A Quote by Porter Stansberry
The Fed's buying is far more important to the market price of U.S. debt than any other economic variable. If the Fed stops buying, it doesn't matter whether unemployment goes up or down. It doesn't matter whether inflation is higher or lower. Its influence on the market is dominant.
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If the stock market does go through a crisis of confidence, which I think clearly will happen one of these days, no one can predict just like you couldn't the dot com crash or the Lehman crash, but when it goes down it will go down by thousands of points because everyone will panic. No one owns this market today because they believe there's a huge sunny future for the United States economy. They're buying because they think the Fed can keep the thing pumped up, the bubble expanding.
I'm against having a Fed. It's socialism in its worst form. But until the Fed is gotten rid of, the only economic variable the poor have to counteract the injustices of the Fed is the minimum wage law.
People tend to think that paying a debt is like going out and buying a car, buying more food or buying more clothes. But it really isn't. When you pay a debt to the bank, the banks use this money to lend out to somebody else or to yourself. The interest charges to carry this debt go up and up as debt grows.
Clearly the price considered most likely by the market is the true current price: if the market judged otherwise, it would quote not this price, but another price higher or lower.
Once a price move exceeds its median historical age, any method you use to analyze the market, whether it be fundamental or technical, is likely to be far more accurate. For example, if a chartist interprets a particular pattern as a top formation, but the market is only up 10% from the last low, the odds are high that the projection will be incorrect. However, if the market is up 25% to 30%, then the same type of formation should be given a great deal more weight.
There are no bad days in the market. When the market is down, you've got bargains, and it's lovely to think of what you are buying at low prices. When the market is up, the bargains have gone, but you're rich.
The underlying strategy of the Fed is to tell people, "Do you want your money to lose value in the bank, or do you want to put it in the stock market?" They're trying to push money into the stock market, into hedge funds, to temporarily bid up prices. Then, all of a sudden, the Fed can raise interest rates, let the stock market prices collapse and the people will lose even more in the stock market than they would have by the negative interest rates in the bank. So it's a pro-Wall Street financial engineering gimmick.
It doesn't matter whether the market is up or down. All the day traders want is volatility.
The investor is neither smart not richer when he buys in an advancing market and the market continues to rise. That is true even when he cashes in a goodly profit, unless either (a) he is definitely through with buying stocks an unlikely story or (b) he is determined to reinvest only at considerably lower levels. In a continuous program no market profit is fully realized until the later reinvestment has actually taken place, and the true measure of the trading profit is the difference between the previous selling level and the new buying level.
Yes, when they're buying there are more buyers in the market and that's supportive of the price. The more buyers you have, the firmer the price is going to be. When central banks were selling it was a headwind the market had to overcome. Now it's a tailwind that central banks are joining the buyers.
The idea that when people see prices falling they will stop buying those cheaper goods or cheaper food does not make much sense. And aiming for 2 percent inflation every year means that after a decade prices are more than 25 percent higher and the price level doubles every generation. That is not price stability, yet they call it price stability. I just do not understand central banks wanting a little inflation.
Every time the market has corrected, since 2008, it's always been the Fed that's made the bottom. The Fed has always saved the market either by cutting rates, launching QE, or threatening to launch another round of QE.
Whether it's buying products or researching what you're buying, or just becoming aware of what you're buying, you're saying so much with the money that you're spending.
One market paradigm that I take exception to is: Buy low and sell high. I believe far more money is made by buying high and selling at even higher prices.
If higher unemployment is the price we have to pay in order to bring inflation down, then it is a price worth paying.
Speculation in oil stock companies was another great evil ... From the first, oil men had to contend with wild fluctuations in the price of oil. ... Such fluctuations were the natural element of the speculator, and he came early, buying in quantities and holding in storage tanks for higher prices. If enough oil was held, or if the production fell off, up went the price, only to be knocked down by the throwing of great quantities of stocks on the market.
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