The Prism Letter ~ Issue 25
From the desks of David Taylor and Gordon Phillips…
In This Issue-
* August 2012 Performance Report – Happy Clients, Again!
* The Prism ‘$10,000 Foot View’
* This Week’s Featured Article: The Inflation Gun Sounds (Again), And They’re Off!
* Wall Street Time Machine: Whither the DOW?
* Prism Presidential Package: Vote For Wealth!
* The Whether Report: Making Better Sense of the Incomprehensible
* The Prism Daily: A Blast From the Past
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August 2012 Performance Report – Happy Clients, Again!
Watch the video version of this report here.
Prism Solutions is pleased to announce that our automated investing software chomped its way again nicely through the $6 trillion-a-day Forex market during August 2012, producing Conservative returns for the month of 2.0% and 8.3%, Moderate returns of 12.5% and Aggressive returns of 13.1%, projecting annualized growth of 24.1%, 99.6%, 149.9% and 147.7% respectively.
We realize that these may look somewhat out of whack (that’s a technical term we use here in the office). A Conservative return of 8.3% in a single month? A Moderate return of 12.5%? Good heavens, that’s as much as the DOW struggles to get in a good year. Sometimes in a good decade.
The average annualized return for all three programs was107.8% which is 18 times faster than the DOW’s historical average annual return of 6%, 57 times faster than a 5-year bank CD paying 1.9%, and 98 times faster than a 1-year bank CD paying 1.1%. In other words, it would take 98 years for a 1-year bank paying 1.1% to match us.
This Week’s Featured Article
The Inflation Gun Sounds (Again), And They’re Off!
The inflation gun first sounded in August of 1971 when Richard ‘Tricky Dick’ Nixon, the man who assured us “I am not a crook!”, removed all visible connection between the dollar and gold, leaving the former to race to the stars without restraint. And levitate it has, thanks first and foremost to the efforts of ‘Easy Al’ Greenspan and most recently to the Herculean efforts of Ben ‘Helicopter’ Bernanke who now assures us that more fiat money manufacturing is on its way. Lots more. Depend on it.
From MarketWatch we read…
‘QE3’ Is Necessary, Bernanke Suggests
“The Federal Reserve will soon fire off another round of bond-buying in an effort to goose the economy and bring down the unemployment rate… While Fed Chairman Ben Bernanke did not give any hints at the timing of the next Fed move, he made it clear that he’s ready to pull the trigger…”.
This is absolutely terrific news for our automated trading software clients. After all, the more money there is sloshing around in the Forex, the more there is to trade. Ask a whale if they’d be happy with more water in the ocean. See what we mean?
We encourage Chairman Bernanke to add as much liquidity to the currency market as fast as his manicured fingers can dance across Fed computer keys, adding ever more zeroes to the national debt as fresh new money appears out of the space-time continuum.
Of course, QE3 will be bad for our clients’ pantries, though. Gas tanks too. Not good for their bank CD’s either. Or bonds. Or anything else, come to think of it. But here is where we need to fire the starter’s pistol once again.
Picture this, Dear Reader. It’s a race between the giant Federal Reserve and tiny Prism Solutions. In lane one we have Chairman Bernanke driving a high-speed Pepio model R20, high-precision, roll-to-roll, flatbed gravure offset printing press.
In lane two — please try to suppress your snickers — we have Dave Taylor of Prism Solutions wearing last year’s sneakers which he picked up at a church rummage sale (we are nothing if not frugal) and driving… nothing!
Whoever generates the most new money at the fastest rate of return will be the winner of a brand new semi-auto, pump action shotgun which you’ll need to protect your buried silver coins when the Big Inflation hits.
The inflation starting gun fires, and they’re off!
Chairman Bernanke, looking smug after a fresh round of softball congressional testimony, lights a cigar, summons a brandy, presses a velvet button and money begins being manufactured at the current rate of inflation, a true 5% per year. This is going to be a tough act to follow.
