Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

[DRumsfeld2000]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

thriftyandboringinohio

'The second (from Fred on a thread in Trader’s Corner today) is that the market is not the same as it was when RR made his bones the Fed now intervenes big and intervenes often.'

If that is how you see it, then simply put all your money in the market as it will be an eternal bull and you cannot loose. Persoanlly I hope that the market is bigger than Governments, if not then this whole exercise of investing is utterly pointless in my opinion.

[marvenger]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

Are you sure the oligarchs are in consensus of what they are doing anymore. It seems like you're assuming the trend of the few decades will continue forever, which by definition is impossible. What will have to have happen for you to consider a game changing turn of events.

[ThePythonicCow]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

Are you sure the oligarchs are in consensus of what they are doing anymore. It seems like you're assuming the trend of the few decades will continue forever, which by definition is impossible. What will have to have happen for you to consider a game changing turn of events.

To whom or to what comment are you responding, marvenger? Sorry -- but it's not obvious to me.

[marvenger]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

Sorry PC

it was to EJ. Double entry accounting has been sold to the public on self-regulating ability of markets and banks that would never risk their reputations as its against their self interest. Well that didn't workout so well and noone trusts anyone. Don't see how the double entry paradigm can last for ever, just like anything. Was wondering what the iTulip team was looking for for game changing events. Unless of course its the end of history.

[gnk]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

No one seems to understand the concept of double entry bookkeeping, and it's hard to teach without causing eyes to glaze over.

“The process by which banks create money is so simple that the mind is repelled.”

-John Kenneth Galbraith

[LargoWinch]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

“The process by which banks create money is so simple that the mind is repelled.”

-John Kenneth Galbraith

Exactly. If iTulipers are still confused about inflation/deflation debate, well I can just imagine the state of mind of the average investor.

About a month ago, I attended a conference by the Bank of Canada about inflation (they believe it is well under 2%) and I ended up sitting next to a mutual fund manager. This gentlemen was adamant that deflation was just around the corner despite my attempts to point out the price of crude and especially the cost of my taxi to get to the event.

Great investment opportunity comes to mind!

[Chomsky]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

Toast, you've been here for a long while now; why not go back and revisit the many EJ pieces on deflation? Like:

http://www.itulip.com/forums/showthr...umber=&p=57193

Etc.

[we_are_toast]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

Toast, you've been here for a long while now; why not go back and revisit the many EJ pieces on deflation? Like:

http://www.itulip.com/forums/showthr...umber=&p=57193

Etc.

Thanks for the link Chomsky.

The critical take-away is that we are indeed experiencing short term deflation. We call it disinflation here in the context of Ka-Poom Theory to keep readers from confusing the process with the start of a deflation spiral–which cannot happen under a floating exchange rate, fiat money system. The only way it could is if governments around the world all got together and decided to crash the global economy. That strikes us as unlikely. More likely one or more will move to reflate using currency devaluation.

If the Fed so desired the US could have 100% inflation by the middle of 2009 as the US did in 1946. All that is needed is for Congress to borrow a few more trillion into existence to fund old and new liabilities and have the Fed print it because our government cannot borrow the money from overseas or raise taxes, or devalue the dollar, or both.

I don't think I made myself very clear. I'm not questioning whether we're going to have inflation, and I don't believe we'll have a 30's style deflation. But I was expecting Poom by now and instead it seems like we had a small puff and are now heading back into Ka.

As stated in your linked article, it requires congress to borrow trillions into existence and the FED to print it. I simply don't see that happening any time soon, and in fact it kind of looks like "governments around the world all got together and decided to crash the global economy". Poom is not a technical problem, it's a political problem. We are expecting the worlds CB's and governments to make a particular set of decisions, and instead, they seem to be making the opposite decisions.

I think most of us took defensive investment action against Ka, and are trying to take an offensive investment position for Poom. So the timing of Poom may be very important. I have no doubt Poom will come, but when? Wasn't the 1st quarter of 2010 once suggested?

The actions of Europe, China, the U.S. and the IMF, all seem to indicate that Poom may be delayed by several years, or maybe if we replicate Japan, by a decade or more. Maybe I'm the only one that thinks these countries are not taking the actions that will lead to a Poom. I am open to persuasion that Poom will arrive shortly, presented with legitimate data and a reasonable argument, but rather than risk another slap down from EJ , perhaps someone else can present an argument that Poom will soon be here.

[thriftyandboringinohio]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

thriftyandboringinohio

'The second (from Fred on a thread in Trader’s Corner today) is that the market is not the same as it was when RR made his bones the Fed now intervenes big and intervenes often.'

If that is how you see it, then simply put all your money in the market as it will be an eternal bull and you cannot loose. Persoanlly I hope that the market is bigger than Governments, if not then this whole exercise of investing is utterly pointless in my opinion.

I presented two of the best counter arguments in the spirit of open and thoughtful discussion.

My money is on Russell. More precisely, my money is in physical gold and cash because both EJ and Russell recommend this and both have clearly amazing track records. I don’t view the differences between EJ and RR as important. They both seem to be discovering the same truth approaching from two entirely different directions. I don't subscribe to RR or follow him closely because technical chart analysis doesn't appeal to me or stick in my brain. I do subscribe to EJ and follow him closely because his original work on the fundamentals of our economics does appeal to me and does stick in my brain (a little).

[thriftyandboringinohio]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

..No one seems to understand the concept of double entry bookkeeping, and it's hard to teach without causing eyes to glaze over. What to do? Obviously the results of our analysis over the past 12 years is insufficient. We have to keep re-proving it over and over.... It's as if we are starting over again each time.

