Level 3 Assets

Another example in which a large bank hide stuff under "level 3 assets" These values are "marked-to-belief" rather than marked-to-market. Their public income statements look all nice and dandy but these figures were not included inside.

Waning interest in stocks

If I'm right, a lot of traders or investors will soon generally lose interest in the stock market for quite some time. At least, that's what history suggests. From my various readings of market movements in the past, I think there's a fair chance of this happening.

Stocks have been going nowhere for the past 12 years, nominally. In real terms, it has plunged. Investors and traders alike keep on hoping for the stimulus from money-printing to keep stock prices elevated. True, in times of massive inflation, stock prices will go up, but they generally do not keep up with increases in the prices of real goods. Even Warren Buffett's real wealth has been cut substantially in the past 12 years, even though his nominal wealth has doubled in the same time. And true, if one is a good short-term market timer, he/she can try to trade. But most people will just lose money doing this.

When people realise that their stocks are not gaining nominally, or are gaining nominally but not in real terms, they will look elsewhere - most probably into commodities. Right now it is unimaginable that people will lose interest in stocks, but I think that day will come. When that happens, I may probably wait for a few months or years of pessimism in stocks, before entering the market. It doesn't mean that when things hit bottom that there will be a bull run right away. It normally takes a few years for years or decades of excesses to clear out first.

Short the banks

Large banks hide a lot of stuff under their "level 3 assets". In this example, the bank supposedly have $109.2 billion of Level 3 assets. This value is "marked-to-belief" rather than marked-to-market. I will short this bank soon. Its stock price has returned to the 2007/2008 level.

Fed Exit?

The Fed has an exit plan? As I've said a few years ago when they started their first QE program - not a chance. 

For those who still believe that the Fed can exit and raise interest rates without a financial crash. This is just one example of the amount of junk on a balance sheet of just one major US bank.

P.S. I provide a link to this at the comment section.

Clueless

here's a nice website to show just how clueless those in charge were, and still are.

http://theeconomiccollapseblog.com/archives/denial-is-not-just-a-river-in-egypt-10-hilarious-examples-of-how-clueless-our-leaders-are-about-the-economy

Sell US long term bonds

Now that my silver holdings are good and approaching my targeted 1000 oz, I've started shorting US long-term government bond. This is by far the biggest bubble in the world, and I've been waiting to short it for a few years. The bond market has been in a bull run for some odd 30 years. Many don't realise it, but this is classic euphoria. I'm in this for the long haul. Possibly months or years. I will look to short corporate bonds in the near future. I think those will go first, but haven't done enough research on them. Who knows when these bubbles will burst? I'll rather be early than late.

they psychology of economic commentators

Over the years, it has come to my attention that people like to predict a bull market right after a bear market, or a bear market right after a bull market. This is not true all the time. Certainly, we've been taught to enter the market after things hit bottom. But what we're not told is, after how long after things hit the bottom? And why should things turn around?

People rush in to buy once things hit bottom. The housing market in the US is a prime example. Now after a few years of downturn, people are predicting a housing recovery and a US recovery. Why? Well, it has to be! Because they've been down for so long! It has hit bottom! (Of course, the same people have been predicting the same thing and giving the same reasons for a few years ever since the housing collapse in 2007/2008).

Unfortunately, such assumption has no base. This assumption is made based on headlines from the media. It is made based on what is taught in schools and by investment gurus. If one were to really do his/her homework and examine the actual numbers, things are far from rosy. There're still too much EXCESSES to be cleared from the US economy and the housing market. Excess debt. Excess inventory. Excess regulations. Excess taxes. Excess spending. I've tried many times to show people the real numbers, but they're being ignored.

But maybe they'll turn out to be right. Who knows. It's highly unlikely from my perspective. Maths and history don't lie.