Meanwhile, Dave Taylor nonchalantly ties his laces, changes his mind and takes a nap, then purchases a used laptop off of Craigslist, connects to the Internet via a wifi network outside of a local Starbucks, downloads Prism Solutions’ automated currency trading software, checks his built-in wristwatch GPS (Dick Tracy, eat your heart out) to determine in which direction Chairman Bernanke (now over the hill and out of sight) has headed, presses the ‘trade’ button to turn the software on and, with duct tape holding up the screen on his newly acquired 2006 Hewlett Packard, sets off with his equipment in a shopping carriage, following the trail of bankruptcies and foreclosures left in the Chairman’s wake.
The question is, how long will it take Dave to catch up? After all, Chairman Bernanke has a 24-hour lead on our hero. Let’s figure it out. At a true 5% annual rate of inflation, the Chairman is manufacturing fresh money at an inflation rate of .0137% per day. Meanwhile, with Prism’s software set to produce 4% per month, Dave is producing profits and thereby counteracting inflation at the rate of .0219% per hour, or about 0.000365% per minute.
And just thirty-seven and a half minutes later, Dave not only blisters past the world’s foremost counterfeiter, he generates a hypersonic bow wave that shocks and upends the Chairman, leaving him sitting on his regulated rear end in a deep depression (sorry), just as Dave presses the ‘stop’ button, quickly cruises to a stop and checks his watch.
It appears that Dave, in a scene from Back To The Future, has warped through an economic wormhole and emerged 4%, or one full month into the future, a distance that would take the Chairman another 292 days to catch up. And by the time he did, Dave would be light years farther ahead.
And so, Dear Reader, we see that the moral to the story is more a trick than a moral. The trick is to manufacture your own money faster than the Fed can manufacture theirs. That’s how to conquer inflation, beat the Depression and grow a nice retirement cushion in the process. Care to join us?
Prism Presidential Package
Who will win the coming election? We don’t pretend to know, but we do know where you could be when the 2016 elections roll around. You could be sitting pretty, 4 years from now, with 4 times as much money, even as the dollar falls father, stocks follow the dollar down and the bond bubble deflates with a whimper. It’s our new Prism Presidential Package. Vote for wealth!
Wall Street Time Machine: Whither the DOW?
Wherein we borrow a page from Sherman and Mr. Peabody and hop into the WayBack Machine to see where the DOW has been trading lately.
On Jan 3rd of this year – the first trading day of 2012 – the DOW closed at 12,397. As of Friday, August 31, 2012 it closed at 13,103, up 5.7% for the year so far, yet still down 6.0% over the past 5 years. Total cumulative paper money price inflation over the past 5 years has totaled at least 15%.
When we add these figures together we get:
– 6.0% 5-year price performance
-15.0% minimum cumulative inflation
-21.0% 5-year net wealth erosion
Prism Pointer: At an average net monthly growth of 4%, our software could repair these 5 years’ worth of damage in about 5 months. Five years vs. 5 months. We’ll let you do the math.
The Whether Report
Our latest collection of compelling economic articles that take you ‘behind the news’ to help make sense of the incomprehensible.
World Shipping Crisis Threatens
The Telegraph Reports: “Germany is the superpower of container shipping, controlling almost 40pc of the world market… Over 100 German ship funds have already shut down as the long-simmering crisis in global container shipping finally comes to a head… A further 800 funds are threatened with insolvency… They are not alone. Britain’s oldest ship owner, Stephenson Clark, dating back to 1730, went into liquidation last week, closing the final chapter of Britain’s coal trade and the industrial revolution… It cited “incredibly depressed” vessel rates.”
Prism Responds: Container shipping is one of the most critical indicators of global economic health, the reason being that it cannot be fudged by any government. It’s a raw, unalterable barometer of true global commerce and right now it’s crashing – a sign of severe economic contraction. As we’ve been saying all along, the world is still in a contractive (deflationary) phase with the velocity of money slowing. When you stop to consider that this is true in spite of strongly rising consumer price inflation in food, energy and other consumables, you can only ponder in awe at what inflation will really look like when the economic cycle flips from contractive to expansive (inflationary).
