Warning: Crash dead ahead. Sell. Get liquid. Now.

[marmar]

via MarketWatch:



Warning: Crash dead ahead. Sell. Get liquid. Now.
Commentary: 'Game's in the refrigerator.' Power's turning off. Dow sinking below 6,470

By Paul Elliott, Motley Fool Hidden Gems


ARROYO GRANDE, Calif. (MarketWatch) -- "This game's in the refrigerator! The door's closed, the lights are out, the eggs are cooling, the butter's getting hard and the Jell-O is jiggling ..."

That was legendary Lakers' radio announcer Chick Hearn's signature way of calling a game early, telling fans the home team won ... you can head for the exits before the final buzzer. Chick wrote the book with popular sports phrases like "slam dunk," "air ball," "charity stripe," and a "bunny hop in the pea patch" for a traveling violation.

Chick's our inspiration today: Last March I wrote "6 reasons I'm calling a bottom and a new bull." Today it's time for a new call. We've had a good year. Net gains over 50% in 2009. But now: "Game over, head for the exits." Bears beating bulls.

....(snip)....

Main Street lost 20% last decade ... yet like sheep keep going back

Yes, if you're channeling Chick, here's your "mixed metaphor" cue card: "This game's in the refrigerator ... Wall Street won (proof, Goldman's $100-million-profit trading days and Blankfein's $68 million bonus) ... Main Street's headed for another losing streak ... Congress' lights are out ... the refrigerator door's closing on financial reforms ... the lobbyists are laying some rotten eggs, poisoning capitalism ... the Tea Party-of-No-No ideologies are hardening ... the bull's Jell-O is jiggling to a flat line ... and this market's going into hibernation, with the bears ... run, don't walk, to the exits, folks."

But will Main Street exit? Will we ever learn? No. The Wall Street casino makes mega-billions for insiders like Blankfein and the Goldman Conspiracy. Yet "The Casino" is still below the 2000 record of 11,722. So after accounting for inflation, Wall Street lost over 20% of Main Street's 401(k) retirement money between 2000 and 2010. Yes, Wall Street's a big loser the past decade. Their advice is self-serving. Period.

Given their miserable track record, only a fool would bet with Wall Street. Betting odds are Wall Street will lose another 20% in the next decade from 2010-2020. Yes, today's market is a "buying opportunity," but only for Wall Street casino insiders like Biggs, Blankfein and even low-level staffers inside "The Casino." But not for our 95 million Main Street investors, there's more pain ahead, this market's dropping. ...........(more)

The complete piece is at: http://www.marketwatch.com/story/crash-is-dead-ahead-sell-get-liquid-now-2010-05-25

[HillbillyBob]

1. For people like me the casino was never open

Our only hedge is that we bought an abandoned homestead in rural nc so we can grow food and be closer to independent from fossil fuel.
We are trying to eliminate the stuff we don't necessarily need, and keep the essentials..we have tv, puters, satellite, 3yr and 12 yr old cars. etc..but not the latest hd-3D-THX surround or ipods..but we have been on an energy diet so we are not so tied to what the electric bill is, since it was so high the first year we were here we are still playing catchup on other things.

[dixiegrrrrl]

2. You are doing good.

I have been reading your posts of progress.
Wanted to tell you I did same thing the decade of the 80's, lived very self sufficiently.

It's hard work when you are over 60. Hell, it was hard work when I was 40.
Rewarding as hell tho.

[TalkingDog]

4. Hi HBB. We're in NC too, doing something similar.

If you are ever in Iredell County drop me a line via DU, and we'll give you a tour.
And if you are nearby you can join our Crop Mob (Crop Mob Piedmont) we do work exchange/sustainable farming education.

[HillWilliam]

5. Heya TD. I just passed by your doorstep this weekend

I'm HBB's partner. I went up to perform a wedding in Transylvania County. If I'd've known we could have had coffee. We've joined up with the Crop Mob Piedmont and Crop Mob Greensboro, but we're sort of out of the way even for those. We're about 2 hours from you, not a bad drive.

More folks ought to check out their local Crop Mobs. There's a lot of learning and experience to be gotten. HBB and I grew up way out in the country and learned a lot of the old lore and have since combined it with new knowledge. We're doing our micro-farm as green and sustainable as we can. It's not but 9 acres total, 3 of which are starting to become productive, but it's a start.

If you've ever a mind to come out, you're welcome. PM us or find me on FB -- it's in my profile.

[Recursion]

3. Sell what? My laptop? The apartment I rent? The car I don't have?

Not to be full of schadenfreude, but anybody who has enough money to worry about the value of their stocks doesn't really get much pity from me.

[wolfgangmo]

6. +1

For all too many American's even the idea of investing is beyond their budgets.

And it is getting worse. One estimate is that from 50 - 75 percent of recent graduates are unemployed. I know lots of folks who are taking others into their homes and giving the newly homeless a place to sleep and food in exchange for housework or upkeep help. Maybe that's not a bad idea, but I'll tell you that what we are creating is a generation of highly educated servants in debt bondage.

