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The Dow’s Phony New High

Posted on October 3, 2006
Filed Under Uncategorized |

Phony for a number of reasons. See here:

http://bullnotbull.com/archive/stocks-6.html

It is a meaningless distraction. Distraction from what? How about that Henry Kissinger is a secret advisor to the White House and wants to fight Vietnam all over again in the form or Iraq? (for one)

Come election day, you have to get out and VOTE! The stakes are high.

Comments of course welcome.

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126 Comments so far
  1. LAYOR October 3, 2006 2:49 pm

    PU-LEEZE.The fact that Kissinger has been a white house advisor has been known and talked about for months !!!So what is so secret about it? And UNLESS you or someone who is willing to be named sat in on the “Secret Meetings” where this fantasy was discussed go on to something really newsworthy.Thank you.

  2. Sapiens October 3, 2006 2:51 pm

    One common fallacy is that central bankers have a choice in investing in US Dollar denominated assets. They don’t. Richard Duncan in “The Dollar Crisis” has done an excellent job in unraveling that puzzle. Also, they are not business people, they are bureaucrats that implement policy.

    Don’t think this is the top just yet, but keep a sharp eye on the US Current Account, that is the indicator that will dictate when the major shift will occur.

    In the mean time, watch how the Fed finds a way to insert liquidity into the system while extracting it from somewhere else. Be in the look out for policy to keep homeowners afloat and current in their mortgages with new 40 year low interest refinance loans.

    -Sapiens

  3. Javi October 3, 2006 3:04 pm

    “Come election day, you have to get out and VOTE! The stakes are high.”

    Voting does not make any difference, does it? If the politicians are not yet corrupt and they actually have the people’s best interests in mind, they are soon swallowed by a system that no longer works and makes little difference who appears to be in power.

    Elections are like a football game. The teams battle it out. The spectators think they are involved, they think they can make a difference, they scream louder and louder but at the end it changes nothing. The only ones that win are the owners. Whether your team wins or looses, they make all the money afterall, they own the teams, the stadium and everything inside.

  4. matcha October 3, 2006 3:09 pm
  5. chasfish October 3, 2006 3:10 pm

    I agree with your thoughts on stock market.

    In a previous post here, I also pointed out that we would have to hit ~13,800 for a new high. I’ll say again, look at 1965 through about 1974 for a peek at what may well be in our future. On an inflation adjusted basis, each succeeding year of a ‘high’ after the 1966 high was actually lower, like this one, so far. I don’t think we will get anywhere close to 13800. Maybe wonder around from here, but not make it to 13800.

    What you should do is do a study like in your email today and find out what stocks were hitting all time highs in 1966 compared to 1929. That would be interesting. I bet more than 23% (7/30) were hitting new highs.

    Regarding manipulation, it really does seem like it can be manipulated. I know that’s heresy to DOW Theory people. If the market did go down to say 7400 or lower, that would kick pople nearly ready to retire right in the butt and make many people have to work longer. Can you imagine what that would do to the economy?? The gov really has to do whatever it takes to keep it afloat. Or we really pay the price if it doesn’t.

  6. Jeff Kassel October 3, 2006 3:27 pm

    Oh, no. Not Kissinger Again. The guy’s a thousand years old. He does have a great voice though. Shades of Dr. Strangelove.

    I’m waiting to hear from you, Mike. When are you going to come up to the studio and be on my TV show?

    Jeff

  7. the stranger October 3, 2006 3:35 pm

    I don’t think manipulation can avoid a crash; create it or make it worse, sure. I have no doubt they are trying to hold it together for the elections – everything is at stake. I don’t know if Kissinger on-the-scene is a secret, but I’m sure it’s negative info. No way would I disparage the significance; see Christopher Hitchens – The Trial of Henry Kissinger. And I’ll second Sapiens; Duncan’s “The Dollar Crisis” is worth a read.

    I’m no trader, I’ve said that before. No calls and puts for me. For you guys already experienced, I understand tryin’ to play the historic move; I would.

    Michael, I also agree with your take on the fundamentals; it’s illegitimate. PE ratios, dividends… there’s no buy and hold here. All this does is keep the game going well past closing time; lipstick on a pig…

    Javi – great analogy. Chasfish – it doesn’t matter whether the Dow breaks down to 7400 (nominally) or if it breaks down next to gold; it’s down either way for the purpose of savings. Have Michael on Jeff, good idea.

  8. the stranger October 3, 2006 3:48 pm

    Matcha, excepts from the Woodward book look like evidence for a trial. Thanks for the link.

  9. the stranger October 3, 2006 3:54 pm

    Michael, here’s Jim Sinclair with Black Boxes and Dead Hedge Funds, very on subject.

  10. Jeff Kassel October 3, 2006 3:55 pm

    OK, I get it now. Kissinger, Bandar, Hedge funds, Bush and the Tri-lateral commission are conspiring to drive the Dow to new heights, only to get out and convert their cash to gold just before the collapse. How could I have been so blind.

    Mike, Lets do a show on this!

    Jeff

  11. Gemstocks October 3, 2006 4:54 pm

    Everybody does need to vote, to vote against the party in power. We can’t beat them but we can emasculate the party in power. That makes it harder for tem to screw us.

    If the GOP has the White House and the DEMs have part of Congress, (either house will do)it’s harder for them to do any damage.

    WHEN IN DOUBT VOTE THEM OUT!!!

  12. ron October 3, 2006 6:01 pm

    Check for anti-war candidates at this address:

    http://www.whatreallyhappened.com/antiwarcandidates.php

  13. Nish October 3, 2006 6:55 pm

    Mike,

    I always enjoy your articles. Just curious though, are you still investmenting and making a ton of money with your knowledge. I know you are using your knowledge to wake people up, but I ask why not play the game also and get rich doing it.

    Nish (nishg@hotmail.com)

  14. max October 3, 2006 7:25 pm

    I would like to ask Sapien what should we watch for in the current account deficit to note the shift ? Is the Dow being manipulated for political purposes ? Seems very obvious. How about oil and gold as well. At almost any other time should an enemy of the US state they are on the verge of testing a nuclear device I doubt gold would have gone double digits.

  15. the stranger October 3, 2006 8:04 pm

    I forget who was asking, this site looks interesting…
    M3 is Back (thank George)

  16. the stranger October 3, 2006 8:31 pm

    More food for thought from the cryptogon
    Out of the Money PUT OPTIONS, Expire at Close Fri, Oct 20, 2006:

  17. Anon October 3, 2006 8:41 pm

    Where are the NUMBER of shares that each company has on offer in your anaylsis???
    You have not considered the fact that many of the companies that comprise the Dow Jones Industrial Average will have issued MORE shares than they had on offer in past years. Therefore the total index MAY be larger/higher even though the share prices are LOWER as there is more capital on offer.

    Please investigate this and not delete this the same way the US government certainly would.

  18. Greg October 3, 2006 10:36 pm

    Mr Anon got in ahead of me (#17). Would the answer not lie in the divisor? Maybe I’m naive, but I don’t see how the govt could “manipulate” the index such that it no longer reflected its mathematical calculation. (Rather than manipulating by buying stock). Have you worked backwards from the prices? What is Your index calculation?

  19. Administrator October 3, 2006 10:55 pm

    Hey Anon #17 -

    The Dow is price weighted - market cap has nothing to do with it.

    Please investigate this and not delete this the same way the US government certainly would.

    Give me a break! How about you go investigate it yourself, instead of relying on someone else to do it for you? Like all the people who sit around anonymously expecting a handout from the government?

    This is exactly what is wrong with this country - people who 1) Are convinced they know what they’re talking about, when in fact they don’t:

    You have not considered the fact that many of the companies that comprise the Dow Jones Industrial Average will have issued MORE shares than they had on offer in past years. Therefore the total index MAY be larger/higher even though the share prices are LOWER as there is more capital on offer.

    How do you know what I have considered and what I have not, when you don’t even know what you’re talking about yourself?

    and 2) Abdicate responsibility and demand other people do work that they should be doing themselves.

    The internet is right here in front of your face. You have the same access to it that I do, and that everyone here does. The information is all here. Ever heard of Wikipedia

    Next time try offering something, rather than demanding something. Try having the courage to leave a name or a real email address so the people of the community know who you are.

    It takes a lot of people to build a society and a community and just a few to fuck it up. This is the age old problem that I don’t know how to solve.

    Michael

  20. Marc Authier October 3, 2006 10:57 pm

    Indexes but particularly the DOW is a meaningless piece of information. In reality the DOW is just a historical piece of junk. A nice antique that is used when politicians are in deep shit. “Oh wow look how the economy is doing great. Look the DOW is at all time high.” Yeah sure! Vote for us the DOW is up and the price of gas is down. What a bunch of programmed monkeys US voters are. Stupid as they are, it will probably work! The DOW is a sacred COW that should be taken out and shot.

    And all the fidling and adjustments has made many indexes pure jokes. The Dow is being manipulated as is the price of oil too. Election time is coming and the Republicans and their little buddies on Wall Street and in Saudi Arabia are giving them a little help. Wonder what Bush and his bunch will give them back in return.

  21. Linda L. Richards October 3, 2006 11:45 pm

    Michael: All well, well put and clearly considered. Thank you.

    It’s distressing. It’s disturbing and though I loathe the idea of anyone calling me a conspiracy theorist, it feels at least a little like sunshine up the ass.