Middle Class Hit By 10% Drop In Worth
“The middle class has shrunk drastically over the last 10 years as Americans’ net worth has plunged, wages declined and standards of living slipped away… ‘America’s middle class has endured its worst decade in modern history’… In all, 85 percent of middle-class Americans say it is more difficult now than a decade ago to maintain their standard of living… household wealth declined by 35 percent… between 2005 and 2010 as… net worth plunged…”
Let’s take a look at this analytically. For a 10% margin to cause significant deprivation implies that most of those who consider themselves middle class have been living at the edge of prosperity, with a minimal safety buffer in place, such that a 10% setback could cause them noticeable financial discomfiture.
If that is true, Dear Reader, and it appears to be, then how affluent could America’s middle class have been in the first place? After all, if you have, say, a 50% safety net in place and then slip 10% it’s a minor setback. But to have a 10% setback be the difference between making it and losing it, we seriously have to question the premise of what defines the middle class in the first place.
At Prism Solutions, we have our own very different take on these things. In our view, the first step is to eliminate the very term middle class. No lower class or upper class either. There are just people, living at all different degrees of indebtedness and in possession of all different valuations of tangible assets.
For starters, if you own your home, vehicles and other property titled in your name, those are not real assets; they are contingent assets. Head out to the convenience store for a loaf of bread, plow into a station wagon full of lawyers on their way to an American Bar Association conference and the first one to sue you will take everything you own way from you.
Certainly you can take out umbrella liability insurance to protect against predatory and opportunistic litigation, but the premiums required to offset today’s double-digit jury awards might exceed your monthly income. The answer is to enjoy the sole and exclusive use of assets with none of the liabilities of ownership. It’s the ‘little people’ (to use Leona Helmsley’s term) who fall prey to pride of ownership.
Q: What do a homeless person sleeping over a warm city grating and a Rockefeller sleeping in a warm country mansion have in common?
A: Neither owns a thing.
The wealthy wouldn’t dream of owning anything. When you own things they can be taken away from, and that’s so very bothersome. Which is why they let various trusts and asset protection entities own the stuff they get to use and enjoy. Sue them and they can turn their pockets inside out. “Sorry, I just live here.” Control, not ownership. Big difference.
The proper disposition of assets is such an obvious and elementary step on the journey to wealth that it’s no wonder that these principles are taught in public school at the earliest comprehensible age.
Then there’s the matter of debt, which is nothing more than a financial time machine. Debt allows you to have today what you cannot afford today. Rather than save up enough cash to purchase a thing, you charge it on plastic, bring it into your life right now for instant gratification, then pay it off with tomorrow’s uncertain cash flow. Why uncertain? Because no one ever knows what tomorrow may bring.
Debt is nothing but rented money. When you owe money you are a money tenant, living month-to-month on your debt rental payments. A comfortable lifestyle sustained by significant debts that must be satisfied monthly in the form of recurring installment payments is but the reflection of wealth in a mirror. The real thing is always debt free.
Then there is the matter of cash flow. A person living in a plush McMansion and just a few paychecks away from being broke may enjoy the appearance of an elevated lifestyle, but a 10% setback could topple the whole thing.
The person living in a debt-free residence held in irrevocable trust, and driving vehicles that likewise are unencumbered and held in separate trusts (you never place both liability-positive and liability-neutral assets in the same trust) is in a vastly stronger position to weather lawyers, economic busts and other social calamities. And with no monthly expenses other than food, utilities and annual vassal tribute payments to the state (which some still call property tax), a 10% setback would hardly be noticed.
U.S. Banks Told To Make Plans For Preventing Collapse
Reuters Reports: “U.S. regulators directed five of the country’s biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help… The two-year-old program, which has been largely secret until now, is in addition to the ‘living wills’ the banks crafted to help regulators dismantle them if they actually do fail.”
Prism Responds: Why do people store their life savings in green coupons bearing the likeness of deceased notables? Even squirrels aren’t credulous enough to store coupons with pictures of nuts on them. Have you ever seen a piece of silver suddenly shrink? Have you ever seen a lump of gold collapse? People only store their wealth in paper coupons because they’ve been seduced into trusting them. The day that trust evaporates, the dollar will revert to what it actually is — an idea. And the precious metals will reassert their historic role as real stores of wealth. Which side of that inversion will you be on, Dear Reader?
