Okay how about a predicition for 2010? I’ve been saying what this guy is saying for about 5 months now (only he does it more intelligently). My theory as to why this was happened all stemmed around the health care package. Watch the video then I will explain my 2010 prediction in comments below.
My prediction speaks to how you may consider to position yourself for this year so that you are not hurt financially. Very simply, as one of President O’s men has said, “don’t ever let a crisis go to waste.” Position yourself!
Analysis:
The Presidents Health Care package was (hopefully dead now) a very expensive, massive move to socialized medicine and a shift in the America way. No matter which way this bill ended up going he had to know that it was going to be a big fight due to the change in how we do things.
At the same time he was trying to get this massive takeover through, the fundamentals of our economy were getting worse, just look at the “price” if you will or “real money” factors of the economy…employment, GDP, housing/foreclosures, dollar value, etc. All of this is tanking. However, most people are not economically educated and they look at the stock market to judge the condition of the economy.
According to Biderman HUGE amounts of money have been propping up the market through the overnight commodities trading (ever wonder where the non-spent stimulus money went?) As he points out, only the Federal Reserve (which is neither Federal or a Reserve) has the ability to do this.
Why? In my opinion if the market tanked (which it should have being as overpriced as it is) those who supported health care reform may back out, if not just temporarily, because of the cost on the economy. This in itself would have killed President Obama’s ability to get his pet project through.
With the recent Massachusetts vote and the super majority changed the road to passage is much more difficult, but President Obama in his State of the Union address has not given up.
Now for my prediction. I predict that the propping up the market is going to stop and a new strategy will emerge. Before, it was “let’s artificially keep the economy looking better than it is so people think we can do this.” I believe that the strategy will now be, “let’s allow the economy to tank so that it will become so difficult that people will have to have government health care.”
So what is my prediction? This year is going to be very difficult for most from a financial sense. Mr. Bernake’s plan is to flood the economy with money in order to avoid deflation, but will cause major inflation. U3 unemployment will increase to over 15% before the end of the year and the S&P will fall below 900 (maybe much worse) by the end of the year.
Predictions:
1. The value in the dollar through inflation and world abandonment will tank. Buy gold or silver. Gold should be testing the $1,000 an ounce support levels over the next week or so and Silver is in the $16 level…both excellent places to buy.
I prefer silver based on the scarcity of it (lowest above ground levels ever) and because per ounce it is more affordable to the average person.
2. Profit from the falling market. You can do this through short positions, but since many don’t understand how to short the market one can buy shares in the ETF “SH” which is the Short S&P Fund. It is an inverse fund so in essence if you buy shares you will profit from the decline in the S&P. Buying on pullbacks would be a good strategy while keeping a stop loss order below prior support should keep you in the game.
You can also buy shares in the “PSQ” which is an ETF fund that is short the QQQQ. Again an inverse fund that goes up when the market goes down. The Q’s reflect what is happening in the Nasdaq. The Nasdaq led the rise over the past several months and therefore has more to lose.
Remember, this is my opinion and as I’ve said many times, “Opinions are like arm pits. Everyone has a couple and they typically stink.” My main point is not for people to necessarily do what I say, but to not live blindly. Pay attention to what is going on. Your whole life may be changed (good or bad) in the next few months. We’ll see how my predictions play out by the end of the year.
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