Sorry EJ, that's the nature of teaching. Fundamentals, fundamentals, fundamentals. I'm sure Joe Paterno has spent a huge fraction of the last 50 years personally running basic blocking and tackling drills. Of course, Paterno has the advantage that his students don't presume to question him or ask him to justify his position for fear of running laps all afternoon.

Thank you for doing this, and please keep it up.

[DRumsfeld2000]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

I presented two of the best counter arguments in the spirit of open and thoughtful discussion.

My money is on Russell. More precisely, my money is in physical gold and cash because both EJ and Russell recommend this and both have clearly amazing track records. I don’t view the differences between EJ and RR as important. They both seem to be discovering the same truth approaching from two entirely different directions. I don't subscribe to RR or follow him closely because technical chart analysis doesn't appeal to me or stick in my brain. I do subscribe to EJ and follow him closely because his original work on the fundamentals of our economics does appeal to me and does stick in my brain (a little).

I hope you do not take my comments as critical as they were not meant to be. In fact, like you I dislike technical analysis and that is why I subscribe to RR. His work is at least reasonably easy to follow. We shall soon see how things pan out.

[thriftyandboringinohio]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

I hope you do not take my comments as critical as they were not meant to be. In fact, like you I dislike technical analysis and that is why I subscribe to RR. His work is at least reasonably easy to follow. We shall soon see how things pan out.

No worries. And I agree it's way cool to be able to watch one of his major calls unfold.

[Basil]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

thriftyandboringinohio

'The second (from Fred on a thread in Trader’s Corner today) is that the market is not the same as it was when RR made his bones the Fed now intervenes big and intervenes often.'

If that is how you see it, then simply put all your money in the market as it will be an eternal bull and you cannot loose. Persoanlly I hope that the market is bigger than Governments, if not then this whole exercise of investing is utterly pointless in my opinion.

Just for clarification, here is what Fred said: "Much of the dissonance that is freaking out long time observers like Richard Russell is due to, in our view, modest interventions in the markets. More extreme interventions are likey in the case of major corrections. So we are worried about taking the kind of position we took in December 2007 because we believe that intervention via the futures market is now the rule, and 10,000 is the target to the bext of our understanding. Of course, this will ultimately fail, as all manipulation does, but it does make shorting the market hazardous at this stage of the Debt Deflation Bear Market. Just an opinion, no trading advice of course."

I have noticed this with a few other analysts, such as Sy Harding and Steve Leeb; both seem somewhat undone by the fact that their modes of analysis have not been able to keep up with some of the recent changes in the market. Long term Russell is almost definitely right (IMHO), but short term this may be a small correction and then back up again for the most part until the end of the summer or so.

[medved]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

Thanks for the link Chomsky.


I don't think I made myself very clear. I'm not questioning whether we're going to have inflation, and I don't believe we'll have a 30's style deflation. But I was expecting Poom by now and instead it seems like we had a small puff and are now heading back into Ka.

As stated in your linked article, it requires congress to borrow trillions into existence and the FED to print it. I simply don't see that happening any time soon, and in fact it kind of looks like "governments around the world all got together and decided to crash the global economy". Poom is not a technical problem, it's a political problem. We are expecting the worlds CB's and governments to make a particular set of decisions, and instead, they seem to be making the opposite decisions.

I think most of us took defensive investment action against Ka, and are trying to take an offensive investment position for Poom. So the timing of Poom may be very important. I have no doubt Poom will come, but when? Wasn't the 1st quarter of 2010 once suggested?

The actions of Europe, China, the U.S. and the IMF, all seem to indicate that Poom may be delayed by several years, or maybe if we replicate Japan, by a decade or more. Maybe I'm the only one that thinks these countries are not taking the actions that will lead to a Poom. I am open to persuasion that Poom will arrive shortly, presented with legitimate data and a reasonable argument, but rather than risk another slap down from EJ , perhaps someone else can present an argument that Poom will soon be here.

IMHO, the first question is not *when*, but *what*. The 1^st Poom was the stock market, then the housing market. What is the next one? I guess, before inflation takes hold we may still have a Poom in USTs. It does not mean Main Street deflation, it just means speculators moving money from stocks into bonds and from ROW currencies to $US. Consequently, the next Ka will be higher interest rates and bond market correction. Only after that we may get all-out inflation. I would not be surprised, if it took a few more years.

[jpatter666]

Re: Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

Deflation has been forecast repeatedly since we opened shop in 1998, and disproved, yet it keeps coming up. We've run out of ways to explain it again. No one seems to understand the concept of double entry bookkeeping, and it's hard to teach without causing eyes to glaze over. What to do? Obviously the results of our analysis over the past 12 years is insufficient. We have to keep re-proving it over and over. Columbus was not asked to keep circling the world over and over to prove that the discovery of a round earth was not a fluke. We've proved deflation a false worry twice in 12 years, but apparently to no avail. It's as if we are starting over again each time.

As I've mentioned before, no one here (I'd hope) expects long-term deflation -- I think when people mention deflation, they are thinking of a repeat of the 2008 break. Having watched both Fed, ECB, Japanese and Chinese blatant bank manipulations, I think the proper answers are:

Are the circumstances for a deflationary episode in place? IMO, yes.
Will TPTB ever allow such an event to occur? No. Any such risk will be immediately met with money-printing both blatant (TARP II, more European bailouts) and subtle (US swap lines). These maneuvers were not in place for the 2008 break; they are now.
Might such an episode cause stock market dislocations? Yes. We've seen them recently. If you are looking at stocks though, IMO this is not the site for it. iTulip is stock-adverse (for general indexes they are right, for specific sectors and stocks, IMO wrong, but hey, that's why I belong to multiple sites)

And here's a good question for EJ. PMs have been a good purchase yes -- especially if you bought with iTulip in 2001. Would you buy them now?

(edit add)
One more thought -- with popular opinion turning against deficits and out-of-control spending, how might this affect things?