U.S. Unemployment Rate Rises On Weak Jobs Report
WSW Reports: “… the unemployment rate grew to 8.3 percent, the Labor Department reported on Friday… The ‘real’ unemployment rate, referred to as the ‘U6,’ which includes those working part-time for economic reasons and those who have given up looking for work, hit 15 percent of the workforce… Long-term unemployment continues at near record highs.”
Prism Responds: In order to understand the world around you it is necessary to filter out the “chatter”, stare the facts in the face, get a firm grip on reality, then pour yourself a stiff one. The fact is that the economy continues to deteriorate. One out of 6 Americans is underemployed, out of work or just stopped looking. Bottom line: they can’t pay their bills. There is no recovery; nor any that can be detected with even the most powerful telescope. The economy is still headed down and will continue to do for an indeterminate period – indeterminate since there is no way of knowing what degree of manipulation or intervention will be finagled, and whether economically, politically or both.
We Are All Muppets Now
“Every participant in the manipulated, rigged stock market is now a muppet… The muppets now include every pension fund, mutual fund, hedge fund and investor with capital in the stock market. We’re all muppets now because we all know the markets are rigged, skimmed by high-frequency trading machines and propped up by officially sanctioned intervention on a grand scale… When the officially sanctioned intervention finally fails and the market leaks 40% of its current value, the muppets will finally understand the ‘outsized returns’ were just a con used to entice them into playing digital 3-card monte.”
Prism Responds: The average America realizes this on a gut level, but not on an intellectual level. By the time thay do, it will be too late. Defensive measures need to be taken on every front, and right away, from dollar diversification to asset protection to physical and financial preparedness.
The Sobering Reality Of What Life Is Like In Reno, Nevada
“What do you do when the city where you live is dying? All over the United States formerly great cities are crumbling… in Reno, Nevada… The unemployment rate in Reno is now up to 11.7 percent… As the city has declined, gangs have moved in and the drug trade is flourishing… Reno has been called the meth capital of America… a very unpleasant place in which to live… also happening in hundreds of other communities across the United States… economy is collapsing and our cities are crumbling right in front of our eyes, and it is only going to get worse from here.”
Prism Responds: There are plenty of nice places to live in the United States where the cost of living is fairly low, the natives are friendly and nothing much changes — rural areas where folks are more self-reliant and less dependent on the economy.
Every small town needs a plumber, a carpenter, an electrician, a few school teachers, a hardware store, a gas station, etc. And you know what? They already have them. And they’ll have them right through the Depression. The question is, do you have the means to go live there and escape the implosion in the cities followed by the ruin of suburbia?
Close-to-Death Cash-Strapped Americans Selling Their Life Insurance Policies
Alternet Reports: We have such an eroded public safety net that folks are reduced to selling their life insurance policies for the sake of paying their medical bills… “life-settlements business”… people who need cash near what is ostensibly the end of their life sell their life insurance policies to a third party for a price… In an era of small social security payments, high medical costs, and a failed system of retirement savings, our once-proud system to prevent poverty in old age is reeling… What can we draw from all this? That our social insurance safety net is in trouble: yes. That financial innovation in life insurance has a very long and weird history: absolutely.”
Prism Responds: This is a very sad state of affairs. Who would ever have imagined that the American dream would come to this? We would argue the urgency of educating our youth to the necessity of providing for your own retirement one day. Don’t depend on the government; depend on yourself.
The Prism Daily: A Blast From the Past
In case you missed them, we repeat some choice issues from our daily communiqué, The Prism Daily for your economic and literary convenience.
The Prism Daily
Tue, Aug 21, 2012
It’s another day in the profit production trenches and Dave and Gordon are busy playing whack-a-mole with another Forex candlestick when this comes in across the wires….
