[Money-matters] Money Matters Update Oct 1 2008

Thu Oct 2 00:19:12 UTC 2008

This article is strictly for informational purposes only. It is not a 
solicitation to make any exchange in precious metal products, 
commodities, securities,stock, warrants, options or other financial 
instruments. Marc Cuniberti, author of this article, does not accept 
culpability for losses and/ or damages arising from the use of this 
publication or any information contained herein. Investing involves 
risk. You can lose money. Please order up the prospectus on any and all 
securities you may be planning to buy and do your own research before 
investing. Mr. Cuniberti may or may not hold the securities listed.

_/*Marc's Notes:*/_
The bail out bill will pass this week. ( I was wrong on it Monday but 
said it would go thru eventually and IT WILL).
The market will RALLY heavy. The bill WAS 700 billion and was said to be 
to much money.
Now they ADDED more, with tax credits and the like!  If it was too much 
money Monday, our spend happy Congress ADDS MORE?
Holy cow.  What gets me is that everyone is talking about getting the 
banks "lending" again.
Not saving, but LENDING. Debt and LENDING and credit is what got us here 
in the first place, and now they want to encourage MORE LENDING?
Does anyone have a brain up there? We need to STOP BORROWING and SAVE!  
NO MORE LENDING!
Phone calls were running 9 to 1 against the bail out on Monday. But the 
market fell. So now the Lemmings are phoning FOR the bill.
Boy, are we dumb. We just keep making the wrong decisions. I am 
beginning to think we never will make a right one.
Here is what is happening.
The subprime mortgages are worth very little. No private firm will buy 
them. The banks wont lend to you or me or each other. They dont trust 
each other. They dont think they will get paid back if they loan. 
Trillions of dollars are now at stake thru leveraged bets. (Gambling).
700 billion or whatever it is wont be 1/100 th of what will be needed. 
The bailout attempts to buy these almost worthless mortgages for close 
to full price and pretend they are worth something.
You just cant say a broken chair is a new couch. It doesn't work that 
way. But thats what they are doing.
IF they let the market determine the price, it would fall until some 
scavengers would pick it up and then the recovery could begin. Many 
firms would fail, but only the ones that SHOULD fail. Strong firms would 
survive. By buying these bad mortgages, we are propping up bad firms and 
bad investments, so they will never be purged from the system. The rot 
will remain. The banks will use the money to prop up their bad balance 
sheets, and none of it will go anywhere but in their books. It will 
disappear like the 2 trillion we have already poured in, except now you 
and I will be another 800 billion in the hole.
Also, another half trillion will attempt to insure money market funds, 
banks, insurance companies. Etc.
There is 4 trillion in money market funds so how is 200 billion going to 
insure that?  It is a perception based bail out, not a solution. It is 
just a bigger ANNOUNCEMENT. Only this time they have let off the last 
fire cracker with little ammo left. When (not if) this does not work, 
the system will begin to implode slowly once again, and then what? What 
will they try next? Cheese?
Housing, the underlying asset is crashing even FASTER. So the problems 
you are seeing haven't even hit the bank balance sheets as delinquent 
loans now are not logged on balance sheets until months ( 2 years at 
FANNIE !) so we are seeing damage from house prices from last spring! 
Maybe even last winter!  They are now even talking about letting banks 
IGNORE true values of these things so they don't have to list the 
losses. Dress up the PIG and call it a Princess??? ITS STILL A PIG.. 
Saying it is worth more don't make it so.
When ( not if) this bailout is enacted this week, yes the markets will 
rally. When it fades, their final try at an announcement will be to prop 
up house prices by either:
A) letting you off on your mortgage by buying them, or
B) Bulldoze down the vacant houses    (cant happen you say? FDR had 
farmers burn their fields DURING THE DEPRESSION when people were 
starving,  to try and prop up farm prices !  How ludicrous was that, yet 
it happened)
Dont kid yourself, these bozos will TRY ANYTHING! And it will all be 
futile. Markets wont be fooled. A dollar mortgage is only worth a 
dollar, no matter what THEY SAY.
You CANNOT falsely prop up prices of anything. Its called price controls 
and doesn't work. But they will try.