  22. David Jones October 4, 2006 3:01 am

    I have been of the bear persuasion for many years. But this website (and others like George Ures’) are giving us a bad image. You pitiful morons are just sitting around with your pathetic bucket of silver and gold, hiding under a rock waiting for life as we know it to end. When it didn’t end according to some Elliotwave gobbledygook formula, you start blaming the government, the pope, Henry Kissinger, Ben Bernanke, who knows who else.
    This is all ludicrous. Everybody, please, stop for a few seconds….take a few deep breaths….get some oxygen back into the brain….now… do you really believe all this CRAP?

  23. Sapiens October 4, 2006 4:03 am

    Michael,

    Excellent responce @ #19, kudos to you.


    David Jones @ #22, there is no one more blind that he whom
    doesn’t want to see.

    -Sapiens

  24. John Shaeffer October 4, 2006 4:11 am

    Here is the list of Dow Jones components and the changes over the years.

    http://www.djindexes.com/mdsidx/downloads/DJIA_Hist_Comp.pdf

    Inflation has been addressed–how about the viability of the businesses that make up the DJIA? Indexes will always be bullishly biased, as the dogs are let loose at various times along the way–after all losers are for losers. How many names do you recognize on the listing from early on?

  25. Sapiens October 4, 2006 4:16 am
  26. Dr Jane Karlsson October 4, 2006 4:39 am

    Henry Kissinger is also reported to be a frequent visitor to Tony Blair at 10 Downing St. He comes and goes by the back door.

    This is the guy who bombed Cambodia into very small pieces and got a Nobel Peace Prize for it. Nuking Iran would be all in a day’s work.

  27. nestor October 4, 2006 4:55 am

    Kissinger is scum. most politicians are.. what’s that got to do with the stock markets?

    the Dow, after rallying 1000 points in two months or so, is ready for a break.. expect some sideways action, for a month or so.. before it breaks 12,000 this year.. on it’s way to 13/14,000.

  28. Sapiens October 4, 2006 4:55 am

    Americans Skeptical About Gas Price Drop
    September 25, 2006, CBS News/Associated Press
    http://www.cbsnews.com/stories/2006/09/25/ap/business/mainD8KC5MEO0.shtml

  29. Sapiens October 4, 2006 4:56 am
  30. Administrator October 4, 2006 5:06 am

    Dr. Karlsson - excellent way of putting it: “Nuking Iran would be all in a day’s work.”

    Nestor - I’m proud of you. I think this is the first post I’ve seen from you that does not say, “Prechter is an idiot.”

    And Sapiens - yes, I can imagine that people are skeptical about the drop in gas. Because there is an old Texas saying,
    Fool me once… (if you have not seen this video clip, it is hilarious!)

    Good morning everyone!

    Michael

  31. Joseph E. Meyer October 4, 2006 5:16 am

    Mike
    Great Insight into what this market is doing, the public again being setup for a huge decline in equity
    prices. The decline I believe in housing ahead of us will mirror what took place in the tech bubble with the public in denial all the way down to the bottom.
    My thoughts sell the stock market, bond market ,real estate, raise some cash and move into the metals and energy on any further weakness in prices.

  32. Sapiens October 4, 2006 5:25 am

    China warns on protectionism after US bill move

    Reuters
    Saturday, September 30, 2006; 11:33 PM

    http://www.washingtonpost.com/wp-dyn/content/article/2006/09/30/AR2006093001432_pf.html

    Schumer and Graham said on Thursday that they had accomplished their goal of focusing more attention on China’s strict exchange rate controls.

    LOL, it seems they don’t understand the implications…. Well, one way or another the day to pay the piper will come.

  33. zephyr October 4, 2006 5:39 am

    As I have mentioned in the past, I work as a cameraman in television. I mentioned that under my name Jeff but saw that there are a few Jeff’s….hence you can call me Zephyr (Like Nicholson calls himself Joker in Batman).

    Anyway, I have been in tv for 20 year, half of those spent in news. There are very, very few real journalists left. 60 Minutes is still the best. We lost a giant when Peter Jennings died. So, to be blunt, I have lost all faith in our privately controlled mass media. I now get my “real” info from brave people like Alex Jones of Prisonplanet, Chris Laird of Prudentsquirrel.com, the very brave Michael C Ruppert (who has had to leave the country due to very real threats on his life), the good folks at TheDailyReckoning.com to mention just a few.

    Our media mostly has drank the Koolaid, washing down some qualudes, percocets and Xanax. Of course, everyone was gaga over the new “high” in the Dow. I guess people just choose to believe what they wish to be so. Of course things are being manipulated so Joe Public can stay the course. But, as Michael has said, this can’t be maintained longterm. Natures abhors vacuums and imbalances.

    Great to see that evil prick Kissinger still in the mix. He might be the only person who could make Cheney look like Mother Theresa. How evil is Cheney? God has hit him with, what, 4 heart attacks now and he just refuses to die. How evil is Cheney? Even Satan is afraid to let him into hell. Hence, we have Kissinger/Cheney leading us. Anybody else just greatly disturbed by that?

    Lastly, Hey David Jones, post #22….how about pulling your head out of your ass to get some of that vital oxygen you mentioned. Oh, you must have to have drank some of that yummy qualude/percocet/xanax Koolaid. Perfect example of someone believing what they wish.

  34. Mike October 4, 2006 5:51 am

    Hi
    I noticed your all time high price are not adjusted for x-dividends, and stock splits etc.
    Specifically in the case of Microsoft there was a stock split of 2 for 1 on 18 Feb 2003:
    http://finance.yahoo.com/q/hp?s=MSFT&a=00&b=01&c=2000&d=08&e=3
    06&g=v
    If so, the high price is 35.53 on 7th jul 2000
    http://finance.yahoo.com/q/hp?s=MSFT&a=00&b=01&c=2000&d=11&e=30&f=2000&g=d&z=66&y=66

    I am a bit disappointed that your analysis made such a simple mistake.

    Thank you.

  35. Sapiens October 4, 2006 5:58 am

    zephyr Says:
    October 4th, 2006 at 5:39 am

    “How evil is Cheney? God has hit him with, what, 4 heart attacks now and he just refuses to die. How evil is Cheney? Even Satan is afraid to let him into hell. Hence, we have Kissinger/Cheney leading us. Anybody else just greatly disturbed by that?”

    I could not stop laughing at this, too painfully funny!

    Of course, everyone was gaga over the new “high” in the Dow. I guess people just choose to believe what they wish to be so. Of course things are being manipulated so Joe Public can stay the course. But, as Michael has said, this can’t be maintained longterm. Natures abhors vacuums and imbalances.

    See this excellent analysis by Randolph Buss:

    http://www.dinl.net/latestLetter.php5?id=139

    -Sapiens

  36. Rich October 4, 2006 6:05 am

    Nice Zephyr.

    I didn’t know Ruppert had left the country, but it makes sense - he’s done a great job of spelling out the psyops program being run on the US population.

    Kissinger has been working for JP Morgan Chase for decades as chief advisor to the board, with David Rockefeller as Chairman, I think that speaks volumes about who is running the show. Between JPM and Citi they own the banking relationships with just about every Fortune 100 company, which means they have a lot of direct and indirect access and control.

    As for Cheney, if there is a Satan (and I really don’t believe that mumbo jumbo) then he is his little brother. How do these kinds of people sleep at night? What on earth drives them to do the things they do, its hard for us peasants to fathom. His legacy will be trashed over time, he’ll be known for being a part of a criminal element that seized control of the corrupted US government, performed a virtual coup, and drove the country off the cliff.

    Rich

  37. Administrator October 4, 2006 6:13 am

    Mike #34 - My numbers are adjusted backwards for all splits, including Microsoft’s 2003 split. If they weren’t the data would have shown MSFT’s 2000 high as 120, not 60. Microsoft has fallen a long way, buddy.

    Michael Nystrom

  38. M F Bevans October 4, 2006 6:41 am

    Mike:

    Not sure if this question has been asked/answered but I am wondering how the Dow could be “higher” than in 2000 when its components are lower? Were the all-time highs you used actually intra-day highs rather than closing highs?

    I think the manipulation is obvious to any who look, and I especially liked your reply to #17.

    Cheers. MFB

  39. zephyr October 4, 2006 6:58 am

    How dumb is the American populace? I remember in 2000 when Bush said he asked Cheney to go out and find the best qaulified vice-presidential candidate. And Cheney came back and said, “Um, I guess that person would be me, sir.”
    I expected to hear alarms going off and red flags flying everywhere. But Joe and Jane Public barely lifted their heads from their beers, and they certainly didn’t turn the sound down on American Idol.

    You’re right Rich…..how do these people sleep….what exactly is their motivation? The only answer I can come up with is they’re certifiably insane, power mad with absolutely no sense for others pain. That sounds like a sociopath to me. Thank God for the internet so that real info can reach people now like never before.

    Now, I really don’t want to sound like an alarmist, but if these people are truly dangerous (which it sounds like more and more of us are coming to believe), and they begin to realize that alot of us are catching on to their game, then they will step up their gameplan before anything can be done.