According to ZeroHedge.com it seems that 89% of hedge funds are under performing the S&P 500 year-to-date for 2012 as hedge fund managers tremble in their boots, anticipating a huge out flow of investor funds, called redemptions.
And (heh) there’s no way on God’s green earth that 89% of these hedgies are going to beat the stock market by New Years, meaning that millions of hedge fund investors will be pulling their money out right after Santa leaves town and looking for somewhere else to stick it.
That’s so exciting! We mean, so sad. Here’s the grim news:
Career Risk Panic: Only 11% Of Hedge Funds Outperform S&P In 2012
“The S&P500 may be soaring to new 2012 highs… yet paradoxically this is arguably the worst possible news to the cadre of US hedge fund managers used to beating the market year after year, thus justifying their… 2 and 20 fees…. with an average return of 4.6%… compared to a 12% return for the S&P, a pathetic 11% of all hedge funds are beating S&P year to date… nearly every single hedge fund manager… is currently panicking like never before knowing very well there are only 4 more months left to beat the S&P or face terminal redemption requests.”
Well, well. It appears that, for all of their performance bonuses and golden parachutes, the smartest people in the room would have been better off just buying shares in the S&P and heading for the Hamptons for vacation.
For all of their buying and selling and shorting and churning and balancing and rebalancing, they’re not doing even HALF as well as the stock market itself. And bear in mind, Dear Reader, that the average hedge fund won’t even return your phone calls unless you have at least $250,000 to commit.
Meanwhile, from our humble Texas and New Hampshire offices in Norman Rockwell communities so small that when they hold a parade there’s no one left to watch it, Dave Taylor and Gordon Philips keep cranking out monthly returns of 4.6% and 8.2% like Dunkin keeps making donuts.
NIRP, Boomers and Yak Bones
The Prism Daily
Thu, Aug 23, 2012
How quaint, the concept of retirement. The very idea that the past 200,000 years of humankind’s social development — as evidenced by the oldest hand-drawn cave paintings and fossil records — ever included such a thing as a cessation of work prior to attaining truly old age — perhaps sitting around the campfire at a healthy 65, gnawing on a yak bone while the young hustled up the next dinner and were forced to give you the first few bites — is frankly laughable.
Rather, retirement it is a very modern innovation. Prior to Franklin ‘Surprise Attack’ Roosevelt’s official August 1935 transformation of the American free enterprise economy into a centrally planned, socialist wealth redistribution machine, no one expected to stop working until the day their bodies gave out in old age. Grandma and grandpa alike pitched in along with the young ‘uns to run both home and farm, doing whatever was necessary, with everyone well aware of the often razor-thin edge between having enough and having too little.
Things worked out pretty well for the ‘Greatest Generation’ who were fortunate enough to catch the artificial fiat money wealth creation boom launched amidst great disinformational fanfare at Bretton Woods in 1944 (by the same folks who brought you the Federal Reserve 31 years earlier) when the Federal Reserve Note (‘dollar’) was official classified as the world’s reserve currency. Over the next 50 years the phony expansion of the economy through a flood tide of debt-based money swept everything that floats, including household wealth, to the stars.
Case in point: Gordon’s parents bought a 3-bedroom home on a quarter-acre lot in Andover, Massachusetts in 1961 for the tidy sum of $30,750. Zillow has that same house pegged today at $388,973 meaning that it now takes 13 times as many pictures of George Washington — we’re speaking of the $1 bill, Dear Reader — to buy it. That house is not on the register of historical places. It’s not sitting atop a gold mine. It’s just a house. And its been deteriorating for over 50 years. Is it really 13 times more valuable as a physical residence? Are there 13 times as many bedrooms? Is it sitting on 13 times as much land? Are the neighbors 13 times nicer?
The grand wealth illusion started to fall apart with the stock market crash of 2000 which marked the beginning of the secular bear market. Alas, for the vast majority of ‘Baby Boomers’ who are just now vigorously strolling across the retirement finish line and not even close to rolling over it in a wheelchair, it’s all coming to a very premature end. And now you can’t even make a buck on your retirement stash, as Eric Sprott explains:
The Financial System’s Death Knell?
