Saturday, October 11, 2008

Here's what's next

Voltron says: Folks,

The next shoe to drop is the dollar and bond collapse and inflation. Were closer to the bottom than the top of the stock market at this point. As I rotate out of my short positions between dow 8000 and 6000, I will be rotating into gold, merkx hard currency etf and tbt,pst ultra short bond etf to hedge against inflation and keep my powder dry for Asia's renaissance.

This guy, predicted the stock market collapse, the "herd mentality" US bond rally/head-fake that would result and the bond collapse that will follow. He posted it back in JUNE!

US Government bonds will be destroyed going forward.

Reasons
1.Unwise fiscal policy has resulted in unprecedented money supply growth.This was the root cause for the massive bull market in all assets.But now the cycle has turned and we are going to see unwinding of the bubble in all asset classes.Increase in money supply has resulted in inflation which will continue to increase growing forward since nothing meaningful has been done so far.The central banks have been adding fuel to the fire by pouring in more liquidity when increased money supply was the cause of the malaise.At some point inflation will be difficult to ignore and interest rates will have to be increased.Rising interest rates will cause bonds to tank.

2.At some point there will be dumping of US treasuries by foreign governments and that will be disastrous for bonds.

It is to be noted that there is a chance of pain when there is the herd like "flight to safety" when equities collapse and fund managers automatically shift to US Treasuries and the dollar.Do not panic.Hold or ideally accumulate at lower levels.Why not wait till then?I am lousy at timing market timing and have difficulty counting beyond my fingers so technical analysis is beyond me.I think I am good at strategy so I am sticking to that.

2 comments:

Greg said...

Tron,

Any idea where rates might be headed and how soon? $64,000 Question, I know. Trying to figure out how long I have before my variable HELOC (currently Prime -1.0) explodes (days, months, years??).

SF!

Greg

Gerard said...

Who knows . . . I would max out your HELOC and use the money to hedge yourself by shorting bonds.