    The info is out there: Aaron Russo’s movie “America:From Freedom to Fascism, numerous books like Crossing the Rubicon, The Global Class War, The Fourth Turning, American Theocracy. This isn’t your typical haha, us vs. them, Repulican vs. Democrat shit. This is potentially world-ending, Stalinesque, Napolean-like, dare I say Hitler-similar, empire expanding shit! Only these folks are much more subtle and charming demagogues compared to the aforementioned.

    Whether, you are religious or not, Jesus said you can tell a tree by it’s fruit. Well, our Govt’s fruit is pretty rotten. I warned people 2 years ago that Iran was next and everyone I spoke to thought I was nuts. Well, the war drums are pounding. I was watching HBO’s Real Time with Bill Maher (who I used to have alot of respect for). Well, Maher did an interview with Benjamin Netanyahu and practically kissed his ass. And all Netanyahu talked about was Iran, Iran, Iran!!! They’re doing it again, numb the people through the “media” and Boom!…off to the races again.

    I don’t know what I’m saying exactly except that preaching to the choir only is not good enough anymore. History (and God, for those religious) won’t remember us kindly. Remember the saying: All evil needs to succeed is for good men to turn their backs.

    Peace all….sorry if this was a little gloomy.

  40. muleskinner October 4, 2006 7:46 am

    During the war between Iraq and Iran in the early to the end of the eighties guess who was selling arms to Iran?

    Israel was first, the US was second. France and Russia were selling arms to the Iraqis, along with the US.

    Arms dealers have no conscience. Wherever it pays the best, that’s where they will do the business.

    Alex Jones is full of it. I don’t believe a word he says. He is basically a fraud. It pays, so he does what he does.

    You say you want a revolution? I don’t. When Russia was besieged by the Bolsheviks, they ran amok laying waste to the land. German immigrants were victims of their exploits. They burned their farms and houses, stole everything they had, sold it for a pittance to the local Jewish population for they knew it would cause discord between the German immigrants and the Jews. When you see the word ‘Busheviks’ in print these days, you know what it means.

    Many thousands of my kinfolk and relatives died because of the Bolsheviks back then. My Grandparents left Russia for the United States in 1903, otherwise, they would have become victims too.

    Revolutions aren’t what took place here 230 years ago. The American Revolution was a cakewalk. Think of the French Revolution in 1789. ‘Heads will roll’ isn’t a meaningless phrase.

    Have a nice day. ‘Faith, hope, and charity… that’s the way to live successfully’

    Sounds hokie, I know, but it’s true.

    When I can’t sleep from being too tired, I repeat a children’s bedtime prayer over and over again. ‘Now I lay me down to sleep, I pray the Lord my soul to Keep. Guide me safely through the night and wake me with the morning light. Amen’

    So be it. It works. Better than drugs, that is for sure.

    Gotta go to work.

  41. Marc Authier October 4, 2006 7:55 am

    David Jones does not see manipulation.
    Where were you the last 10 years ?
    If you think that these markets or these indexes mean something, it means you love crap.
    I remember the NASNAQ crap, the New Economy crap, the real estate crap, the Enron crap, the Global Crossings crap, the Nortel crap, the Telcon crap, the Internet crap. From one crap to another. US capital markets stink and the scandal is that the rest of the world, because most of them are morons and are enven morestupid or even more corrupt, depend on these stinking bastards.

  42. Marc Authier October 4, 2006 7:55 am

    David Jones does not see manipulation.
    Where were you the last 10 years ?
    If you think that these markets or these indexes mean something, it means you love crap.
    I remember the NASNAQ crap, the New Economy crap, the real estate crap, the Enron crap, the Global Crossings crap, the Nortel crap, the Telcon crap, the Internet crap. From one crap to another. US capital markets stink and the scandal is that the rest of the world, because most of them are morons and are enven more stupid or even more corrupt depend on tainted markets.

  43. Sapiens October 4, 2006 8:07 am

    Michael, can’t stop thinking about this part of your reply to #17

    [].. people who 1) Are convinced they know what they’re talking about, when in fact they don’t:

    You have stated something I always kept to myself due to modesty, but it also reminded me of my mentor explaining how, I and other, erroneously defined arrogant: Marked by or arising from a feeling or assumption of one’s superiority toward others.

    The true arrogant does not assume he knows, -he knows he knows! That’s why he is arrogant, he can thumb his nose at those that are ignorant.

    Thanks for the insight.

    -Sapiens

  44. Marc Authier October 4, 2006 8:59 am

    European Central Bank announces that it is accelarating its gold sales. Strange timing indeed. Another Amaranth somewhere? I forgot also the “Hedge fund” CRAP too.

  45. Ed October 4, 2006 9:03 am

    How many idiots are out there? Well….

    They can’t comprehend the meaning of a stock split, a stock index, or even market cap, let alone examine a balance sheet. The think a PE of 22 (the DOW’s average) represents good value (wait, is that PE trailing or forward?). They think the ‘old rules’ don’t apply to ‘the new economy’. They think that stock buy backs actually increase share holder value. They listen to CNN and the DOW publications and think they’re getting the real news. WAKE THE FUCK UP!

    When all of the idicators are pointing down, WAY DOWN, and the market is going up, WAY UP - something is very, very wrong. It may be manipulation or it may be irrational exhuberence, but either way, it will correct. The market always gets it right.

  46. zephyr October 4, 2006 9:22 am

    Muleskinner, you were kind of all over the place so I’m not sure what you’re point was. True, about Iran/Iraq/arms dealers….no questions there.

    Alex Jones is not a fraud or full of it. You may not care for his style, but the substance is spot on.

    Revolutions are, never were easy….nobody was insinuating that.

    I believe in God, I believe in faith, hope and charity. I believe in letting the divine guide you everyday. However, those controlling world events don’t subscribe to that theory. At least that would be my educated guess. Remember that whole thing about wolves in sheeps clothing? I’m a Christian but I’m not one of those nutbag, hypocritcal fundamentalists. Actually, they would be the idiots who believe the Bushies are wonderful. But, for those that share faith, evil is very good at deceit and portraying itself as light. And for those of you who are not religious, you still must admit Bush/Cheney/Rice/Rumsfeld/Kissinger are secularly evil. I guess when you come right down to it, evil is evil is evil.

  47. muleskinner October 4, 2006 9:45 am

    Maybe I went over the top. I have listened to him on George Noory plenty of times. I do lend some credence to what he has to say, and there is some substantial evidence that he may be correct. Google ‘pictures of concentration camps.’ However, he seems to want to toot his own horn at the expense of others.

    Here is an example:

    http://www.christianmediaresearch.com/jones.html

    I’ll withold anymore judgment about the Alex Jones’ business.

    It’s his business. I’m going to keep my nose to my own grindstone.

    MGNU has lost 58 cents per share in the new ‘highs’ the DOW is gaining. I see the new highs, but the other stocks I watch aren’t going anywhere. Down is what I see.

    It, indeed, could be a set-up for a gigantic fall.

  48. nestor October 4, 2006 10:27 am

    wow. look at that. up another 100 points for the dow so far today. what a shame you’re not long making money…

    here you go. PRECHTER IS A MORON. now that the Dow has made new highs, he’s completely worng on his wave count going back 7 years now. what a suprise.

  49. Ed October 4, 2006 10:50 am

    Nestor: Why is the DOW headed to 13,000? Facts please.

    This is why I think it’s headed to 7,000 or lower.

    1) Monetary liquidity/inflation
    2) Housing bubble
    3) Energy costs/supply/demand/infrastructure
    4) Record earnings
    5) Wage erosion
    6) Deflation

  50. Marc Authier October 4, 2006 11:20 am

    Love your 6 points Ed.

    No it won’t go to 7000 however. Why would the manipulation change? You are fundementally right Ed. You are 100% right. But this being the case, how in the hell can we make money and keep our heads out of the water?

    Hey David Jones, read the 6 POINTS. Ed thanks for your lazer precision points. Reality will prevail but when ?

  51. MJR October 4, 2006 11:34 am

    Shouldn’t there be 7th point covering our kaput SS/Medicare/Pension situation (it’s toast NOW, simple math!) and the kung fu grip China (and others) have on Uncle Sam’s testicles vis-a-vis an obscene foreign debt and trade imbalance situation? Sooner or later the dolar buying will dry up and the only thing saving our dumb asses will be war. And WAR it will be, too. The kabal is probably cooking up another Tonkin Gulf as we speak….er, blog.

  52. Marc Authier October 4, 2006 11:45 am

    Answer: YES. You can add a number 7.
    You could call them the 7 horseman of the DOW.

  53. Marc Authier October 4, 2006 11:48 am

    Nothing as god for the globalist bunch as a nice little world war. You are right. It is coming. You can smell it. It is in the air big time. Buy defence stocks. Defence what a pack of bull. Buy war stocks.

  54. santa cruz hal October 4, 2006 11:57 am

    You and most of the postings here are seeing everything
    thru partisan politics…remember the clinton years and
    the spin machine that he had? Wall street ran with that too! Greed and corruption are “nonpartisan”. Stick to the
    actual numbers and leave politics to the other political
    animals on the web! I do agree with your basic idea that the hype about the DOW is absurd… please work that angle further without the emotional stuff.. thanks

  55. Sapiens October 4, 2006 12:00 pm

    Yes, the Dow will go to 13k and yes it will crash.

    The art of patience must be practiced. The housing bubble cash must first take effect. The follow closely the Trade balance…..