_/*What to do:*/_
You are being given a gift with this bailout. The subsequent rally will 
be explosive possibly,  but will fade. In a day or a week or a month.
No one can tell. But WHEN it does, beware. Your signs will be continued 
failures, failing retail sales, higher unemployment numbers,  house 
prices making record lows, more foreclosures. It will probably start 
with bad retail figures and more company failures. Look for the news 
articles.
When the rally starts to fade, I would tell my clients to DUMP mutuals, 
almost all long shares, anything that even resembles a stock. (Keep 
dividend payers WE RECOMMENDED and all the rest we talked about)   BUT 
REMEMBER, most of your money should be in CDs (short term) or T BILL 
ACCTS. (Short terms).
The next down when it happens may be HARD and  catastrophic. The time is 
getting near. Anything is possible. I expect things to be radically 
different by the spring.
ALSO:

Always hold 1 -3 weeks cash on hand.
ADD physical Gold and silver. As much as you can afford. Dont wait. The 
coins are getting harder and harder to get.
ADD to   SHY    VIPSX    TIP     RRPIX   _ HOLD  ALL 4_   of these NOW 
in equal amounts now. These are fairly safe and all pay.
These are GOVT funds and the best of the best for now. That will change 
at some point however.
Another fairly safe one is PTRAX.
We will watch GLD and SLV,  the ETF's.  If things get dicey, we may have 
you sell these but not now.
Dividend payers - HOLD but do not add at this time.
UNWPX    ADD     (Precious metals fund).
DBC  - HOLD  do not add large amounts at this time.
CGMFX    HOLD  do not add at this time.
Contrary funds- Wait for the rally to end, then ADD    
ADD alot if you have other regular LONG stocks from another broker as 
this may offset a market decline. It is designed to GO UP if the market 
goes down. Those holding LOTS of regular stocks can protect them with 
other "ULTRA SHORT" contrary funds..These go up twice as fast, but will 
go down in rising markets.
Foreign Currency funds -  Add anytime.  FXY   FXC  FXA   FXF
Swiss Annuities- Only one company in Switzerland now sells these. When 
things go south, the Govt will probably initiate monetary controls and 
then it will be to late. Put some money where the Bushes and 
Rockefeller's and Duponts do. Email address me for a free book.

_/*Advanced traders:*/_
Money is ready to be picked up off the floor. Go over there and get it.
Wait for the rally to end.
Then short RETAILERS and HOUSING.
Try SCC  SKK  SRS      there are many others. Try the leveraged ULTRA 
shorts for a bigger bang.
Puts on     HOT    SHLD   MAR     You name it, it will crater if its in 
retail or housing. Housing may get a temporary reprieve if the NEXT 
ANNOUNCEMENT is to bulldoze houses!  or   buy more mortgages.
It will not stop the end result. Housing stocks will CRATER when a major 
homebuilder goes under. This event is a certainty. They will fall like 
dominoes unless they to get bailed out.  Mark it down.  A major home 
builder will go under soon. ( Remember we said a MAJOR bank or brokerage 
would go under in July, and wha la ! 4 of them did and many smaller ones!)
I would lay off financial shorts until the rally fades, but this sector 
is gray to me, so hands off for now.

All for now,
Next show- ALL CALL INS   
A FULL HOUR OF YOUR QUESTIONS
Spread the word. Nows your chance.

All the best for now
Sorry to be so morose, but it aint my fault what is happening! :-D
Busy here as you can guess.
Talk soon
Marc

PS:
I am not a republican anymore, but I laugh when I see this. The Democrat 
leadership is caught on the video stopping Fannie and Freddie 
Regulation, saying housing is "as safe as anything" and now they deny 
this took place. This is an actual video of the Senate hearing.
WATCH IT.

http://www.breitbart.tv/?p=184743

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