Comments on the Crash and When to Buy

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I am not predicting a 1929 style crash. That doesn’t mean it won’t happen. In 1929, investors were on their own. Today we have constant government intervention in the financial markets. Circuit breakers may smooth out the decline. I am guessing there will be a lot of two to five percent down days.  It doesn’t matter how fast the decline occurs, just know that it will continue. Expect government inspired game changing news that could blow traders out of any short positions. The bear market will last at least two years. Damage from Quantitative Easing and other political initiatives will be so sever, it will take decades to recover. We may not recover completely and the entire political system we live under may collapse.

The situation is very bad and it behoves all to be forewarned. The reasons cannot be reduced to numbers. More than anything the nation’s resources are allocated so inefficiently, real growth is not possible. Quantative easing and other other market rigging schemes replace price as the main resource rationing mechanism. There are no numbers that can be attached to to this problem. We just have to know the damage is there and there will be consequences. Free market principles cannot be replaced with central economic planning in ways where everything comes out o.k.

There are stocks trading at around $500 per share that are not worth $5.00. Amazon.com (AMZN) is one of them. There are many.  Apple (APPL) is a highly profitable company but it is vulnerable to at least two external threats. Tastes and preferences can change in such a way that owning Apple products no longer makes a person the coolest dude on the planet. There is another principle called, “The second rat gets the Cheese.” Apple has developed a lot of technology others can copy and then offer similar products cheaper. There are many companies in Apples circumstances. Corporations which have had by back programs are going to start taking steep losses on these positions.

Count on government initiatives aimed at “saving the market”. Don’t expect short positions to go straight down.  News will be constantly created in efforts to turn the market.

I don’t give direct investment advice. Why? I feel too guilty when it doesn’t work out. I do explain what I am doing. As stated earlier, I am mostly in cash with the rest in bear etfs and just a few short positions.  Mainly I want to go long at once in a life time low prices. The strategy is simple. Here is a chart of Exxon Mobil (XOM). With patience is will be possible to buy stocks as they touch long term trend lines. With Exxon Mobil, I expect to be able to buy the stock at around the red trend line. The idea is to start buying the largest and most stable corporations in the world. These kinds of stocks will survive. Many of today’s most popular stocks will not survive. 082415_XOM

 

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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.

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