Investing

There is little the United States can do militarily to change the outcome in Ukraine...but this does not mean the United States is helpless. No sooner had the Russian invasion become clear than the White House announced the possibility of economic sanctions against Russia....By implementing such sanctions, the United States has moved in the direction of a new kind of warfare — not kinetic war involving ships, planes and missiles — but financial war involving cash, stocks, bonds and derivatives. The policy question, and an important question for investors, is how far can this type of financial warfare go and how effective can it be? What will the impact of financial war be on markets in general and investors in particular?

With both the fundamentals and the technicals saying the stock market is a risky place to be, we await its crash back to reality. Here's why.

Every time the number of, or specific constituent, companies change in the Dow index any comparison of the new index value with the old index value is impossible to make with any validity whatsoever. It is like comparing the taste of a cocktail of fruits when the number of different fruits and their distinctive flavours – keep changing. Furthermore, because of the application of the ever changing Dow Divisor, we are always comparing a basket of today’s apples with a basket of yesterday’s pears.

Copper has just met the lower resistance line of its descending triangle pattern and should it break through that resistance the price for copper could fall like a stone. That, in turn, would have a MAJOR "watch out below" impact on the future level of the S&P 500. Let me explain.

We fail to pay attention to the warnings signs as long as we see no immediate danger and keep our foot pressed to the accelerator believing that since it hasn’t happened yet, it won’t. This time is only “different” from the perspective of the “why” and “when” the next major event occurs. Below are analyses and exhibits to support that contention.

Stock market volatility, directed mostly to the downside this year, has caught the attention of anyone with funds at risk. The obvious question on most people’s minds is whether to get out or to put more money in. Advice going both ways is readily available. Here are some such articles. Take them into account and make your own decision regarding whether this correction is an opportunity to buy or a signal to sell.

Warren Buffett's favorite indicator - the ratio of the value of U.S. stocks to GDP - is seen by him as a reliable gauge of where the market stands and these days it suggests that all the main indexes are pointing to an imminent 50% crash.

The tables below provide an update of where the current S&P 500 bull market stands in comparison to prior bull markets in terms of duration and magnitude

Investors generally assign higher multiples to many Nasdaq firms, as they expect significant future growth, but if volatility ensues and growth, which is already priced in, isn't realized by these firms a violent reaction to broken promises will ensue just as happened in 2000. For that matter there are a number of similarities between the current level of the Nasdaq index and back then that strongly suggest that the bubble is here. Let me explain why I believe that is the case.

Now marketing himself as a “rogue economist,” Harry Dent is forecasting “gold down to $750 an ounce, housing down 35%, oil down to $10 a barrel, the Dow down to 6,000, [and] a war between inflation and deflation” this year. His swami-like predictions in the past have been truly dreadful but, unlike most of his ilk, Dent has perhaps offered something actionable, if not in the way he intended. Let me explain.