I wanted to take a moment to discuss the current stock market rally.
For starters, this rally has largely been driven by short covering. Before the market exploded last week, short interest on the NYSE was at its highest levels since March 2009: a time when the entire investment community thought the world was ending and had gone short to profit from it.
So there were plenty of shorts to shred with a market ramp job. And that’s precisely what has happened.
Now, I know that most commentators believe that anytime stocks go up it’s a good thing, but short-covering rallies are in fact quite dangerous.
The reason for this is because these moves are caused by articifial buying interest (people covering their short positions) NOT by investors actually buying stocks because of some perceived value.
So when the short covering ends, the market implodes again. Indeed, during 2008, between September 15th and December 1st alone we had no less than FIVE RAPID double digit rallies: 11%, 19%, 12%, 11%, and 13% all brought about by short-covering.
Suffice to say, none of these ended well.
So let’s be honest about what’s happening in the financial system today… and why this current rally is in fact just another head fake as we enter the Great Crash.
1) Europe’s banking system faces potential systemic collapse: the insolvency issues are beyond PIIGS’ debt at this point. Even Belgian banks which no one thought were problematic are now going to $0.
2) The “powers that be” have lost control of the markets. Both the IMF and the Bank of England have warned we are facing a financial meltdown of historic proportions and possibly the worst ever in history. These are the very groups that are supposed to hold up the financial system… telling us that we’re facing a “meltdown.”
3) The world Central Banks cannot hold the markets together anymore. Indeed, even China is now having to actively buy shares in its own banks to prop up its financial system. This is CHINA, the supposed largest creditor nation in the world… having to step in to BUY bank stocks to stop its ongoing Crash.
4) The US Federal Reserve is insolvent. With only $50 billion in capital and a portfolio of $2.8 trillion, the Fed is leveraged at OVER 50 to 1. Lehman Brothers was leveraged at 30 to 1 when it collapsed. And the Fed’s portfolio of toxic debt and other junk it bought from Wall Street has tainted the US’s balance sheet.
I could go on and on, but the fact remains that we have now entered a Financial Crisis to which 2008 was just the warm-up.
You see, 2008 was caused by toxic debts on private bank balance sheets. Today, thanks to US Federal Reserve and other Central Banks’ moves, these toxic debts have moved onto the PUBLIC’s balance sheet.
So this time around, the market collapse is ALSO going to feature the bond bubble bursting, sovereign defaults (including eventually
the US), MAJOR bank failures (Bank of America?), bank holidays, government shutdowns, civil unrest, and food shortages.
In short, we’re entering the Greatest Depression: the full-scale collapse of the entire credit-based financial system in the developed world.
If you have not already taken steps to prepare your family AND your finances for what’s coming, you need to get moving NOW. Because the situation in Greece today IS coming to a country near you in short order.
I can help you navigate this mess so that you not only keep your self and your loved ones’ secure, but I can even help you to actually MAKE money from what’s coming.
In terms of personal preparation, my three reports Protect Your Family, Protect Your Savings, and Protect Your Portfolio outline exactly what you need to do to prepare for:
1) market crashes
2) bank holidays
3) runaway deflation OR inflation (whichever may come)
4) food shortages
5) debt defaults
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The below chart shows actual, verifiable recommendations I made in 2008. These are real “buy” or “sell” alerts that I sent to my clients during that time:
Aside from this, my clients ALSO made money during the Euro collapse in May 2010, locking in gains of 14%, 16%, even 19% as the markets broke down.
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So if you’ve looking for someone to help you navigate this mess, I’m your guy. I’ve been helping investors (including executives at many Fortune 500 companies and strategists at numerous financial institutions and hedge funds) avoid collapses and profit from the market for years.
I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.
You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.
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