    -Sapiens

  56. Sapiens October 4, 2006 12:02 pm

    meant crash in above, also “then follow closely…”

    Damn small keyboards….

    -Sapiens

  57. Ed October 4, 2006 12:16 pm

    Item #2, the Housing bubble, is the easiest to understand and explain:

    1) Housing has had its first month to month price decline in a decade - and it will have its first year to year price decline since the Great Depression.
    2) Housing accounts for up to 20% of the US jobs and some ungodly portion of the GDP
    3) Housing inventory is the highest it has ever been
    4) 40% of all houses bought last year were either spec or 2nd houses
    5) Housing affordability is the lowest its ever been
    6) Housing capital (i.e., money down), is the lowest it has ever been
    7) Mortgage capital, (i.e., money out) is the highest its ever been

    Don’t beleive me, check it out for yourself:

    http://64.29.208.119/bc_chart_library.html

    The DOW phony? Man, knowing what we know, you can make a HUGE amount of money over the course of the next year. Don’t get mad, get even! Go short. Get in the contrarian funds, get into gold. Wait for the market to correct and then get into the oil stocks. I can smell a 10 bagger!!!!!

  58. tz October 4, 2006 1:05 pm

    I posted a longer comment on the open thread, but would echo that this market is dangerous.

    Generally the best time is when technicals and fundamentals align. Right now fundamentals aren’t very strong (though Jim Pulplava is bullish I would note he has bent his ruler - the P/Es, dividends, etc. he is using to make a bullish case would have been considered bearish by anyone in the 1970s - but it is a new, new era, and it will really be different this time).

    Technicals are flashing red (VIX, sentiment) or yellow, not green.

    I mentioned on the other thread that it looks much like gold when it really shot past 650 (it was ascending too fast for me so I exited around 640 and haven’t been back in). But it shot past 700 and everyone was giddy or kicking themselves for not getting back in - the prior drop was shallow but scared everyone. We didn’t get a real capitulation in May for stocks - it would have looked more like the first fall in gold, and we are getting the second one in gold now.

    All that said, much more upside and I’ll exit my shorts and sit on the sidelines until the price action stops. I’m not out yet since some spiral calendar indications pointed to a market peak in a window whose center was yesterday (followed by lots of serious lows in the next two weeks).

    It hasn’t turned, but when it does it might look like the Nasdaq from its peak to the first bottom about one month later.

  59. Gold Bar Tender October 4, 2006 1:15 pm

    Richard Russell (if you don’t know who he is, go find out now) noted recently the following:

    “21 of the Dow stocs (71%) are 20% off of their all time highs, and 17 Dow stocks (57%) are at least 30% below their all time highs”.

    Now let’s look at that closely: over 70% of the Dow stocks are basically under water, yet the Dow just hit a new high. What does that tell you about the breadth of this rally? What does that suggest to you about the strength of this rally? Never mind worrying about some great and powerful figures behind green curtains pulling levers and pushing buttons:OVER 2/3 of the stocks that make up the Dow are over ONE FIFTH DOWN from their peak. This is a narrow, intense rally. Look at small cap; what is it doing? Where is the Russel2000? Doesn’t small cap usually lead a rally? Do I have to point to the NASDAQ (phew!) as well? We have a blown up hedge fund, Amaranth, and how many other hedge funds went long on commodities & short on stocks in the summer…and now are piling into blue chip large cap like it’s the last lifeboat leaving the Titanic?

    I agree, this high is a phony. It’s worse, it’s a sucker’s high. Bubblevision, as Fleckenstein calls it, is all over this rally. But they were all over the NASDAQ in 2000, too. The six points above are understated; yes, a lot of people are working directly on home construction. But what about all the business surrounding it? What about Countrywide, out in California, why are so many insiders selling Countrywide stock like crazy, and why is Countrywide laying off people, cancelling vacations, etc. if the housing market is about to boom again? What about all the people who took a class in “getting rich in real estate” that became Realtors? Want a bubble sign? 1 in every 55 Californians has a Real Estate license. That’s right, almost 2% of the entire population of California is licensed to sell Real Estate, and it’s an absurd number.

    Now some claim that the real estate market wil just rotate to commercial. But we’ve had a commercial boom going on, too, just not as dramatic as the housing boom. Test this notion yourself: go find new commercial buildings in your town, and compare how many have tenants vs. how many are standing empty. When housing shuts down, and there’s block after block of empty houses for sale, is WalMart really going to want to build yet another store next to a pile of empty houses? It doesn’t make any sense! Homebuilders are still building, yes, but they think they can build their way out of the hole they are in. That’s nothing new, go talk to the old timers in Phoenix who remember the booms of the 50’s, 60’s and 70’s, and the busts that followed them; every time, some of the builders just knew they could make it by finishing out a few dozen or two more houses, and every time they went bankrupt at the end.

    The signs are all around us. I’m sure that there are people reading this who have lost money on puts, or even more money on shorts, who are stunned by this market. If you are one of them, go look at the technical chart of the NASDAQ in 2000 - 2001, compare the last stages of the blowoff of that market to recent action here, then take counsel of your fears. I strongly suspect that the reversal will be swift, and the decline will be sharp, sharp enough to trip the “circuit breakers” and halt trading at least once.

  60. Ed October 4, 2006 1:23 pm

    Another reason for the upcoming DOW crash - Stock buybacks.

    Stock buybacks are nothing more than a means for washing stock options thru the market, making the CEO/COO types extremely rich. When they announce stock buybacks and say it is to increase shareholder value, I crack up. Who do they think they’re kidding - wait, I know, its the idiots.

    What really disturbs me is the stock buybacks now equal capital expenditures in corporate America. Translation: as much money goes to CEO pay as to future investments in their companies. Further translation: DOW PHONY!

    The following news release is quite enlightening:

    “Standard & Poor’s reported that the record level of stock buybacks by S&P 500 companies has resulted in a reduced share count for eight of the 10 S&P 500 sectors, as well as a reallocation of over $60 billion in sector representation. The credit rating agency made the announcement on the first trading day of the quarterly rebalancing for its U.S. indices. S&P earlier reported a record $116 billion in S&P 500 buybacks during the second quarter.

    “We expect the strong buyback activity to continue as companies reap the duel benefits of improved reported earnings per share, as well as short-term price support from the buybacks,” says Howard Silverblatt, senior index analyst at Standard & Poor’s, in a press release.

    The healthcare industry was by far the most active buyers of its own stock. The two industries that increased their share count were financial services and utilities. Over the last seven quarters, S&P 500 issuers have spent over $630 billion on stock buybacks, and buyback expenditures are now on track to match capital expenditures, according to Standard & Poor’s.

    It added that the strong buyback programs within the S&P 500 began during the fourth quarter of 2004, and has reached “an unprecedented level” in both the number of issues and the aggregate dollar value. “Over 20 percent of the issues within the S&P 500 have reduced their year-over-year share count by at least 4 percent last quarter, adding a similar increase to their reported earnings per share,” noted Silverblatt.

    Companies repurchase shares for a number of reasons—to reduce their overall share count with the goal of boosting their stock price, to reissue shares for mergers and acquisitions, and to satisfy employees looking to exercise their stock options. Interestingly, S&P points out that traditionally, companies re-issued shares as a way to cover existing employee stock options. However, the ratings agency contends that there is an increasing tendency among companies to reduce their share count through buybacks as a way to improve earnings per share.”

    So let me get this straight, they dump their options on the market, buy them back to reduce the share count they inflated, and then say its good for their shareholders because it improves earnings per share. How about good old dividends to increase shareholder value? What a joke!

  61. surfdude October 4, 2006 2:16 pm

    I am so tired of this. This stinks to high heaven. We all know that a crash will eventually come, but who can predict when? who has big enough balls to short this market and wait. Once the crash begins, there will be no enrty points to go short. Someone out there please tell me how to watch your short position go deep in the red and not get sick. Who out there can take this pain? I am ready to call it quits because, even though i know that there will be a huge payoff someday, It may not be worth the agony watching this intervention levitation bull.

    And before one of you starts preaching to me - I am not using money that I am not prepared to lose. But LOSING SUCKS! I HATE IT - ESPECIALLY when you read Ed’s 6 points above.

    Is it different this time? Will debtors get rewarded, savers go broke, and the DOW hit 36,000?

  62. Marc Authier October 4, 2006 2:26 pm

    Why not 50 000 DOW or DOW 100 000 ? Again the DOW is a joke. Economic science and finance is a joke. Why bother with this stupid indexe ? Might as well buy a forest in Northern Quebec and grow trees, that looking at that nuisance and that piece of junk called the Dow Jones. Even the CRB Index was manupulated big time by the crooks from Golman Sachs last week. Stinking American financial system. It’s as bad as Russia or Eastern Europe.

  63. muleskinner October 4, 2006 2:33 pm

    All of that buyback baloney is kinda like daylight savings time. You lose an hour in the spring, gain an hour in the fall and nobody gets any sleep at all.

    11 PM is midnight, 7 AM is 6 AM, you are always tired because you can’t really make up that two hours, one at night and one in thd morning. It’s nuts.

    Get some sleep, it’s the best thing for you.

    Forget about the US government, they don’t know if they’re afoot or horseback.