“On July 18th, 2012, the German government sold US$5.13 billion worth of 2-year bonds at an average yield of -0.06%… investors knowingly and willingly bid… for bonds that will pay no interest and are guaranteed to lose them money on expiration. Welcome to the new status quo… NIRP (Negative Interest Rate Policy)… a symptom of a broken financial system… When so-called safe-haven bonds start to consistently produce a negative return, try charging advisory fees to clients while recommending a 50% allocation to negative-yielding government debt. Advisors can try it for a while, but investors won’t put up with it for long… The pension plans are also deteriorating… the funded status of US corporate pension plans hit a record low in July 2012.”
Dear, Dear Reader. Are you going to sit there and take this when math can be your ally and not a cancer that eats away at your retirement? You simply must become pro-active in seeking a higher yield for your money. Whatever you decide to do, making the decision to do something — anything! — would be a good first step.
Because one of these days the government is going to be all out of yak bones.
Diversify Ahead of Default
The Prism Daily
Mon, Aug 27, 2012
The United States government will never be able to make good on its obligations. Sooner or later, Uncle Sam will default. The consequence of this will be nothing short of social upheaval. Mises.org informs us:
Hyperinflation Is Not Inevitable (Default Is)
“… the federal government at some point will have to default on large portions of the long-term debt. The numbers do not lie… the government cannot get out of its obligations by fiat money. It cannot default by using hyperinflation, because hyperinflation will only last a few years, but the obligations last for the next 75 years… The government is going to have to renege on promises made to the vast majority of people who are now dependent on the federal government for their retirement income, and it will also default on the workers who are still in the workforce, who are paying each payday into Social Security and Medicare.”
What cannot go on forever will stop one day. Denial runs deep, and no amount of attempts at explanation will prepare the vast majority of Americans for the reality of this. Your job, Dear Reader, is to be the 1% who will be prepared. But what does default look like? What would the social consequences be? What, precisely, can you do to prepare?
The first and absolute foremost step is to diversify out of the dollar. Think of the United States as if it were a company like Google and the dollar as a share of stock in USA, Inc. LIkewise, think of the euro as a share of stock in the European Union, Inc; of the yen as a share in Japan, Inc.; of the Swiss Franc as a share in Switzerland, Inc. etc.
If you hold funds in a 401k, IRA or other investment vehicle that holds stocks and mutual funds, are 100% of your holdings in the same stock or fund? Of course not. You wouldn’t dream of holding just a single one.
Then why are 100% of your sovereign debt holdings all held in the same ‘country’ stock? Why are 100% of your investments denominated in dollars? Why aren’t you diversified amongst other sovereign currencies too? It can only be because you don’t see the connection.
The United States comprises 5% of the world’s population. What currencies do the other 95% hold their life savings in. When the U.S. dollar defaults, will all of those other currencies default along with it, at the exact same time?
Another important step in protecting yourself against a sovereign debt default is to grow a portion of your money as quickly and safely while you are still able, to get ahead of the crowd. This is where Prism Solutions can help.
Keep Your Gas Cheap (Here’s How)
The Prism Daily
Tue, Aug 28, 2012
Mankind stuck a giant virtual straw into Mother Earth back in the late 1800’s and is now slurping oil at an astonishing clip. But not fast enough to keep up with rising demand as billions of new oil consumers from the rural populations of China, India and other emerging markets transition into the 21st century and trade bicycles and rickshaws for internal combustion engines.
Bottom line: the cost of your gasoline is going up, Dear Reader. Way up. From the London Telegraph we read:
Peak Cheap Oil Is An Incontrovertible Fact
“Brent crude jumped to $115 a barrel last week. Petrol costs in Germany and across much of Europe are now at record levels in local currencies… Diesel is above the political pain threshold of $4 a gallon in the US… Goldman Sachs said the industry is chronically incapable of meeting global needs… ‘It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand’… This is a remarkable state of affairs given the world economy is close to a double-dip slump right now, the latest relapse in our contained global depression.”
