Posts Tagged ‘Fibonacci Financial’

Everything is going UP UP and Away!

Gold is Up, Silver is Up, Oil is Up, Stocks are Up.
What Next?

Listen to this Tech|Ticker interview with Bob Prechter
Titled: Yes, Robert Prechter Is Still Worried About Deflation

One of several markets we are watching to help answer

the Inflation vs Deflation Outcome

of the current financial crisis is Silver !

In addition to Silver, we are watching to see which way the Stock Market and the CRB index break (see Stock Market Head and Shoulders formation from last weeks blog entry).

But remember the following Fibonacci Financial Mantra :

There are a wide variety of ways to protect your assets and profit from this tidal change ranging from the very conservative to the highly speculative.

BUT you need active guidance – Contact Us at Fibonacci Financial.

Do not get the idea that you can trade or make investment decisions from our blog entries.  These are EDUCATIONAL and an introduction to our services and DO NOT constitute investment advice.

Dear Reader,

The Markets have been in a Holding Pattern since late last year.

That’s about to change DRAMATICALLY.

The Stock Market as exemplified by the Dow Jones Industrial Average  (aka: the D.J.I.A.) has been stuck in a trading range roughly between 10,000- and 11,000+.

For the last year the D.J.I.A. trading range market has been forming a potentially OMINOUS Head and Shoulders Top.  This is just a potential until the neck line is broken decisively!

Remember Summer School over a year ago when we first reviewed the Head and Shoulders Formation? If you need a refresher course,

Go here : http://www.fibonaccifinancial.com/financialwarroom/if-bonzo-is-buying-then-you-should-be-selling/

When this neck line in the D.J.I.A. is broken decisively,

I believe we will be entering  a very dangerous period of HYPER-DEFLATION.

The Federal Government’s Plunge Protection Team ( aka the PPT) have been very busy!  With the X-Ray vision provided by the COT (Commitment Of Traders) reports we can see that each time the D.J.I.A. is in danger of breaking down, the PPT  jumps in with tones of money and buys the market. If they loose this game (which I suspect they will a la King Canute) the breaking of the neck line will be even more ominous and meaningful. If all the Fed’s horses (fiat money) and all the Fed’s men (Ivy League Whiz Kids – full of hubris) can support the market – there’s a hard rain coming…..

This has real potential of making the Great Depression of the 1930s look like a dress rehearsal. For some interesting insight into the potential magnitude of this HyperDeflation buy The Great Wave by David Hackett Fisher and read the last chapter. (FYI David is not an economist but he is a Pulitzer Prize winning author/historian).

Go here to Amazon.com and buy it!

http://www.amazon.com/Great-Wave-Revolutions-Rhythm-History/dp/019512121X/ref=sr_1_1?s=books&ie=UTF8&qid=1283634769&sr=1-1

To sum up – It’s time to WAKE UP again. Go to Safety! Don’t wait till the D.J.I.A. breaks the Neck Line at approx. 9500

You may still have a couple of months (till after the election), a couple of weeks or only a couple of days !

DON’T WAIT –  ACT NOW !

Have You Missed My Posts ?

If you have missed my posts while I was on Sabbatical and want me to post more often again

- Please drop me a line.

Are Your Assets Allocated Properly ?

And REMEMBER

There are a wide variety of ways to protect your assets and profit from this tidal change ranging from the very conservative to the highly speculative.

BUT you need active guidance – Contact Us at Fibonacci Financial.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are EDUCATIONAL and an introduction to my services and DO NOT constitute investment advice.

Vindication ?

The Wall Street Journal

Announces

The Worst Decade For Stocks EVER!

“The U.S. stock market is wrapping up what is likely to be its worst decade ever.

In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s.

Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade.”  TOM LAURICELLA WSJ digital December 20,2009.

I started aggressively moving clients out of Stocks and into T-Bills during the 2000-2001 market blow-off and then again in late 2007.

This appeared foolish to my clients, family and friends many times during the last nine years.

But my evolving

Asset Allocation Model

has kept my client’s investments and retirement plan assets SAFE.

BUT NOW

“Danger Will Robinson, Danger!”

The Worst Is Yet To Come!

So Stay Tuned.

Remember Gentle Reader – the best strategy is still:

Obamacare!

Executive Summary

1. Our current health insurance model massively violates the basic fundamentals of risk management.

2. This violation of prudent risk management concepts grossly enriches health insurance companies & greatly increases the cost of health care to all of us.

3. When you combine the violation of risk management principles with the bureaucratic red tape of medicare and medicaid the costs to society become outrageously expensive.

4. This is not the only reason that health care costs are out of control, but it is a primary reason.

Now the Proof

Risk Management 101

To understand why America’s health care costs are expensive and how to fix the current system you must first understand the fundamentals of risk management.