    I sage advisor told me to NOT be trading back and forth with stocks all of the time, it’s what the stockbrokers hope you do. He was no slouch, you had better be ready if you were going to mess with him. He made a fortune in the market. I still can’t figure out how he did it. Buy and hold, don’t sell is what he did. Seems to have worked for him.

    It is a rigged game. Stay long, it always pays.

  64. Ed October 4, 2006 2:45 pm

    You don’t have to go Short to go Short, go contrarian!

    Check out these tickers:
    BRPIX
    UWPIX
    USPIX
    URPIX
    DXD
    QID
    SDS
    MZZ

    There are a lot of them out there. These are just where I am playing.

    You can never get in at the top or at the bottom, but you can get pretty close. This bull might ride a little longer, but the fall is going to be tremendous - you can get rich on the downside as well as the upside.

    Good luck!

  65. MJR October 4, 2006 3:02 pm

    Ed- With the ETFs available, why use the other ultrabear funds? I was fortunately able to stop out of both QID and DXD early this morning before things got way wacky. Saved my can.

  66. muleskinner October 4, 2006 3:24 pm

    Somewhat off topic, but I’ll leave this link here. It might be of some help to understand what the heck is going on.

    http://www.claremont.org/writings/crb/summer2004/west.html

  67. Ed (aka longshort) October 4, 2006 4:00 pm

    MJR: The ETF’s don’t have enough history for my taste to load up on them. Profunds has been around for quite a while, and have proven they know how to play the short game. Check out this chart:

    http://finance.yahoo.com/q/bc?t=my&l=on&z=m&q=l&p=&a=&c=&s=urpix

    Inversely proportional to the market as advertised. It’s the same with all of their other contrarian funds. Good stuff, well managed….

    I am shocked the market is this resilient. It is truly reminiscent of the 2001 crash all over again. The writing is on the wall but the masses don’t see it coming. Imagine if there is another terrorist attack. Game over!

    I am long for short, if you know what I mean…..hey, that’s a good alias, longshort!!!!

  68. Rich October 4, 2006 4:07 pm

    Hey Ed.

    I owned BEARX (still have some) USPIX and a bunch of others (I can’t even remember the acronyms anymore), I was shorting the DOW and Nasdaq for about 2 years - - me and my buddy Jeff Kassel (the one trying to get Michael on his Access TV show, you should do it Michael, we’d all get a kick out of it).

    Anyway, I was LONG SHORT, even wrote an article on Depression2.tv about how to do it with the mutual funds.

    Needless to say I LOST MY SHORTS! I sold my shorts long!

    So, the moral of the story is…..TIMING IS EVERYTHING.

    Sorry to be yelling some of this stuff, but it was another painful lesson. I was so convinced the market was phony and ultimately going to hell in a handbasket. Well it didn’t, real estate boomed and the markets were ignored. Gold shot up, so I was half right (my article was called Long Short, Long Gold). Well now I look wrong about gold too! Today it dipped to $560ish.

    Anyway, when the FDIC will guarantee that short mutual fund investments are protected up to $100K from any downsize, then I will get back in!!

    Cheers Rich

  69. Grendel October 4, 2006 4:26 pm

    Stirctly for laughs- The image in this guy’s page header today is priceless -

    http://www.etfdigest.com/daveDaily.php

  70. nestor October 4, 2006 4:47 pm

    man. you bears are pathetic. all the indicies are screaming higher, and you’re all bearish. incredible.

    take it from a guy that was actually short on 9-11. this market is NOT going lower right now. it’s too bullish.

    WHY is it going higher.. who really cares? it just is.

  71. the stranger October 4, 2006 5:56 pm

    Why were you short on 9/11?

  72. Mohammad atta October 4, 2006 6:12 pm

    Yeah, that is right, stranger #71.

    That’s what I’m talking about.

    Just why were you short on 9/11, nestor.

    Are you one of …. them …. ???

  73. nestor October 4, 2006 6:17 pm

    i was short, because it was a bear market, trending lower, and the july/august consolidation broke down. purely technical in nature. all the stocks i was following at the time looked horrible. it would have been stupid NOT to be short.

    on the other hand, today, it’s completely the opposite. it’s stupid NOT to be LONG right now.

    get it?

  74. MJR October 4, 2006 6:19 pm

    Atta, I thought you were dead?
    Let’s face it - a lot of rational people here looking to short Dowzilla when he falls - heck a lot of us prob. wandered into this blog while looking for Peak or No Peak clues to begin with. I did, anyway. Any interest in a purely technical thread?

  75. surfdude October 4, 2006 6:29 pm

    Nestor - you seem to have it all together. I am sure that there are a few people who believe you, I however have learned that successfull people are always willing to share their errors so as to help others avoid them. You don’t seem to make errors. Ah - maybe your not really successful, but a story teller.

  76. the stranger October 4, 2006 6:36 pm

    nestor, I had to ask.

    And the reason I want to know why the Dow is headed up is the same reason I want to know why the ocean suddenly receding. Maybe this wave is pulling everything into it.

    A purely technical thread? I like the idea – even if I have nothing to add.

  77. Administrator October 4, 2006 6:49 pm

    MJR -

    Thanks - excellent idea about the purely technical thread. Here it is: http://www.bullnotbull.com/blog/?p=74

    I’ll be adding to it in the future. I’m a trader - I’ll be adding to it. I’m working on Part II of the Dow’s Phony highs. This market reminds me of Nasdaq 1999.

    Good luck to all
    manystrom

  78. nestor October 4, 2006 7:02 pm

    surfdude. where do i say i’ve never made mistakes? do you have a question for me?

    stranger. why is the dow headed higher… from a purely technical point of view, the markets have consolidated for nearly 2 years, and are now breaking out. the trend is up. cycles are positive. 13,000 is probably a minimum target for this next year. i really have no idea how far it will get. 13K? 14K? 15K? who knows. who cares.

    trend is up.
    momentum is strong.
    cycles are positive.
    wave structure is positive.

    there really is nothing negative about the markets right now. as i said earlier, at some point, there will be a consolidation, likely into november. then the markets continue up. it really isn’t rocket science.

    being a bear or a bull is a waste of time.

  79. the stranger October 4, 2006 7:15 pm

    Well, thanks for the feedback. I must be seeing this economy through blood-colored glasses; seems to me, blowing-a-kiss at it could trigger the fall.

  80. nestor October 4, 2006 7:18 pm

    hey. maybe next year.

  81. surfdude October 4, 2006 7:30 pm

    Look - the whole thing right now is based on debt. People are not afraid to buy today what they can not aford and pay it off till doomsday. If savings were up, and incomes up, then I would agree that all might be well. But the average guy out there with a set level of income can not take all of this inflation (dollar purchasing power ever declining), increased cost of living just because the fake foney economy appears OK. At some point, millions of people will have to cut back consimtion, and that will do it. The whole thing is based on continued assett inflation, but that will KILL the average worker. And unless you live on the moon, everything is going to come crashing down.

    Nester - do you not see the writing on the wall? How can you be so bullish? How can you alone know when the inevitable crash will occur? We would like to know NOW when you preict that this party will turn ugly. Then you can gain my respect. tell us now when the crash is coming. You knew about the bear market during 9-11 in advance. If you can not answer, then you are a story teller indeed. If you can, I appologize and give you credit - and we will all watch to see if you are right. And if you are right, maybe you have a great career and can charge twice Pretcher’s fees and offer your insights to the investing world.

  82. Sapiens October 4, 2006 7:43 pm

    surfdude, kind of childish your taunting of Nestor. Let him be, I am sure if he knows he would not share it with you. At least I wouldn’t.

    -Sapiens

  83. surfdude October 4, 2006 7:50 pm

    The point is nobody knows. That’s my point. He acts as though he knows everything. That’s being dishonest. It doesn’t help anyone who is looking for real help. He says Pretcher from Elliot Wave is a “moron” several times on a previous post, and yet he know’s everthing? That is childish. I just want to see if he is for real, or playing all of you.

  84. Sapiens October 4, 2006 8:02 pm

    He is not playing anyone; if anyone is stupid to believe anything he reads without a critical eye and due diligence, he deserves to get burned.

    Take it with a grain of salt, heck like JB says, take it with a 50Lbs bag of rock salt.

    -Sapiens

  85. surfdude October 4, 2006 8:05 pm

    Good Point Sapiens. I would hate to see someone jump on the bull bandwagon and end up losing his/her shirt and underwear when this thing finally blows.

  86. nestor October 4, 2006 8:05 pm

    surfdude, the bear market did not begin on 9-11. it began jan-2000. the market was already in decline and looked horrible by the time 9-11 occured. the bear market ended oct-2002. it’s been a bull market since.

    during bull markets, you look for pullbacks to go long. during bear markets, you look for rallies to go short. it’s really a simple philosophy.

    Prechter is a complete moron. as i’ve said, he’s done more damage to elliott wave theory than anyone else on the planet. he’s a joke.

    where have i said that i alone know when the crash will occur?? where have i said i know when this party will end?

    i’m not being dishonest about anything. all i’ve said is that market action is extremely bullish, and that should carry the dow to much higher levels. where is your problem?

  87. surfdude October 4, 2006 8:14 pm

    Oh - I forgot. When it does blow - and it will someday, those that preserved their wealth will be sitting FAT. CASH WILL BE KING AGAIN ONE DAY. So don’t go chasing this phoney fake fraud of a market thinking you are missing something. Shorting it is dangerous too. Just stay out of debt, and watch this cartoon play out. Put your money in short term T-Bills - 26 week bills are still paying out 5%. In the long run, those who protect their cash from loses will do just fine. Remember - the title of this blog is “Dow’s Phoney High”.

