Investment Cycle

Boom to Bust and Back

My experience in 50 years of stock market

watching is that there is usually an index leader

that usually precedes the fall of the whole market

If you listen and watch carefully for signs that a

particular part of the economy is doing

extraordinarily well and then start following an

index or a basket of stocks in that area of the

economy you will probably notice a decline that

will preceed the whole market by several months

-

Early in 1999 the Technology Stocks reached their

High and started to fall.Within a year the S & P

Index and the rest of the Market started to crash.

It reached the bottom in 2002 [It was not caused by

9/11] 

The Technology Bubble Greed had caused a

 Recessionon the Bush watch. He wanted it over

 fast. He cut Taxes of the Rich and lowered interest

rates on mortgages to pump up construction.

It work so well that they kept them low and

invented new types of 100% mortgages including

the ARMs and other sub prime contracts.

Brokers sold them any way they could to earn

the big commissions. They sold the bad

mortgages to banks. Bankers get rid of

them to private investors as securities and raise

more money. The bubble grew ever bigger until the

 Builders finally built too many houses. Supply out

stripped demand and prices started to fall.

The bad mortgages began to default and prices

fell farther.The mortgage securities started to

fail and in the fall of 2008 the cards came

tumbling down. Greed had again hurt the

working man and made the Bankers richer.

The Taxpayer bailed out the big banks and

unregulated Capitalism had come full cycle

again.Greenspan said we just missed the signs.


Now we know what to look for. We don’t need to

overregulate the banking system. As they say in

 Battleship Galactica “This has all

happened before and it will all happen again”

As Cassius observed in Julius Caesar.

“The fault, dear Brutus, is not in our stars,

But in ourselves, that we are underlings.”

The lesson to be learned is that is possible to

foresee the turn in an economic cycle.

Follow as many indexes as you can that

measure important segments of the economy.

When you see one that is booming too much in

excess of the general economy you wait until

it makes a dramatic change in direction.

Then you move your investments in the Stock

Market into fixed income investments.

When the stock market falls substantially

(wait at least a year) you start to move your

investment back into different types of Mutual Funds until at least 80% of it is invested. Then you wait

for the next Boom and do it all over again.

This is not an attempt to make exact market 

timing.That is not possible. You simply want to ride the curve up and get out.  Then get in again when

 you spot another annomally after enough time for the Market to reached bottom [ about a year on 

average]. This is a lifetime method for investing. It is not a short term adventure.

Copyright © William Hodge 2010

The Room by Ray Melnik

The post below came from my Website

http://paxvillage.com/

I am thinking about building a new website

and wanted to put my blogs here where I

started blogging so I would not lose

them in a process of changing over

and they would still be available for reading.

Ray Melnik and I became friends on Face book.

He has a brilliant and logical mind and I have

enjoyed exchanging ideas in conversations with

him. I was delighted when he was gracious enough

to send me autographed copies of three of the

books he has written.

When Ray sent me a copy of his book The Room

I expected it to be Science Fiction and it was.

But It was a lot more . It is also a Love Story and

it is a story about family relationships and the

consequence of the decisions that are made.

The protagonist and narrator of The Room is

Harry Ladd, a recently-divorced wiring technician of modest means

.

At the heart of the story is Harry’s interaction with

his dying mother, who suffers from the delusion that

she is living 24 years in the past. She thinks Harry is

twelve years old and she keeps asking him about his

absent younger brother, Malcolm, whom she wants

to see. It involves adult concerns of a man who is

father, brother, son, divorcée and lover in his new

romance with Lacie.

“If multiple universes were true and somehow

two of those universes could lightly touch, creating

a bubble, what would be the consequence of

decisions changed in the past”.

This concept is the Science that furnishes the twist

in the fiction. What happens in the future if different

choices are made in the past.

http://www.emergentnovels.com/synbook.htm

It is a very enjoyable read and I recommend it.