There are four fundamental choices when considering how to manage risk.

You can do the following:

1. Retain the Risk – You pay for it on a pay-as-you-go basis.

2. Reduce the Risk – Examine the nature of the risk and engage in actions that reduce the risk.

3. Transfer the Risk – Insurance -join with others who are exposed to the same risk and pool your resources to spread the risk out.

4. Avoid the Risk – Just don’t engage in activities of this nature!  Don’t jump of cliffs without parachutes.

Now let’s apply these risk management choices to Health Care Risks.

Let’s start by examing quadrant #1.  This quadrant includes health risks that don’t happen that often and don’t cost very much.  Timmy scrapes his knee when he falls off his bike.  What do we do? Run to the doctor? No, we wash his knee with hot soapy water, spray disinfectant on it, cover it with a bandaide then send him back out to play.  We Retain this risk and pay the small costs as we go.

Next let’s consider risks that fall into quadrant # 2.  This quadrant includes health risks that are relatively infrequent by also relatively expensive.  A good example is the risk of getting gall stones.  OOOOUUUCCCHH – OMG !  This, thank heavens, doesn’t happen to all of us and can be relatively expensive as well as tremendously painful.  Given it’s infrequency but expensive nature, it is an ideal candidate for pooling of risks through insurance.  Those actuaries are able to nail down the minimal shared expense of this health risk fairly easily.  This risk should be Transfered.   Another well recognized health risk in this category is death.  OK, I know we all die; so the frequency is rather high. .  But it does not make sense to insure against death at 98.  But for a young father who is 35 with family financial obligations it make a great deal of sense.  Can the actuaries estimate the frequency of death amongst 35 year old males.  Can this group insure against this health risk relatively inexpensively?  Yes.

Now the problem area.

Now let’s examine quadrant # 3.  These are the relative low cost but more frequent health risks.  They consist of risks such as strep throat and broken arms.  We can also throw in the ubiquitous maladies such as acid reflux and high blood pressure.  We should be retaining and managing these risks.  Because of their relatively high frequency and low cost , if they are run through a health insurance bureaucracy they become very expensive.  This is an area that we should self insure and manage.  The costs to administer these high frequency low cost events is very very high.  But the health insurance companies make bank off each of these transactions. This is equivalent to instituting grocery care insurance.  Imagine the cost!!!

Stupid!  Stupid!  Stupid!

So how did we begin to expose ourselves to this insane insurance industry money machine?

Well as all good economic stories begin – It started with the government interfering with our market choices.  During WWII the government froze wages.  Now businesses could no longer compete for talent by offering higher wages.  But they could offer benefits without restriction.  So they decided that instead of paying people more money they would straight out pay for health care costs through health insurance programs.  This was another story of the unintended consequences of inappropriate government intervention.  They should have also instituted grocery care insurance.  My goodness it costs thousands of dollars a year to eat, why don’t we have food insurance?  By including these risks in health insurance plans we also open a Pandora’s box of behavioral finance risks.  When we don’t pay directly for these frequent relatively low cost health risks, we tend to over use the health care system.  We also don’t have the immediacy of the cost to incent us to modify our poor health behaviours.

Now add into the third quadrant mix medicare and medicaid red tape and you have a health care cost disaster.

Insert Obamacare into Quadrant #3 ?

So, I ask you, is the way to solve two failed government interventions the institutionalization of these errors with a third massive government intervention called Obamacare?   The health “insurance” industry (and its lobbyists) is licking its fat fingers!

What we need to do is to return to sound risk management principles.

Get the Health Insurance Industry Out of Quadrant #3!

This will greatly reduce health care costs to all of us.

Properly understood and used HSA plans were a giant step in the right direction.

Recently I we reviewed the classic head and shoulders top formation.  The Dow had formed one and sucked a lot of analysts into recommending selling or shorts.  But we weren’t fooled because it never broke below the neckline by a decisive 3%.  What I also didn’t tell you though was that the Commercials had been buying!  I didn’t want to give away my hand. .

But we have been waiting months for this bear market rally to resolve.  We are getting closer.  As the Commercials unload their positions at the end of this rally, it will probably mark the last opportunity to sell stocks at reasonable prices for several years.  The decline from the top of this rally will be absolutely devastating to most investors.

Remember what I said in earlier blog posts – it will be hard to sell at the end of this bear market rally because all the talking heads and headlines will be positive about the Obama recovery etc. etc.  It is almost impossible to fight the herd!

AGAIN

There are a wide variety of ways to participate in this opportunity ranging from the very conservative to the highly speculative.