There are two strategies you can put in place right away to counteract this household budget-destroying trend. The first is to trade the oil sector long — to buy equities that will appreciate dramatically over the longer term as the cost of crude oil rises.
Example: You buy $10,000 worth of oil stocks which double over the next 5 years to $20,000. Divide the $10,000 in profits by 5 years and you have an extra $2,000 a year to put towards gasoline. If you consume 1,000 gallons of gasoline a year (about 20 gallons a week), you will have reduced your personal cost of gasoline by $2 a gallon. As a nine-year-old would say, easy peasy.
There are any number of oil sector ETF’s to choose from (Google ‘oil sector ETF’), and in several flavors from conservative to aggressive. Be sure to check with your financial advisor before making any such move. Unless, of course, that involves a simple meeting with yourself.
The second strategy is to take a modest piece of your money and grow it with Prism Solutions. That way you don’t have to wait for OPEC to bilk you. You can start bilking the Forex market right away!
Illustration: A $10,000 account generating 4% net per month could put another $400 a month in your tank. In fact, it could take care of 100% of your gasoline requirements. Try that with a bank CD and it could take you a century, by which time gasoline will be $1,000 a gallon and you’ll be dead.
We offer everyone a no-obligation, FREE consultation to answer your questions and see if we can help you achieve your wealth development goals. Get in touch and let’s talk.
Bankers Warn of Market Crash
The Prism Daily
Thu, Aug 30, 2012
This ‘market could crash’ stuff is getting tiresome. Markets go up and markets go down. It’s the ying and the yang of it all. It’s not as though stocks only ever go up, right? To quote Gordon: “What goes up, must come DOW”
Yesterday we wrote: “What will happen to your 401k and other tax-sheltered plans if the stock market crashes? For the answer, simply phone your plan’s administrator and ask what happened last time. We’ll wait…”
Have you made that call yet, Dear Reader? Today we read from the London Telegraph:
Market Crash ‘Could Hit Within Weeks’, Warn Bankers
“A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets… Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group’s implosion nearly three years ago… Credit default swaps… flashed warning signals… ‘The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008… I think we are heading for a market shock in September or October that will match anything we have ever seen before’…”
The stock market has had a nice run up since March 2009 which is when the crash of 2007 (which followed the run up from the crash of 2000) started to recover. Who knows? Maybe it will keep going up from here. Then again, maybe not.
We don’t have a crystal ball, but the stock market is definitely looking like a disaster movie where a school bus full of screaming passengers is hanging half off of a bridge and teetering. All it takes is for one terrified passenger to move a single inch and…
Which, again, is why we love currencies. If we think of the Forex as Godzilla, the school can be the stock market. Just a snack.
Hungry for profits? Ready to get off the stock market bus? We offer everyone a no-obligation, FREE consultation to answer your questions and see if we can help you achieve your wealth development goals. Get in touch and let’s talk.
Time to Protect Your 401k
The Prism Daily
Wed, Aug 29, 2012
What will happen to your 401k and other tax-sheltered plans if the stock market crashes? For the answer, simply phone your plan’s administrator and ask what happened last time. We’ll wait…
Just as we thought, your plan crashed along with the market, right? So if the market crashes again, what do you think will happen again?
It might be a good idea to really think this through because today we ask you, Dear Reader…
Is There Going To Be A Stock Market Crash In The Fall?
“Is the stock market going to crash by the end of this year? Are we on the verge of major financial chaos on a global scale?… Technical indicators are screaming that a stock market decline is imminent and sources in the financial industry all over the world are warning that a massive crisis is on the way… The truth is that the second half of 2012 looks a little bit more like the second half of 2008 with each passing day… Bob Janjuah of Nomura Securities has been saying…’over the August to November period I am looking for… global equity markets fall by 20% to 25% from current levels’… Bank of America analysts said… ‘Our strategists see an unusually high number of macro catalysts over the next 3-6 months that could take markets lower’…”
Millions of Americans have 401k and other tax-sheltered plans at their place of employment. Millions more have several plans still being managed at firms they no longer work for. Most of these people have no idea whatsoever what stock and bond funds those plans even hold, let alone who is managing them.
