The Tycoon Report

WAKE UP AND SMELL THE COFFEE

UNCOMMON COMMON SENSE

For People Who Think

WAKE UP AND SMELL THE COFFEE

The excitement in the stock market these days is not whether the economy will rebound the later part of his year, but by how much. However, after looking at some the compelling data being used over the past couple of weeks, it makes me scratch my head and wonder; will they ever learn? The preliminary figures being used are usually revised 3 to 6 times before they finally get it right. That’s 6 to 9 months from today and only fools would rely on these kinds of numbers to make investment decisions. But then again, is that not what the banks, mutual funds, insurance companies, hedge funds, brokers and pension fund managers were doing for the last 3 years?

More importantly, the Natural Laws of Economics have not been suspended. Okay, but before all the booing, name calling and accusations that my views fall into the Perma-Bear camp starts, please open up your minds and allow me to explain. First of all, I called the March bottom to the day and even now that I am expecting as much as a 650 to 850 point sell-off, I am not suggesting going short except for experienced traders and short sellers. We are probably in the middle of that 1930 type correction in an ongoing secular Bear Market and since very few investors have the ability to turn on a dime, I am recommending that you build your cash position pending the best shorting opportunity of your life. Just like I have been cautioning you to not sell your Gold and to continue to buy on weakness for 7 years now, the Bull Market in Gold has at least another 8 years to run. This current Stock Market Bear Market Rally, after a correction, has about another 2 months to run. So keep the faith and keep your powder dry.

For starters, let me remind you that the 1930, 50% rally off of the 1929 stock market bottom convinced even the most ardent of Bears that a new Bull Market had started and that the economy would be rip roaring again. We now know that the recession turned in to a Depression that lasted another 16 years.. First Hoover and then FDR did then what Obama is doing now; Lowered interest rates down from 5% to 1%, spent tons of money on propping up failing companies, began huge construction projects and lest we forget, raised taxes. It didn’t work then and it won’t work now. But what it did then and is doing now is creating one of history’s biggest suck-in rally. Except for me and I assume a few others who could not speak for fear of losing their jobs (I have no job to lose), not one government or prominent economist foresaw what was about to happen and even today, do not yet realize what is happening right now. Do you really want to trust them as to what will be happening tomorrow as they continue to focus their attention in the rear view mirror? Let's also remember that the official pronouncements of recessions beginning and ending come from the National Bureau of Economic Research, which uses a great deal of hindsight to make their calls.

So, since the stock market is a forward looking vehicle and the NBER calls are backward-looking, waiting for the official word that the recession has ended isn't very helpful to investors. Let me remind you that as far back as November of 07 I was calling for Recession 2008 Depression 2009/10 and that the recession probably started in the 4th quarter of 2007. It took the NBER 10 months to confirm my assertions. So who are you going to believe now?

I hate being redundant but I have no other choice, especially in the face of the best propaganda machine since Gobbles. Please remember that “doing the same thing over and over again and expecting a different outcome is the height of insanity.” If ultra low interest rates, easy subsidized credit and massive out of thin air money creation got us into this mess in the first place, please explain to me how doing more of the same, only at ten times the pace, will turn the situation around? The only thing I am not sure of is the exact timing, but the US Dollar will crash, interest rates will sky rocket to new all time highs and both the bond and stock market will crash. We are headed into what history will call the greatest Depression of them all. IS THER A WAY OUT? Tune in two weeks from now for a blueprint to salvation.

UNCOMMON COMMON SENSE

Aubie Baltin CFA, CTA, CFP, PhD. May 26, 2009

2078 Bonisle Circle

Palm Beach Gardens FL. 33418

aubiebat@yahoo.com

561-840-9767