What have you learned from the current economic collapse?

[mountainrose]

What have you learned from the current economic collapse?

How stunningly corrupt and incompetent the whole system is

[Northern Maine Land Man]

Here is a very timely post as a follow-up to mountainrose:

JP Morgan shorted the gold market for a year, driving down gold prices. Then they bought physical gold and went long on the precious metals market.

Here is a three hour explanation. They say that bloggers have short attention spans. Some may, but this is worth the time of anybody who has a savings account, owns property, owns precious metals, needs fuel or has a retirement account of any kind. That list includes just about anybody. Those folks in Section 8 housing with EBT cards? It applies to you too.

The coming bank bail-ins, wealth confiscation & economic collapse 01/10 by Hagmann and Hagmann Report | News Podcasts

I intend to listen to this three times and take copious notes before it disappears.

[Malloric]

Or you could just save the Podcast to your hard drive. Amazing how the simplest of ideas escapes the conspiracy theorist. It's like the dull side of Occam's Razor.

[AngelWingDesigns]

Originally Posted by icicles

Hi Linda.

I would like to share with you some information about the stock markets. I like businesses and have a lot of money invested in the stock market. I have been buying gold and silver bullion and some companies that are miners in the sector.

Everything in life moves in waves against each other. Inflation (the printing of money) causes most sectors to rise over time, some sectors rise faster than others (gaining purchasing power value). So the key is to watch a couple of metrics that signal if something is overpriced or underpriced. Those metrics typically are removing the dollar price from the asset and pricing things in terms of things (in a ratio). Over time assets against each other remain in a valuation channel over time. The key is to invest in assets that are low in their channel and sell when they are high in their channel.

Example, one could use the dow to gold ratio to invest this way. Right now I would still be invested in gold. One could use the gold to oil ratio and swap assets back and forth between those two, 1:10 you buy gold, 1:20 you buy oil. Each round trip is a TRUE doubling of wealth. if you make two trips its a TRUE quadrupling of wealth and so on. If one had done just the gold to oil ratio since 1971, the paper value of $3,000 turned into $1,800,000 today. This also carries zero currency risk

Anyway, back to how we value the stock market. Here is the P/E ratio over time. As you can see we are in bubble territory. Roaring 20's type bubble. The price of the stocks are increasing while earnings are not. This is a fake recovery if you ask me.

P/E ratio history
http://imageshack.us/a/img845/6290/qx1x.png

Dow to Gold Ratio
http://imageshack.us/a/img856/1251/c2qx.jpg
Todays value is 13.31 dow to gold ratio. I think we are seeing a 1970's pull up before a slaughter down, worse than 2008 at some point in the future (now to a few years).

the stock market could do something like this.
http://imageshack.us/a/img89/7527/bf0w.png

Also, dividend yields are at 2.72% which is bubble territory again. It hasn't been this low, well ever.

Just like you said, you cannot earn yield anywhere so the fed reserve is pushing people into riskier assets, and the favorite right now is stocks. when everyone goes into riskier assets, that is the time to get out of dodge.

Here is an S&P 500 dividend yield chart, it shows where we are at over time and why I used this chart.

http://imageshack.us/a/img833/4147/fs1a.png

http://imageshack.us/a/img14/808/jp7i.jpg

Ratio's give us information that prices cannot. Look at how clear the housing bubble shows up in a ratio chart.
http://imageshack.us/a/img46/1516/gln.gif

I am sure you can see threads about the schiller calling a housing bubble still. He is right, the free market forces equilibrium. The fed is trying to force it up while the free market is going to drag it down.

Either the prices fall, or the fed inflates and brings the prices of other assets up to it through inflation (money printing).

Excellent post! But if you read most of hers why bother

[Yuptag]

Bumping the post since there was a lot of good stuff here.

[txfriend]

I knew we had a recession but not an economic collapse, either way it did not affect me or my family in a negative way.

[AmFest]

Originally Posted by txfriend

I knew we had a recession but not an economic collapse, either way it did not effect me or my family in a negative way.

You meant to say "affect".

[txfriend]

Originally Posted by AmFest

You meant to say "affect".

Yes I did, thanks.

[BradPiff]

The biggest lesson to learn from the recession was the importance of having multiple streams of income. The days of the 9-5 covering everything are pretty much over for the vast majority of Americans. That's even if you can get that 9-5 when you realize how part time work has exploded over the last 5 years.

[Boompa]

Collapse???