Can you imagine? These plans constitute a core component of their retirement planning and they have no idea where they stand, let alone a strategy for managing them themselves. The consequences boggle the mind.
Many (most?) of these folks falsely believe that they have no access to those funds. That’s not true. It’s your money, after all. You can always cancel the plan, withdraw the funds, eat the penalty and pay the taxes on the withdrawals. Or you can leave your money in the hands of anonymous managers and get what you get.
At Prism Solutions we don’t have a tax-deferred employee plan. We work for ourselves. We put our money to work where it can get the best return with the lowest proportional amount of risk, bearing in mind that there is no such thing as gain without accepting some measure of risk. Unless you want to put your money in a bank CD, that is, and watch it go backwards.
Fortunately for us, the Forex doesn’t crash. Sure, it goes up and down. Some days it even goes down and then up. Every once in a while it takes off and goes way up, or way down, for a while. But these aren’t crashes. They’re trends. If the currency market is moving, regardless of whether it’s moving up or down, you can make good money from it. The trend is your friend!
Why agonize over 100% of your stock and bond retirement holdings when you can agonize over 90% of them and put the other 10% with us? If we can double that 10% a handful of times, you could end up having as much as the other 90% combined — what’s left of it, anyway.
We offer everyone a no-obligation, FREE consultation to answer your questions and see if we can help you achieve your wealth development goals. Get in touch and let’s talk.
We Go Both Ways
The Prism Daily
Fri, Aug 31, 2012
Art Cashin is what’s known as an old hand. He’s experienced the entire second half of the 20th century, having lived and invested through inflation, deflation, booms, busts, frauds, embezzlements, lies, broken promises, unbalanced budgets and a dozen presidents. But we repeat ourselves.
And with 3/5ths of a trillion dollars under management, Cashin (what a great name) is worth paying attention to. Here’s what he says about the current stock market cycle.
Art Cashin – The Most Disastrous Economic Event In US History
“Art Cashin… Director of Floor Operations for UBS, which has $612 billion under management… said… In the stock market, traders think of something called the 17.6 year cycle… a ‘fat’ cycle, where you can pick almost any stock you want and it will go up… The other one [is the sideways cycle] in which the markets go up and down, but don’t make any real progress… An example of that is the period from 1966 to 1982, where you started at about 800 on the Dow, and ended at about 800 on the Dow, having gone to 1,000 several times, having gone to 500 several times… the current 17.6 year cycle says we’ve got, probably, another 6 years to go… We started this cycle in February of 2000… for these people to get back on their feet, we may not be looking at months, we may well be looking at years…”
Precisely. And here’ i the problem. Investors only participate in half of all stock market cycles: the UP half.
Think of the AC current in your home. It alternates, right? Thomas Edison tried foisting direct current on the public and Tesla’s AC won out because it was superior by generating electricity in both directions.
Investors who trade stocks in both directions can make a fortune during sideways market cycles. Investors who only trade up are, like, so AC.
Plus, they may have to wait 17.6 years since 2000 for things to go higher, which would be… doing a little quick math here… sometime in 2017. Which means the next 5 years could produce bupkus.
Here at Prism Solutions we trade currencies like an AC generator. Our software is poised to dart in either direction to catch the natural, up and down price movements of the currencies. Which is one reason why we can not only generate so much profit but do so regularly, like sticking a lamp cord into a wall outlet. Turn the switch and the light comes on.
So to all of you one-way, AC types, we say: why not take us up on our invitation to claim your FREE, no-obligation consultation to answer your questions and see if we can help you achieve your wealth development goals. Get in touch and let’s talk. Back and forth. Alternating Conversation. AC.
Share The Good News About Scientific Investing
Why not let your friends and neighbors know that they don’t have to settle for bank CD’s and money market funds paying next to nothing? In turn, we’ll be happy to compensate you with a nice monthly residual for your one-time referral effort. Contact us to learn more.
Remember our motto: ‘Friends don’t let friends go broke!’
Until next time,
The Staff and Management of Prism Solutions, LLC
‘Better Investing Through Science’