[Money-matters] FW: [Money Matters Newsletter] Market Screams at Ben- "Dont stop the party Ben!" Update June 23, 2013

Mon Jun 24 00:13:41 UTC 2013

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From: Money Management Radio [mailto:news at moneymanagementradio.com] 
Sent: Sunday, June 23, 2013 5:12 PM
To: "marc"
Subject: [Money Matters Newsletter] Market Screams at Ben- "Dont stop the
party Ben!" Update June 23, 2013

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Market Screams at Ben- "Dont stop the party Ben!" Update June 23, 2013

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Marc's Notes:

Wow, what a week. The markets sure did not like Ben Bernanke threatening to
take away the punch bowl full of printed money. Not that he will anytime
soon, but just the mention of it sent world markets into a tailspin.
Interest rates soared, bonds and stocks plummeted. Gold got hammered as
well. I did the show last week on this market fall and what to expect but
for those who missed it, I mentioned that the markets are addicted to cheap
money from the Fed and bond markets are as well. Any whisper of the drug
(printed money) being withdrawn and the addicts go crazy and did. I hope
everyone heeded the suggestion to have mental stops or real stops in place
to protect profits as well as to sell bonds. (I said that last year and
repeated it often).

As for now, we wait to see if the fall will stop but the real canary will be
if interest rates stop their ascent. If they do NOT, then we have the chance
for real problems. Debt soaked economies everywhere will face rising
financing costs and real estate will fall off a cliff. We will see if Ben
can keep interest rates from rising. He has been and will be buying truck
loads of debt to try and stem this rise. I have always said he will NEVER be
able to stop his printing. The economy is too addicted to it. He will talk
about it but will back down when the markets react as they just did. He will
claim the economy is still too fragile. He is right of course. They are too
fragile to exist without the printing press that is! 

Stock holders, we may be in for more downside but trust that partying Ben
will bring out the punch bowl again as soon as the crowd complains of
hangover. Just the MENTION of Ben leaving sent markets into a tailspin!

For now, be careful, set stops or watch for further erosion. With only the
recommended 10- 15% in stocks, you cant get hurt too badly. As for bonds,
get rid of any long term bonds if you have not already and hold only short
term government or AAA rated debt, but all short term!

As for our insurance, gold and silver, the underlying reasons for insurance
has not changed. To be held JUST IN CASE the dollar implodes!

Hold your interest rate funds shorts (TBT and SJB, RRPIX) and hold your
foreign annuities and currencies as well as maintain your foreign bank
accounts. Watch interest rates! They are your clue as to what is next. Watch
for Ben to announce a back track or put his minions out to start hinting of
such. Ben will print again!

Want to attend class? Learn what to do? Email me!
Want to meet? Email me. I have a bit of free time this summer but not much.
Get in early or wait in line until the fall when I return from vacations.

For now, read this below and think gold and silver.

Markets do their best to fool you- Look deeper

Most investors don't realize that even in bull markets severe corrections
can still take place without violating the premise of what makes a bull
market.

What I mean by that is take the typical stock market. Investors tend to
think bull markets always have to rise in price to signify a bull or up
market is indeed continuing.

Technically speaking this is far from the truth. Bull markets usually have
significant and ongoing price increases but to really be a true bull market,
severe corrections can and usually do take place.  It's sort of like back
filling. Prices that continually rise are more like bubble markets and
usually end badly and cannot be sustained over long periods.

A straight line up in prices signifies an irrational exuberance and that
investors have tossed caution to the wind. These linear price actions that
rise like rockets on the Fourth of July are not a sign of a true bull market
but of a market that has left reason behind and morphed into mania.

Our recent real estate market comes to mind. It had little or no pull back
over its life span and with this unrelenting meteoric rise came the
catastrophic fall.

True and healthy bull markets rise in fits and starts, up strong one day
then correcting some the next.

This up and down motion in price with a tendency towards always ending
higher over a long period of time are the way true bull markets rise.

It is said bull markets rise on a wall of worry, a worry that they may fall
anytime, but its long term trend is always up. Corrections take place all
along the rising curve, and it's these corrections that are the back filling
of the price rise before it.

The corrections are investors who got in earlier taking profits, and severe
corrections tend to wash out what is called the "weak hands", those that
don't have the stomach for quick routs in price action. Smart investors know
that by holding thru these corrections or even buying more is the way to the
big money.

Skittish investors tend to sell on brief falls, giving up their shares to
those who see the real trend.  Severe corrections can give back almost half
of the total increase and still qualify as bull markets.

It's these dramatic corrections that can cause even the savviest investor to
question his positions and as to whether the end of the bull has arrived.

It's difficult to tell just when a bull has ended and therein lays the
problem. How do you know when to sell and if the bull is truly exhausted? 

By focusing on the reasons the bull took flight in the first place is one
way you can get a feel as to what is to come. Find the underlying reason the
asset began to rise and stick to that.

If the initial reason or reasons still exist, a drastic price fall might
only be the markets way of trying to fool you.

This article expresses the opinions of Marc Cuniberti. Mr. Cuniberti hosts
"Money Matters" on KVMR FM 89.5 and 105.1 FM on Thursdays at noon. He has
been featured on NBC and ABC television and on a host of made for TV
documentaries for his economic insights. His website is
www.moneymanagementradio.com <http://www.moneymanagementradio.com/> 

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