested by CNBC’s knowledgeable Jim Kramer:
EQUITY: TOP WATER UTILITIES FOR 2015
|MSEX||MIDDLESEX WATER CO||A+|
|AWR||AMERICAN STATES WATER CO||A|
|AWK||AMERICAN WATER WORKS CO INC||A|
|WTR||AQUA AMERICA INC||B+|
|CWCO||CONSOLIDATED WATER CO INC||B+|
|CWT||CALIFORNIA WATER SERVICE GP||B|
|CTWS||CONNECTICUT WATER SVC INC||B|
|YORW||YORK WATER CO||B|
And that wraps up my investment suggestions tonight – Sunday August 23rd 2015 – for tomorrow: Monday August 24rth 2015.
Nuff said on these financial matters, for now, I think.