  88. surfdude October 4, 2006 8:23 pm

    Hey Nester - thanks for the response. The market is just too dangerous. The economic news is BAD. Real estate bust. Consumer debt out of control. Gov’t debt unpayable. Zero household savings. The market action may appear extremely bullish, but it is either: 1) manipulation with the coming election in focus, or 2) irrational exuberance - the herd running right off a cliff, or 3) this time it’s different. Look at the yield curve. Is the bond market stupid? Is there no possibility of an imminent recession? How can all be well and DOW 15,00 like you suggest? Can we have the whole real estate sector go into a funck and it not effect a thing? Please explain what is so bullish.

  89. larry October 4, 2006 8:25 pm

    If you are’nt confused then you don’t know what’s goin on…..

  90. Sapiens October 4, 2006 8:42 pm

    Surfdude, you are correct.

    What you fail to see is the sociopolitical implications of this mess. (Think why they created the Fed and demonetized gold, heck they even confiscated it)

    Take for the example the Chinese, they need to create employment for social stability.

    Yes, you are correct but first we must look at how it would play out in different scenarios. They will try to control the crash, hence the euphemism -soft landing-. What they can’t control is the panic of the individual investor, when they try to save their inflated capital.

    My two centimos,

    -Sapiens

  91. surfdude October 4, 2006 8:57 pm

    Yes Sapiens. But you assume that “they” are all powerful and can control everything. This mess is so big, and “they” are mere mortals, that the laws of Nature (I would say God) will humble those who think they are in control. Yes - they will try, but they can not control human emotions. When people realize that that the whole house of cards is ready to fall, what will “they” do? Panick breads more panick. I do not think that “they” are so smart, after all, “they” got us into this mess with cheap credit and then giving the green light for the trusting sheeple to go deep into debt. I wish i could seee a way out. Is their One?

  92. Sapiens October 4, 2006 9:05 pm

    surfdude, I don’t assume anything. I know for a fact they are subject to the Laws of Nature just as I am. They point here is not about “them” being smarter than us, they do have an advantage over us in that their ancestors did design the system for their benefit and those of their decendants. Remember, they print the currency.

    Now, what to do? Oh, boy, where to begin….

    Well, at the individual level, get out of debt, save in metals and …. buy a farm, get some guns and dogs for security, wait, let’s not go there yet.

    What do you, suggest?

    -Sapiens

  93. surfdude October 4, 2006 9:22 pm

    I agree. I have six children, and one big dog. I am really concerned about the future. I got out of debt a year ago - sold my home at a huge gain and now rent. My concern is to preserve and protect the capital that I have. i don’t care about playing this phoney market. If this thing gets ugly, it could come down to survival. You are right - metals are good - although i am totally in T-Bills which are safe.

    But I also live in the real world. I own a business and live a normal life. I did not build a bunker. But the last thing I would do is chase this fake market. This is a time of prudence.

    I wish we all live in Mayberry, but those days are long gone. Everything now is outward appearance, like DOW 11,800, when in reality things are ready to fal apart. Stay safe and debt free.

  94. surfdude October 4, 2006 9:37 pm

    Ooops - sounds like we’re too bearish. Maybe all is well in SoftLandingsville. We’ll soon see.

  95. Sapiens October 4, 2006 9:51 pm

    Surfdude, Interesting, hey, what do you mean by T-Bills being safe? Safe how?

    -Sapiens

  96. surfdude October 4, 2006 10:06 pm

    Well they are safe short term. It is hard to conceive that the Gov’t will default on a 3 Month or 6 month T-bill. And if they did, we are all doomed anyway.

    Longer term, I thnk that you have a good call in precious metals, especially Gold. But that is longer term - Gold is undergoing a serious correction from it’s high and may go lower (intervention?). Long term gold should prove to be a great store of wealth. Short term probably not.

    Staying in dollars long term is not wise - Gold would be much better. But short term, T-Bills are safe. i hope that answers your question.

  97. Sapiens October 4, 2006 10:08 pm

    Yes it does, thank you.

  98. Administrator October 4, 2006 10:22 pm

    New article here: PHONY DOW HIGHS, PART II. Comments welcome.

    If anyone else is having trouble reading the comments when the threads get long, please email me: bull [at] bullnotbull.com. Tell me what kind of computer, browser and OS you’re using. Thanks!!!

    surfdude - ironic, isn’t it, that T bills are considered “risk free.” Look at the nation’s balance sheet, and tell me that is risk free. Ha ha ha.

    Gold is the way to go, but there are problems with storing it. Where and how? The Feds confiscated gold from safe deposit boxes in the 1930’s. They had marshalls standing there, peeking over your shoulder: “Got any gold in there?” Bastards. And if you didn’t claim your box, well, then they claimed it for you.

    Never use your credit card to buy gold. Use cash. No paper trail. And if you store it at the dealer, you risk them going out of business. All this planning for the end of the world is complicated.

    Am I paranoid?

  99. the stranger October 5, 2006 7:23 pm

    No

  100. Will October 6, 2006 7:38 pm

    The S&P 500 and the Wilshire 5000 are also at new highs. Please explain.

  101. doug October 7, 2006 9:30 am

    Sometimes only an intense upheaval can wake the slumbering from their pronlonged trance.

    The flaw that plagues science (its inability to credit the non-linearity of cataclysm in its staid, Darwinian view of the universe) finds resonance in conventional views of finance.

    There is a thought - deeply imbedded in the mass mind - that there will always be peaks and crashes, ups and downs, Always, according to this thought, life, like Darwin’s world, will march on interminably.

    This lie is blinding. Convention holds that times of prosperity will be followed by times of woe, which, in turn, will be followed by times of prosperity, an immutable, unchanging wheel of fortune.

    But what of catastrophe? Can the magician who induces the trance state alter it just as easily? When the unseen collective has finally amassed more billions than it can ever use, what then?

    More important than its stranglehold on the world’s treasure chest is the collective’s terminal stranglehold on thought and reason.

    When this arcane body has finally attained its goal - and one could argue long into the night about the existence of the collective on the one hand, and the true nature of its PLAN on the other - what will it desire, more than the all the billions it has controlled for so many generations?

    Why, of course, it will desire total control of our minds.

    Even the most robust thinkers - one encounters them everywhere on the net, possessed of every shade and nuance of knowledge and insight - can only hope to escape the intricately laid trap.

    The mire of everyday life sucks in even the best among us. The rich may fantasize about Bentleys, as the more common among us think fondly of our Hondas and Toyotas. The rich fare sumptuously in this mansion or that, as their lessers do fairly well on the crumbs.

    Either way, the human mind is entranced by this vehicle or this, this house or that, this meal or that. The trance differs only in its details.

    This is just one man’s thought (though it may be echoed here and there by the occasional eccentric), but I hold that catastrophe is not far off, however one reckons “not far off.”

    After the seven year of plenty had passed, and the ensuing years of famine had taken hold, when men and women had sold everything they possessed, what was left to do but to offer their very bodies to Pharaoh?

    It’s just an eccentric’s prediction:

    Latter day Pharoah will expect no less. Good times do not always follow bad times. Can it be, as some say, that there is an end of all things?

    Some also say that the demonists’ “Availing Time” has commenced.

    Deep, noisome pits are everywhere revealed. Plunge teams plunging us into chaos; Iraq plunged into the terminal, poisoned chaos of “Democracy”; a seemingly endless catalog of lies, distortions, greed, torment pushing and pulling at our minds, chaos on our left and right.

    Is it that hard to believe that there is some truth to the demonist’s contention?

    If, in fact, the “Availing Time” has commenced, shouldn’t the conscientious strive diligently to free themselves of their protracted delusion? (How that can be done is another matter entirely.)

    I end on this note: Strip me of my gold and silver, but please don’t think to strip me of my mind!

    Regards to all. (Please go easy on a poor Joker.)

    doug

  102. Charles Roberts October 7, 2006 3:56 pm

    I’m not a financial expert, but your statemments seem correct regarding the manipulation of the stock market.

    I am, however, a computer expert, running a small computer company and staying busy, paying the mortgage.

    Historically, stock market manipulation and selective market reporting has been standard procedure prior to elections.

    The word “election” can no longer be used. “Selection by computer programming” is the correct concept. When anyone speakes of “winning” an election, we must realize the “winners” will those issues and candidates that produce the highest return on certain sets of investments, as decided by “proprietary” software installed in touch-screen “voting” machines.

    Computer experts are nearly unanimous on this, over 400 research projects have detailed various aspects of known electronic vote fraud and theoretical mechanisms of tampering and manipulation. International observers were completely barred from Ohio in the 2004 “elections,” where over 900 lawsuits have been filed in an attempt to address the loss of democracy.

    HAVA (Help America Vote Act) has mandated widespread implementation of these proprietary “voting” machines, sold by several companies, led by Diebold, ES&S, Sequoia, and Shoup Voting Solutions.

    Logically, the best investments anywhere should be in these companies. After all, investing with disdain for freedom and democracy is the basic nature of the capitalist system.

