Exceptional Bear’s long-term outlook is defined by a likely crash by year-end 2010 to highly undervalued market levels, substantially below the March 2009 lows. The minimum plunge for the S&P 500 is 600 although 300 is more likely. From this highly oversold position the Mother of All Rallies will begin to accumulate momentum, leading to the Mother of all Bubble Tops in approximately 2 ½ -3 years - followed by the Crash of three Centuries. The second Great Depression, or the Greatest Depression has been merely put off, rather than averted, at a great cost to society.
In Elliott terms, 1929-1932 represents wave 2, and the Bear Market beginning in 2000, wave 4 of a collossal 5-wave Supercycle. We can expect at least 15-18 more years of Bear Market. Click here for full-size graph.
“After one bubble bursts, the only way to get out of the resulting recession, and to avoid depression, is to create another bubble by lowering the cost and increasing the availability of credit, particularly for housing.” Ed Yardini – Economist
Optimal Positioning for optimal profits
Whether you're an investment professional, determined to make money in the Bear Market or an individual who just wants a little help squeezing the most out of the Grizzly, we can help. Optimal positioning means inverse funds until we trough, followed by a “long” allocation in those market sectors most likely to participate fully in the upcoming Mother of All Rallies.
Austrian Theory Investing
"Make no mistake, with a little market timing the next 9 months will be profitable beyond your wildest dreams”
Once a week subscribers receive Elliott candlestick charts comprised of our current holdings with a brief description of the future prospects. Although most subscribers find it most advantageous to stick with the recommended allocation, money mangers who are restricted as to their holdings periods and asset classes often use our Timing signals to “lighten up” at tops and buy back at bottoms, thus leveraging their portfolio’s returns as long-term investors. Others successfully modify their cash holdings based on our signals. Stocks move in sync.
Our trading signals are delivered via email by noon Eastern Standard Time and contain an allocation of nine to eleven Exchange-Traded Funds and stocks or “no changes”. There are two sub-categories Traders for taxable accounts; Pension for tax-deferred, retirement accounts. Although the two allocations are frequently similar, Pension reserves 50% in cash most of the time, to back out the leverage and much of the volatility, while enabling reversals without having to wait 3 days for settlement.
Those who cannot execute by the close, can place trades for the next day’s opening, without significant slippage. Under the current market conditions we reverse approximately every 7-10 days for maximum profit. Once the collapse gets under way, trading should be far less frequent. Optimal positioning together with expert timing translates into optimal profit.
What to expect as a subscriber
While the market bottom is not yet in, we should be find the trough somewhat below the March 2009 low. The bounce from that trough should easily take the market up 100% in the subsequent nine months. Long-term investing consists of positioning your portfolio at the trough for the Mother of all Rallies. This final Bear Market Rally will climax in the Mother of all Bubble Tops, likely 2-3 years away. Afterwards, a Crash of unimaginable proportions will kick off the Great Depression of the 21st century. Long or short, Exceptional Bear will guide you for maximum profitability.
Keynes Fairy Tale - A permanent boom
Followers of John Maynard Keynes believe the bust can be side-stepped and the boom prolonged forever through the Fed’s tinkering. In reality all living things operate on cycles, likewise the economy, which is an extension of human activity cannot operate otherwise. Take the sleep-waking cycle for example. If we attempt to cut out sleep for any extended period, our health requires an prolonged recovery period and our lifespan is shortened. An extreme example is the drug crystal meth-amphetamine, invented by Hitler’s scientists to keep the army fighting for days without sleep. Initially it made the German Army appear invincible, however longer-term it brought down the Third Reich with a tired, old army – fatigue makes cowards of us all. Keynes’ fairy tale cannot exist in the real world.
A permanent boom, which Keynes envisioned, is a great idealistic notion like Communism, which in reality never works. The trade cycle operates like the wave principle on alternating excesses of optimism and pessimism. Therefore on the optimistic cycle there is excess investment, which eventually goes bankrupt. You cannot keep it going forever with government tinkering. Government manipulation instead magnifies the downturn by having artificially sustained it, with low interest rates and easy money. The net effect is a far worse drop and acceleration to the bottom, than would have otherwise occurred naturally. Hence the Fed by attempting a short-term fix continually aggravates the economic situation.
The Austrian Theory of Boom & Bust
The Austrian Theory of the Trade Cycle, as elaborated by Ludwig von Mises and Nobel Laureate, Frederick Hayek states that artificially low interest rates, lead to misappropriation of capital. Once the artificial stimulus is withdrawn, the businesses created with this easy money fail, having wasted precious resources and crowded out more deserving projects from funding. While a zero Fed funds rate temporarily eases the pain, it likewise postpones and aggravates the severity and duration of the subsequent Depression. It’s like treating arthritis with anti-inflammatory drugs. While they numb the pain, they also prevent healing; creating a downward spiral where the patient requires larger and more frequent doses just to get through the day.
What differentiates Exceptional Bear?
1) A Big Picture perspective of the Bear Market, consistent with the Austrian Trade Cycle Theory and the Wave Principle.
2) Real-time, intra-day market updates to make sure reversals are spotted and acted upon in a timely manner.
3) Simple and practical end-of-the day trading signals, so you are not tied to your computer all day.
4) Coverage of the most promising market sectors with just one subscription (optimal asset allocation)
5) Direct and to-the-point buy & sell recommendations for each market sector.
6) Proven track record of excellence.
