The suckers rally of August will be less than ameusing to the serious money. The rebalancing of risk and portfolio’s for year end balance sheets will begin. The earnings to price ratio to stocks is out of whack with history and economics. The yeild curve on bonds with negative interest is silly money. The adjustments to off load these rebalancing agenda’s will impact the market with a return of volatility we predicted all summer.

We further warned that a SUPER CRASH is likely and possible in October. The Fed is now the lone slinger on world economic policy. Nations have given up their policy options over years of time by failing to invest in infrastructure – to really stimulate jobs and economics – while pulling back on spending. Save for buying the big banks bad investments we call quantatative easing. Said another way – tax payers acquire trillions of investment crap the banks do not want and this keeps the banks reporting record earnings – avoiding the cost of their risk taking – while their bad managers pay themselves recrod bonus outlays. What is wrong with keeping this system full steam ahead?

Do you think serious money managers do not understand the musical chair game of yeild search at all costs versus real saftey? When real saftey kicks in the speculations going on will receive a huge financial kick in the ass. Only the short sellers in ETF’s will make fortunes in that future market.

One mentor in Wallstreet said recently – I have the future strategy that works – short everything.

Big guns are moving to cash.

Big players are sliding out of the market this week which is why the big roar up has been muted as no one wants to show their hand ( yet ). So the market is loosings a lot of support but its spread and gradual. Until next week. Two weeks into September things are going to look a lot different.

Lets look at economics:

  1. Either consumers spend or government spends or both spend to create growth.
  2. If there is pull back due to confidence there is contraction.
  3. Today the market of investing in growth – stake holder investing – is exceeded by 10 to one in side bet investing – as to which way a price will go – on everything.
  4. Side bet markets are speculations – manipulating price – and add no value to the economy.
  5. Today THE economy is limping along because investment has ciculated at leverage at 10 to 1 in side bets versus real economics.

The market is going to adjust to all this and the price of stocks and the price of bonds are a hair trigger – away – from a great RUN away from stock and from bonds. We have been predicting the next danger periods for a great many reasons is OCTOBER and March period of next year – so we’ll watch.

The wild card is free money – and enomrous leverage on the free money – used to manipulate prices in the market. When the entire market moves away from this “game” all at once – a SUPER CRASH contagion and panic rule the markets until they rebalance.

So keep your search light on BRIGHT right now.

Berny Dohrmann – Three Weeks from CEO SPACE Orlando – Sept 26th join us