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FreeMarkets (40.90)

Has It Really Come to THIS?



August 09, 2011 – Comments (7)

Reuters: "US STOCKS-Futures point to higher open; Fed could turn mood"

LA Times: "The Fed to the rescue, again?"

WSJ: "Treasurys Slip As Stocks Stabilize On Hopes Of Fed Stimulus"

All of the above are from August 9, 2011.  The headlines say it all, Wall Street tentatively up on hopes of QE3.

Is anyone astonished by the last two weeks?  I know my neighbors, co-workers and family/friends are very astonished.  And why shouldn't they be?  All headline readers / NPR Marketplace listeners are astonished, because they weren't told ANY of this was possible.  This was a recovery with poor job growth, not a debt-ridden implosion waiting to happen.

On Feb 5, 2011, headlines read "Stocks rally on strong corporate earnings"


On April 29, the headline was "Corporate earnings boost stocks on Wall Street"

And as recently as August 5, 2011 (yes, you read that date correctly), the talking heads are writing: "Chief strategists at 13 banks from Barclays Plc (BARC) to UBS AG (UBSN) see the benchmark measure of American equity surging 17 percent through Dec. 31, the average estimate in a Bloomberg survey."
SOURCE: Bloomberg

It is entirely possible that the FED has told Wall Street big-wigs that they are ready to flood another $3 trillion into the economy and produce growth through inflation (which we know is not growth, but not the average Joe looking at his 401k statement).

My prediction is quite a bit different.  It's to stay in Gold and Agriculture.  I've been right and safe for over four years now, and I admit I'm not original in saying these things.  I've timed the market right for a couple of nice up swings based purely on my sense of market psychology, not fundamentals.  I don't declare any intuitive ability to call a market top or bottom and I have no clue where the S&P will finish 2011.  

What I do know is everything I read or hear on the major news networks, concerning the economy, is very poor journalism, written by people who have little, if any, understanding of money and economics.  




7 Comments – Post Your Own

#1) On August 09, 2011 at 10:40 AM, Frankydontfailme (28.85) wrote:


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#2) On August 09, 2011 at 10:49 AM, leohaas (30.10) wrote:

If you listened to what Bernanke has said before, and you know what he has done before, then you know that QE3 in some form is 100% sure now. The only question is what form it will take.

PS.  My statement here has nothing to do with the question whether QE3 would be good or bad. It is merely the conclusion that it will happen, nothing more, nothing less.

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#3) On August 09, 2011 at 10:57 AM, leohaas (30.10) wrote:

OK, more to the point: maybe the sell-off from the last 10 or so days was a little overdone? Maybe that is why stocks are up today? Because they are oversold. No doubt some investors see this drop as an opportunity: buy low, sell high!

And if that is not the case, nothing goes down in a straight line. Perhaps today is a "dead cat bounce'?

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#4) On August 09, 2011 at 6:37 PM, Frankydontfailme (28.85) wrote:

Nope. Zero interest rate guaranteed for two years means you need to be invested in not cash or treasuries or bonds (these aren't safe anyways). All thats left is stocks and gold.

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#5) On August 10, 2011 at 1:44 AM, ath002 (< 20) wrote:

Hello FreeMarkets,

Thanks for your post. May I ask when you say you are putting money into agriculture, what do you mean exactly? Are there shares that allow you to buy into that sector, besides Potash and the like?

Thank you in advance for your thoughts.


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#6) On August 10, 2011 at 8:32 AM, FreeMarkets (40.90) wrote:

#5 - I like RAH, K and GIS. 

The three are heavily oriented towards cereals/grains, and specifically into retail sales.  

Only RAH fails to pay a dividend, but they've been acquiring other company's of late.  I will sell my RAH if they don't begin paying a dividend by 2015.  

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#7) On August 10, 2011 at 9:36 AM, TheDumbMoney (67.43) wrote:

Oh please, the statement that interest rates will not be raised for two years WAS a form af QE3.  It just looks better than buying more securities; this is a form of QE3 that the market will help the Fed enforce.  Right now the "experts" are not yet discussing it that way, but that is what it was.

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