BUT you need active guidance – Contact Us at Fibonacci Financial.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

Remember Lexington and Concord

The Right to Keep and Bear Arms is a Responsibility

Please follow my logic.  If the US Constitution acknowledges each US citizen’s right to keep and bear arms, is it not our patriotic duty and responsibility to own and know how to use arms in our own defense and in defense of our families, friends and fellow humans.  This  explicitly protected unalienable right acknowledges that we each, as citizens,  are the last line of defense against tyranny.  If we default on this responsibility and leave it up to our neighbor, what can we say of our level of personal responsibility to ourselves, our family and friends and community.

The Responsibility to Keep and Bear Arms is an Ancient Heritage

Where did the founding fathers get this idea of the right to keep and bear arms.  Much of our Anglo American (sorry dear reader – we were British colonies) legal patrimony is explained in Sir William Blackstone’s inimitable “Commentaries on the Law”.

Please Click on This to Read the Original!

You will probably need to zoom at 100% to read it.

This is a facsimile – most of the “S”s look like “F”s.

Blackstone Arms

As extracted from the above :

This comes from Blackstone’s discussion of  “The Rights of Persons”.

“And we have seen that these rights consist, primarily, in the free enjoyment of personal security, of personal liberty, and of private property.  So long as these remain inviolate, the subject is perfectly free; for every species of compulsive tyranny and oppresion must act in opposition to one or the other of these rights, having no other object upon which it can possibly be employed.  To preserve these from violation, it is necessary that the constitution of parliaments be supported in it’s full vigor; and limits certainly known, be set to the royal perogotive.  And lastly, to vindicate these rights, when actually violated or attacked, the subjects of England are entitled,

1. In the first place, to the regular administration and free course of justice in the courts of law;

2. Next to the right of petitioning the king and parliament for redress of grievances;

3. And lastly to the right of having and using arms for self-preservation and defense.

And all these rights and liberties it is our birthright to enjoy entire; unless where the laws of our country have laid them under necessary restraints.  Restraints in themselves so gentle and moderate, as will appear upon farther enquiry, that no man of sense or probity would wish to see them slackened……. I shall close my remarks upon it with the expiring wish of the famous father Paul to his country, “Esto Perpetua!”  William Blackstone, ESQ. “Commentaries on the Laws of England” Book the First, pages 140 and 141.

Why read Blackstone?

“The man who is ignorant of that which happened before he was born will always remain a boy.” – Tacitus, Roman historian.

And I join my voice to King Leonides, Blackstone, the founding fathers:  “Esto Perpetua” and “Molon Labe”.

Go Out and Invest in a Gun

You are the last line of defense for our liberties.  Go out and buy a gun and learn how to use it.  Oh, and reading between the lines in Blackstone, do it safely and responsibly – use common sense.   Not as those twits back in DC would define common sense, but rather as a “man [woman] of sense or probity” would define it.  Remember, that gun you own is the last line of defense against tyranny!

Desiderata Is A Bridge Over Troubled Water

Desiderata

Go placidly amid the noise and haste,
and remember what peace there may be in silence.
As far as possible, without surrender, be on good terms with all persons.
Speak your truth quietly and clearly; and listen to others,
even to the dull and ignorant; they too have their story.

Avoid loud and aggressive persons, they are vexations to the spirit.
If you compare yourself with others, you may become vain and bitter,
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.

Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs,
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals,
and everywhere life is full of heroism.

Be yourself. Especially do not feign affection.
Neither be cynical about love;
for in the face of all aridity and disenchantment
it is as perennial as the grass.
Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.

Beyond a wholesome discipline, be gentle with yourself.
You are a child of the universe no less than the trees and the stars;
you have a right to be here. And whether or not it is clear to you,
no doubt the universe is unfolding as it should.

Therefore be at peace with God, whatever you conceive Him to be.
And whatever your labors and aspirations,
in the noisy confusion of life, keep peace with your soul.
With all its sham, drudgery and broken dreams,
it is still a beautiful world.
Be cheerful. Strive to be happy.

Max Ehrman 1926

One of my favorite poems is read on You Tube.

This charming little film was built around the Incredible Bread Machine poem:

Long Term Market Success and Wealth Accumulation Requires Patience

Currently All Markets are in Flux.

(Except recent recommendation to buy the US Dollar)

We are waiting for large declines in Gold and Silver before adding to core positions.

We are waiting for a short term decline then a final advance in the current bear market rally in stocks.  This will give us a final opportunity to liquidate stocks before the next killer decline.

While we wait, meditate on these wise words from the most famous stock trader of all time – Jesse Livermore.

“Cash was, is, and always will be – king. Always have cash in reserve. Cash is the ammunition in your gun. My biggest mistake was not in following this rule more often. Time is not money because there may be times when your money should be inactive… Often money that is just sitting can be later moved into the right situation and make a fortune. Patience-Patience-Patience. Patience was the key to success – Don’t be in a hurry.” – Jesse Livermore. How To Trade In Stocks, 1940.