    We should think that you all would welcome a completely controlled stock “market,” “election” system,” and “constituent base,” for this will make all investments more dependable, and returns shall go to the white folk.

    CR

  103. Vicky October 7, 2006 7:28 pm

    In September of 2004 (might have been 2005), Treasury Secretary Snow spoke to the National Press Club. He said that the dot.con bust took $7 trillion dollars out of the equity markets.

    The dot.con boom was a manipulation of the market. They covered it over 3 or 4 years and when Snow made this speech it wasn’t covered in the mainstream media so are they lying about the Dow’s new highs? Of course.

    Audio file of Treasury Secretary Snow’s statement:
    http://www.channelingreality.com/The_Coup/Crimes_Against_Reality.htm

  104. Brian Hurley October 8, 2006 1:57 am

    Sir:

    I’ve often heard it said that the stock market can not be manipulated in the long term. I would say that it depends what you mean by the long term. If you just look at the incredible size of the manipulation of the dollar and treasury markets by the Chinese and Japanese, and then consider that there is no law prohibiting either country from purchasing stocks, you could say that it is possible to manipulate the equity market for a very long time, and that’s exactly what I believe has been happening since the last market meltdown at the beginning of the second Iraq war. The equity market is tiny compared to the currency and treasury markets and neither country, (Like the Fed), is burdened with any qualms about printing as much money as necessary to get the job done. I have no doubt that the Fed and the Treasury Department have been involved in the manipulation as least as long as the tenure of Robert Rubin. It will only stop when foreign countries have decided that the huge portion of their reserves denominated in dollars is very risky given the massive money creation at the Fed.

  105. Web October 8, 2006 12:39 pm

    You eyeballed the highs on bigcharts? That kind of analysis is lame and wrong!!! - find the real numbers to support your arguments if want to be taken seriously. The simple fact that this needs to be pointed out to you makes it hard to believe anything you write.

  106. Web October 8, 2006 1:00 pm

    One example that you tried to explain in post 37

    msft all time high including splits, dividends was on
    Dec 27 1999 at 51.61. Not 60. Of course still a big drop, but this info is so easy to get right. Why would you not conduct due diligence to get these things right which would give so much more weight to your comments. Instead I dismiss much of what you write simply because of your intellectual laziness or maybe dishonesty? You bring this charge upon yourself by not doing the work.

  107. Administrator October 8, 2006 2:07 pm

    Hey Anonymous Web -

    You eyeballed the highs on bigcharts? That kind of analysis is lame and wrong!!!

    Lame and wrong for what purposes? This is a quick and dirty eyeball study that I did in an afternoon to publish on my free website. I disclosed the source of my prices clearly, so I don’t know why you would think there is any dishonesty going on. The only thing that I can think of is that the world is a mirror - we tend it not as it is, but as we are.

    The number you quote is adjusted for dividends as well as splits. For the purpose of this study, there is no need to adjust for dividends, since I’m talking about all time nominal highs. Microsoft actually did hit very close to 120 presplit in 1999. I remember it, because I was trading it.

    You bring this charge upon yourself by not doing the work

    You are very self-important aren’t you? Go back and look at post #19, because it applies to you also, Mr. Anonymous Web. If your “charge” is so important, why not leave a real name and an email address so I can discuss it with you?

    My real name and email address are right here, for all to see and I stand behind my work. I find it amusing that the ones who make the boldest challenges always hide behind the Anonymous postings, and never leave a real email address (as the Administrator I can see the email and IP addresses of all posters).

    What this tells me is that all you really are is a complaining coward.

    Michael Nystrom

  108. Web October 8, 2006 8:25 pm

    I’ll admit writing that you are dishonest was not fair and I take that back, but this a perfect place to discuss these matters anonymously or otherwise. Chill.

    The chart you showed is simply not accurate, for a quick and dirty look it’s fine though - sorry for my over-reaction with my post - but I think you over reacted as well.

    There is so much information on the net that is wrong and skewed to prove an agenda and I too quickly put you into that category.

    Keep up the good work.

  109. James October 9, 2006 4:39 pm

    Very insightful analysis of the DOW. Thanks.

    Just as Bush and his minions are playing with the DOW by making it artificially high, they are also playing with the price of gas to make it artificially low.

    Everyone I’ve talked to is not buying it though…thank God.

  110. Administrator October 9, 2006 4:57 pm

    To Anon Web - okay I accept your apology. Thanks. I still don’t know where to get all time highs that are *not* adjusted for dividends. Doing that artificially lowers the all time high, and that is not accurate, either.

    What I find interesting is that no one in the mainstream press is really buying this new high. You read skepticism everywhere. Which leads me to believe that it could go a lot higher.

    Michael

  111. Don Robertson October 10, 2006 4:03 am

    First of all, the markets are trading one one-thousandth the volume they traded during the DotCom boom/bust. That represents one one-thousandth the economic/financial swindle occurring.

    Generally, the rosy, progress is good, modernization is good, the West has all the answers to cure the world’s problem, spaceships to the stars, the galaxy beyond to colonize, and, bring us into the next great age of some golden globalized economic comfort…

    When was the first great age of economy? I’ve read all the history I can lay my hands on, and things have never been “great”. They’ve always kinda been greed and war are good for the economy, and, the only good Indian is a dead Indian.

    During the current era of “modernization” (the one dumping American jobs (and its incipient pollution) overseas) the disparity between rich and poor has grown in both China and India, Taiwan and Thailand, and, even in Mexico. Poverty, starvation, pestilence, pollution, militancy, bigotry, and populations have all increased, just as the mean qualitiy of life, the quality of the environment, the potential for future generations, and the outlook for peace in these regions has clearly diminished, and, worse than the diminishment going on in the U.S. about which other posters here are certainly quite aware.

    The rosy picture painted by Washington social climbers is so unrealistic, it’s sadistic in it’s sure hidden-agenda of personal agrandizement with a brown-nosed smile meant for future employment, a la Katie Couric with her new neon lit desk advertising daily, trolling for suckers that can be brought into the market swindle.

    No one, I hope no one believes any of this crap about making things better in the developing countries or ours. Yes, for a few corrupted individuals at the expense of many more. (We’re often shown budding entrepreneurs overseas, they’re marched out as examples of progress, but that’s not the real story at all. It’s just a propaganda lie like the propaganda-ads you see on Lehrer’s NewsHour for a few multi-national corporations.)

    The only economic message worth selling today is sustainability.

    Messages that are meaningful should entirely abandon the use of the words “progress”, “Globalization” and phrases like “income per capita” and “reduction of poverty”, which have become mere catch phrases for continuance on the path toward “progress” and “Globalization”.

    I’m generally optimistic over the long run.

    I’m optimistic because the terrorists will likely win as long as their opposition is the “progress” and “Globalization” groups they assail for their lack of touch with reality.

    Terrorism, while a bad thing among many bad things, at least it is standing in the face of the worst things, destruction of the planet by the greedier forces of “progress” and “globalization”.

    Terrorism, is a sorry sort of way, is actually the most positive impetus for change in the world today.

    Support your local terrorists, and encourage them to be less violent at the same time.

    Best-

    Don Robertson, Philosopher
    Limestone, Maine

    An Illustrated Philosophy Primer for Young Readers
    Precious Life - Empirical Knowledge
    The Grand Unifying Theory & The Theory of Time
    http://www.geocities.com/donaldwrobertson/index.html
    Art Auctions:
    http://www.artbyus.com/auctions.php?a=6&b=4807

  112. Administrator October 10, 2006 6:31 am

    Don - thanks for the comment. I enjoyed it.

    One comment: Volume is down a little, but not much. Check the first chart here: Crosscurrents

    Regards,
    Michael

  113. Doomesberry October 10, 2006 12:59 pm

    October certainly has been interesting so far. I’d say the Fed juiced the money supply in late June and let Wall Street (through Paulson at Treasury, a Wall Street surrogate) know ahead of time that despite causing serious inflation risks down, the line the previous rise in rates was so severe to satisfy the banks as the io’s came due that a softening of the rates rise was possible as a temorary respite to oil the election run up. Except that international tension is making the dollar strong which indicates behind the scenes the rates are still in a tightening mode to cover-up the in-reality weakening dollar.
    As far as Kissinger is concerned, he actually never left. He charges $100,000.00/hour to consult Bush on a private basis (15-20 times, more than any one else in private audience) because W. is too stupid to understand the “Plan” . Which by the way is a secret pro-Israeli policy designed to ensure that State’s survival at any cost including the upcoming annihaltion of Iran. So, what else is new?
    Personally, I believe the October surprise is still out there. Nothing has happened to galvanize the Republican Base to charge in to soundly defeat the lame Democrats. After all, the Bush/Cheney/Neocon team have to win big enough to continue to effectuate their disastrous policies without any distractions by losing one of the branches of government thet they do not already own. Mark that there will be no checks or balances assuming Bush wins both houses as I forecast. Due to an as yet indeterminate event that will slew public opinion in favor of the anti-terrorist incumbents who so strongly support a reliatory strike on Iran, Bush and his cronies will win. The process will be to strike fear into our hearts so that even the nay-sayers will be shamed into voting for his lackies. Let’s face it Bin Laden is a thing of the past but the sceptre is still capable of resurrection. This Presidency is not done yet.

