Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Let’s Make a Deal!

I could not believe my eyes! I read the oil news today… don’t they know it’s the low price of oil that is killing the global economy. The reason is simple… a great many energy firms are leveraged up with debt, and they can’t service their debt at $30 oil. I’m talking a lot of firms, and one heck of a lot of bad debt! And, that’s only just the beginning, so don’t get me started.

So, when I saw the oil news that Saudi Arabia, Russia, Qatar and some other producer agreed to hold production at their January levels… and the market took that as good news, I was flabbergasted!!! Folks, we’re awash in oil now! We’re running out of storage capacity. These countries won’t even abide by their own agreement! And, Iran… Iran has said they want all their previous market share back, and they’re not cutting; their increasing production!

And, what did oil do today? Did prices rise by some substantial amount because of that good news? No, it did not! Oil is under $30 a barrel as I write, and is very much more likely to decline further to even $20 a barrel or lower, than it is to revert back to 40, 50 or $60 a barrel.

It’s big trouble folks… very big trouble, and the very reason 1.) all the world’s markets are in Bears, 2.) high-yield corporate bonds are in shambles, 3.) the world’s giant financial institutions are hitting new lows in price, 4.) precious metals are on the move up, and 5.) U.S. treasuries are being more treasured! Do not be deceived or lulled into a complacency… the media is not telling it straight. If they did, the world would go into a panic. As it is, those in the know, are moving their money, and that is why we see the particular price actions in each of those types of securities and asset classes I just mentioned. I did the last of my selling into this morning’s pop. Got some of the best prices of the day in some of them. I don’t have any intention of selling any more… but, if this rally can actually take us back as far as the market’s own 200-day moving average line, and no real cut in oil production, resulting in an oil price increase has happened. I don’t know what will stop me from bailing from the last of my stock holdings.

Unless the circumstances can be righted, and it begins with oil, we’re staring right into the face of GFC II, and it’s not going to be the least bit pretty. GFC stands for Global Financial Crisis, as in ’08 and ’09….

What will be the evidence this assessment is correct? Simple: This rally will fail, and the market will take out the previous lows. I’d rather be wrong, and be sitting on cash, while the market rockets away… than be in all my stocks, near certain of what was going to happen, and watch them blow up! Hey, wonder what that analysts’ consensus of forward-looking EPS estimates line did today?!?!?

—————–

Getting back. Checking in. The EPS line dropped another penny, and has been cut every business day this year, so far… by 6.9% in just 7 weeks. And, oil? That news yesterday gave it quite a boost, didn’t it? NOT! Oil’s now under $29. Japan closed down 1.36%. Hong Kong is open, and down .7%. Our futures are off by .22 to .47%. You can run, but you can’t hide. It’s 1:42 am EST, and I’m going back to bed. We’ll see what Europe does later….

—————–

More inexplicability! Europe’s up big, more than 1.5%. Our futures are ahead .62 to .82% at 7:17 am EST. Oil’s still under $30, and I see two financial headlines. One reads: Why the Saudi-Russian Oil Deal Wont’ Work, and the other says, Danger Signs Flashing for Global Economy. You can’t make this stuff up, folks! O, and our ‘rally’ so far has been on abysmal volume.

Here’s to your successful investing!
Harold F Crowell

Advertisements
Standard

3 thoughts on “Let’s Make a Deal!

  1. Richard Jones says:

    Heres to being optimistic that you are being too bearish, I started raising my cash asset allocation to 30% plus a while back, March of last year, but I’m surprised you are cashing out…hopefully the global central banks can keep it together and we are only looking at a normal correction vs a prolonged bear market. The commodity cycle and in particular the energy component crash was actually nailed by Harry S. Dent Jr and to a lesser extent by James Rickards, I should have listend to both instead of an analyst adviser and cut my energy exposure more assertively last March or in 2014…Pretty good read “The Demographic Cliff” by Harry S. Dent. Optimism in the energy space lower prices bring about market equalibrium and potentially a bit of price premium re-appears with respect to geopolitical risk, much activity in sensitive areas could lead to a quick $10 per barrel bounce, but then again that could also signal increased wasteful resource and human capital expenditure on the ongoing tools of war.

  2. Well, Richard, I read some information as to just how bad the energy sector is at $30 oil, and there’s no real end to the production yet in sight. The debt defaults are just beginning, and are going to be crippling. Just watching the price moves of each the asset classes I’ve mentioned says that early money is moving out of the way of that. Read some of Dent only this morning. He paints no rosy picture either. I started reading Bonner and Stansberry to gain my perspective. Harold

  3. Vicky molet says:

    Harold,
    Thought we were investing for long-term with the best of the best and not selling unless the dividends were cut??? I can see losing 40 – 60 percent of your investment is devastating, but if you buy the best you should be able to ride it out and still collect dividends. Vicky

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s