If you were hoping we were going to pull away and breakout to the upside… you were probably disappointed. Friday opened higher, and made its way down pretty much the entire day. The really big volume came in during the final moments, and that was some pretty big selling. That volume was higher than the volume we had seen during the buying of the up days. So, while the market is making an appearance of rising, moves, like inside today, are signs of institutional distribution, or some taking advantage of the recent climb and unloading stock.
Sure, oil is at $32.84. But the reason it got that far isn’t legit. There’s no cap on production. There’s been no meaningful cut in production. The truly ill producers must produce, or perish… and producing more than can be used will kill them. The only news was that there is record amount in storage, and there are some talking cuts and/or caps… which aren’t going to happen, or will be entirely too little, too late. That’s the bad news.
The good news is: You absolutely cannot believe the opportunity that awaits us somewhere in the next year, two, or three. I mean that! The opportunity to amass a real fortune is out there, and coming our way! And, we’ll have something like a front-row seat, while waiting for it. What am I talking about?
There is a veritable mountain of bad debt waiting to blow up and take out much of the world economy. It’s not making much news yet, but if you pay close attention, some of it does get mention… be looking for it. As the domino effect commences, likely in this year, beginning with the energy industry, the result is going to be tremendous financial dislocation, as the assets of the bankrupt revert to their lenders. The strongly capitalized, i.e., those having cash, are going to be able to pick over the ‘dead’ and acquire pieces of some of the most vital and valuable assets… for pennies on the dollar. What kind of things?
There are certain basic and absolutely essential commodities that are the building blocks of the industrialized economy. They will be decimated in what looks to be coming, but when they are totally flushed, and seemingly left for dead… we want to gobble up all the shares that we can, for when the new economy begins to rise, demand for bauxite to make aluminum, copper, iron for steel, even energy and any other basic commodity we can think of, will become very valuable once again, after we’ve bought our shares!
I’ve long advocated for the very safest of dividend growers, and you definitely do want some of those, and I do… but, I’ve also raised cash, and I am wanting to keep it liquid and ready, as the very greatest opportunity to amass serious wealth; a once in a lifetime opportunity, is likely to unfold. If we’ve been correct in what’s been the mover of the market for the past 2 months, then this is the scenario it is pointing towards, just a little further out there in the future. If we have it right, and I’m very confident that we do, then we can know precisely what will work to take the fullest advantage of what will come to us. As others will be panicking and throw everything out… when you can smell the fear, and the ‘blood’ is said to be flowing in the streets; we want to be the ones that bring order back to the market, by willingly relieving the frightened of that which they will only be too happy to sell to us at fire-sale prices. Mark my words. This is the most likely scenario to unfold within just the next year or three. The entire process, because of all the bankruptcies involved, and the legal wranglings and court actions, will probably take anywhere from 6 to 10 years.
It will be the greatest opportunity since the Great Depression of the 1930’s. Corporate and Treasury bonds are saying so. Precious metals have begun to say so. The financials are definitely saying so. The other markets of the world are saying so. The earnings analysts are saying so, by their continual downward revisions. But, most importantly, and do not miss this… the Central Banks of Europe and Japan are already saying so… and before long, you’ll hear some more negative interest rate talk coming out of the mouth of Janet Yellen and/or other of our own Federal Reserve central bankers. Then, you will know this is what is coming.
I’ve always been the most optimistic, glass-is-half-full, kind of guy that you would ever want to meet, but everywhere I look, for either confirmation, or denial, of what I have just laid out says… It’s coming! It is coming, be getting ready. Lighten up on some of your stock holdings. Got metals? Get ready, ’cause here it comes. The Fed will try to stave it off, and there will be a relief rally as a result, but it cannot succeed, and will ultimately make matters even worse. More later….
Here’s to your successful investing!
Harold F Crowell