  114. Don Robertson October 10, 2006 6:38 pm

    Administrator-

    I looked at the chart. That spike in 2000 (the one that goes right off the chart you refered me to) was a trillion to a trillion and a half shares being traded every day. Today was a heavy trade day at 2.6 billion shares.

    There’s a very similar housing spike that just ended. Look out there, because 1) a lot of people are leveraged in over their heads and their depreciating equity, 2) homeowners are going to howl with the pain until they can pay no more as their property taxes creep up and up to the point where they pay more for property taxes alone than they did for rent before they foolishly jumped in at the peak, and (and this is the kicker!) 3) the parents of the Babyboomers, who demographically will all be deceased within the next ten years, well folks, they still own a huge percentage of real estate in this country. It’s all coming on the market as the housing market is already in a steep nosedive.

    Don Robertson, Philosopher
    Limestone, Maine

    An Illustrated Philosophy Primer for Young Readers
    Precious Life - Empirical Knowledge
    The Grand Unifying Theory & The Theory of Time
    http://www.geocities.com/donaldwrobertson/index.html
    Art Auctions:
    http://www.artbyus.com/auctions.php?a=6&b=4807

  115. surfdude October 10, 2006 8:59 pm

    So Don - are you suggesting a huge 50% off sale in the near future? Wow - it just might be worth the wait while siting back an renting. If the bargains do come, and you are aren’t in cash - it may be very difficult to get a loan unless you have extremely spotless credit. Get out while you can, rent a nice comfortable house or mini-mansion, and get ready for the opportunity of a lifetime. Who will join me? I am already waiting.

  116. Don Robertson October 11, 2006 2:56 am

    Surfdude-

    Well, I’m not waiting. There is absolutely no reason to ever own real estate now that property tax has become the new enslavement. It’s simple. Real estate property taxes have simply reduced the value of all U.S. real estate to zero, or at least that’s the trend.

    I mean honestly. As an example, I stayed a while in a small place in Lee, New Hampshire this year. It was eight acres, a large unheatable farmhouse, a few outbuildings each with headache for maintenance problems, and absolutely no potential for commercial development because of strict zoning ordinances. The property taxes were $11,000 plus per year and rising 15% every year. The guy, a flipper, had it up for sale for $395,000 with no takers.

    Now, why would I lay down $395,000 so I could pay the town of Lee almost a $1000 a month? The interest on $395,000 cash in the bank at 5% would amount to is almost $2000 per month, and interest rates are rising, while housing values are depreciating, maintenace costs escalating, heating costs escalating, etc. etc. So where’s the investment? What could be the point of ownership?

    The worst thing about owning real estate in a declining market is you cannot get out. You’re simply tied down and must forego opportunities that present themselves further away than you can commute. And, for most new home owners who bought in at the high end, their real equity (less costs incurred in re-selling) far and away exceeds what they owe the bank today. They’re America’s new indentured servants, required to pay taxes, maintain and heat properties for which they have no possible chance of financial gain, and for which they will have to continue to pledge an ungodly ever rising portion of their productive work effort proceed to simply stand still, or fall further behind. And, they don’t have any option to bail, because if they do, they still owe the bank the difference (including fees) in what the bank can auction the property off for at a foreclosure auction.

    Renting is freedom. Owning today is enslavement.

    Don Robertson

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  119. Dave in Phoenix October 16, 2006 3:32 pm

    Scanning tons of this and other similar blogs I don’t find anyone answering the often asked questions “How is the Dow being manipulated”?

    Its the big bad government - ok but how?

    The Federal Reserve and Treasury buys BONDS not stocks.

    As much as I disagree with almost everything the Bush Admin has done, I have 25 yrs in the investment business, coming from a CPA background and I look for facts not just opinions that don’t make sense.

    I do agree the hype on the “all time high” is silly. I write:
    Yes, all this excitement about “new market highs” to me is very deceiving. Yes the Dow Jones Industrial 30 companies has now surpassed its peak reached in January 2000. That means if you were in those 30 stocks at the prior peak, you had 6+ years of no return until a few days ago. Not very exciting in my mind. I (I am now expanding this to how narrow within the Dow it is with all the data)

    The “market” is far more represented by the S&P500 index which still needs to climb about 12% just to break even again from its high of 1527.46 on March 24, 2000. At that time its price/earnings ratio was about 44.

    With 18 quarters of more than 10% annualized earnings growth, but not even recovering from market decline the S&P500 index is at about 16 times earnings based on estimated 2006 earnings per Standards & Poor’s - the lowest since June 1995. Based on estimated 2007 earnings the S&P500 index is at about 14 times earnings, based on estimated 2007 earnings growth of 12.1%.

    As of 12/31/05 the average p/e for the S&P500 since 1988 is 23.2 and since 1935 is 15.7. This leads me to conclude the “market” is reasonably valued or a bit undervalued.

    With corporate earnings expected to continue to grow at more than 10% for the next few years I see based on market valuations good growth potential in “the market” as measured by the S&P500 index.

    But according to the Standard & Poor’s Indices Versus Active Funds Scorecard, the S&P 500 beat 80% plus of actively managed large-cap funds. This is not an isolated result. Morningstar also reported that mutual funds delivered third quarter returns of 2.5%, compared to the 5.7% return from the S&P 500 for the quarter ending Sept. 30

    I don’t recommend investing in “the market” with an index fund nor just average performing mutual funds. While past performance is no guarantee of future results some fund managers and their research teams have had long-term track records of outperforming the market by researching individual companies and not just being in an unmanaged index, such as the S&P500 which had no gains in more than six years form its prior peak.

    The NASDAQ composite index still needs to more than double to break even from its March 2000 peak of 5048.62, more than six years ago.

    Investor emotion and other factors such as world events, other than just valuations can of course make the market or stocks in a particular mutual fund not perform as we expect.

    I also point out in newsletter the big concern with the huge trade spending deficits which is a big long term problem not even including social security/medicare reforms , ongoing war costs etc.

    Again exactly how is any manipulation being done? I don’t see it. If I can find facts showing it I would like to write about it but so far I haven’t.

  120. Nick October 18, 2006 10:53 am

    Back in June of this year I called for the start of a major sell-off in the stock market. I thought that it would come around Aug. 25 based on technicals. I have called the previous 2 within on or within a day.
    However, at the end of last year I started to see some things I didn’t like culminating with the M3 being withdrawn.
    I think you are right on. This market is being manipulated, but I think the manipulation goes way beyond a few weeks.

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  122. Eric Y. October 24, 2006 6:16 pm

    Dow record high- We are getting shoved down our throats by EVERY news agency on the planet. As Ralph Kramden would say- Well whoopdeedoo. Are Maria’s lips getting bigger since the Dow reached 12,000, or is it my imagination. Where is Abby Cohen and her constant perma-bullness, so I can throw another brick through my TV again. If you were only to be able to watch one station and it was CNBC, you’d be brainwashed better than a CIA meeting at GITMO. When the suckers finally get onboard, which looks like now, before they miss the “action”, there’s going to be another bubble implosion that will make the tech bubble look like a cake walk. I’ve just cashed in my last 12.85 shares of FNM common, that I’ve had since 1996 on a DRIP. I will NOT buy any equities except the following. Select oil, gold and silver stocks. Only the gold (GLD) and silver (SLV) ETF. Only one fund (true and redeemable) backed by gold and silver fund, CEF of Canada. I will only continue to purchase (since 2003) US Gold and Silver Eagles. Oh the irony.

  123. Weight Loss Help October 25, 2006 4:15 am

    Found your site by referral site. Good blog.

  124. Perpetual Bull October 25, 2006 11:17 pm

    The point about inflation adjusted real gains/losses is very important, since the fundamental point of investing is to INCREASE your fortune, not just make numbers go up. Here is a copy of a USENET post of mine from last month:

    I want to demonstrate the effect of inflation/weakening currency (US dollar) on stock market gains. Inflation wipes out real gains; this should be a factor in risk/reward when you look at stocks.

    The S&P 500 broad stock market index is approximately at a 5 year high, looking at SPY it was $132 back in 2001 and now again in 2006. But the real question is whether the $132 you have now is worth the same as the $132 you had five years ago?

    One popular basis for evaluating real value is the gold standard. Five years ago, an ounce of gold was worth $300 and now it’s worth about $600. So in gold basis terms, the dollar has lost half its value over this period (1/300 oz to 1/600 oz). This means your S&P 500 investment has lost 50% real value even while the index has been flat for five
    years.

    Let’s say you want to ignore gold. Another popular basis is the US Dollar Index, which compares the USD to several other currencies. This index is also down from 120 to 85 now, or -30% over the period.

    THE POINT: Even with the stock market at 5 year highs, in the best case scenario you have only lost 30% of your fortune and more realistically you have lost around 50% of your fortune.

  125. Marc Authier October 27, 2006 3:10 pm

    If you are a foreign investor, buying the DOW Jones is a loosing proposition. The US greenback has lost almost 25% of it’s value. So that the DOW goes from 10,000 to 12,000 is big deal. For a canadian investor his net return would be ZERO! ZERO like the Bush reign.

  126. Administrator November 3, 2006 12:04 pm

    Thank you for all the great comments! I’m going to have to button up this thread to keep the spamming vandalizers at bay. Please check the Blog Home Page to see the current threads.

    Thank you!
    Michael Nystrom
    Editor
    http://www.bullnotbull.com

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