I'm 45 and I'm not far from that. Between my wife and I we have student loan payments that are 3 times larger than our mortgage. We may lose our house if our income drops more and the student loan payments are forever. We could hire 2 more people in our medical practice if it weren't for that payment. The loan is now 2 times the size that it used to be and is growing faster than we can pay. My truck is 27 years old and barely running. My wifes car is 5 years old and a sub compact purchased used. It was all we could afford. Our house is over 100 years old and falling down and we can't afford to fix it.

We would be spending money hand over fist if we could get some relief, but being self employed we "make" too much on paper (because they only consider the gross income and not net (meaning that they only look at the income and discount the expenses like rent, utilities, overhead, supplies, employee, etc. and use the larger figure to disqualify us for relief.


I am in a bad mood today and when I think about kids graduating today I shudder. We are going to lose this entire generation. They are truly screwed for life. When young idealistic students contact our practice to ask about becoming a doctor or going to school we tell them to fly to Alberta Canada and get a job in the oilfield, save their money in T-bills and then retire in less than 20 years. But college and student loans - hell NO.

[Berry Cool]

9. What about people whose retirement funds are invested in the market?

We're not high rollers, but our funds that are supposed to take care of us in our old age are there. If the market tanks again--even worse than usual--we will have lost ALL our chips in the casino. And we're the ones who will really suffer, even though we have tried to be fairly financially conservative and provide for ourselves and do everything we were told...just because the guys who really run the casino, and play high-stakes games using our money, are screwing us over.

[Recursion]

12. That was the illusionary dream people accepted to gut pensions and social security

They were never going to let you keep that money. People bought in to the lie that they'd be able to live off investments and not have to work at building and maintaining a real social security system. And now that a huge crop of people are starting to retire, two problems happen: 1. the sellers start to outnumber the buyers, and 2. the billion dollars or so that are pumped into the markets every two weeks from mutual funds, 401Ks, etc. start to dry up, which makes the "buyers" even rarer.

401(K)'s were a flimsy excuse to send working people's money to very very rich people. Now they get to profit on both sides of the deal by buying those same stocks at bargain basement prices after the crash. It was a scam, and most people fell for it.

[mwb970]

16. Can't you move at least some of your retirement money in and out of the market?

Concerned about the oil spill and the European debt crisis, I transferred all the stock money in my retirement account to a Money Market fund early last week. I'll transfer back into stocks after the market bottoms out. I have been doing this back-and-forth for several years, and have avoided losses that would have been many tens of thousands, while reaping the benefits of the runups.

[dmallind]

7. You accounted for inflation. did you account for dividends? Thought not

How is it so obvious to people that picking arbitrary dates for gains in the Dow (the numbers given are the DJIA not "the stock market") is bullshit - which it is - but don't extend that to "losses"?

This example of a 20% loss is real only for somebody who invested 100% lump sum in a DJIA index at the height of 2000 and for some reason pissed away his dividends (which most DJIA stocks give) and is left with a fund at index value only. If you think that is relevant and realistic why isn't everything coming up roses bacasues somebody who did the same thing 14 months ago is up not 20% but nigh 50%? or that somebody who invested 20 years ago and is up 300%?

What's the difference between cherrypicking good timescales that are unlikely and cherrypicking bad timescales that are equally unlikely?

Question folks - over what time frame are you sure that walking is a good idea and can I hold you to it? Will you admit you were wrong if the future shows that you were?

I'm no hypocrite. I'll start. I don't give a damn about short term volatility. I have a minimum five year horizon to even think about it. Anyone really want to predict we won't go past 10K again for 5 years?

[marmar]

8. I didn't write it......n'est-ce pas?

nt

[dmallind]

11. So you see the same weaknesses or not? Didn't mention them.... NT

[Scuba]

10. Wall Street didn't lose the money, they paid it to themselves as bonuses.

[liberalla]

13. Dow Theorist Richard Russell: Sell Everything Liquid

I read this last week (May 18)

Dow Theorist Richard Russell: Sell Everything Liquid

Richard Russell, the famous writer of the Dow Theory Letters, has a chilling line in today's note:

Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him.

http://www.businessinsider.com/dow-theorist-richard-russell-sell-everything-liquid-you-wont-recognize-america-by-the-end-of-the-year-2010-5

[Recursion]

14. He's trying to get people to buy gold

Yet another guy who has bought into the myth that gold is inherently valuable. If we get to the point that the stock market (or the dollar) collapses, gold won't buy anything either.

[Kablooie]

15. I put most of mine in annuities. They can ratchet up but can't drop down.

And pay a regular interest.

[DemReadingDU]

17. but if you need the money

There is usually a waiting timeframe of 5 years, or thereabouts. You can get the money out earlier, but need to pay a penalty.

And what happens if the firm that is holding the annuity, goes bankrupt?

And what investments are made by the company? They could be any of those toxic things that are on the market.

[Kablooie]

18. I'm close to the age that I can withdraw without penalties. That allowed me to change my investments

And yes there are risks but I use several old established companies with no apparent financial issues right now.