Wednesday, August 10, 2011

Stock Market's Dead Cat Bounce - Preparing for Devastation

My mobile notary business is most always affected by the stock market so one might imagine how I've received few calls since Friday.  People tend to use mobile notaries as a convenience and are willing to pay an extra mobile fee as such.  I'm commonly called out to the homes of CEO's and wealthy people who have business deals they're finalizing who need notarizations.  Notarizations are also closely related to the banking industry.  Therefore my motivation for keeping on top of the stock market should be obvious to anyone.

Yesterday I was a little relieved along with everyone else that the market seemed to partially recover though I knew I was only deluding myself.  To think the stock market had somehow recovered was just a means to postpone the inevitable since what happened yesterday is what they refer to as a "dead cat bounce".  My apologies to cat lovers, that's just what they call it.

At first I thought it was great news Ben Bernanke of the Federal Reserve announced they were committed to keeping the interests rates low through 2013.  Low interest rates in my business are always a good thing since people only tend to purchase homes or refinance home loans when the rates are low.  In fact, when interest rates go up significantly, it's an instant death and dead on arrival for us notary loan signing  agents except those who have been around a long time.

Unfortunately, what's more notable then what Bernanke said yesterday is what he didn't say.  It's clear something is amiss since there was no announcement of any further quantitative easing measures, the projected next stage being QE3. No offer of help through QE3 is a sign of doom because what it means is they aren't going to do anything to stop what's happening.  In fact, all they're really offering to do, other than keep interest rates low, is continue to print out money that can only cause hyperinflation from the U.S. dollar's devaluation.
"Once the Fed made their announcement, the market went haywire.  At one point the Dow was down more than 200 points, but by the end of the day it was up 430 points.  It was a desperate move for the Federal Reserve to pledge not to raise interest rates for the next two years, and it has stabilized financial markets for the moment.  But what is the Fed going to do to save the stock market when it starts crashing next week or next month?"  - The Federal Reserve Saves the Stock Market - The Economic Collapse Blog

Greenspan says all the U.S. has to do is have the Fed print out more money and that there's a "zero probability" of a default.  What a bunch of hogwash!

What's happening in the stock market is much like what happened back in 2008 of wild roller coaster rides of losses and recovery.  The major difference between 2008 and what's happening now is the Fed isn't going to do anything about it anymore other than what it always has.  As former Fed chairman Alan Greenspan said to the media recently, they are going to continue to drown America in cash debt as their only means of addressing the problem.  Printing more money's not a solution at all and will only lead to a devalued dollar and hyperinflation. It all means money will lose its purchasing power.  

The reason why yesterday's semi-recovery in the stock market is considered by many to be a dead cat bounce is because of what they call the short sale activities. The stock market began to fall around 6:00 p.m. after the bounce and began its slide again today.  As I suggested in a former post, employees with 401K plans are not allowed access to their funds until they quit their jobs.  These employees are therefore sitting ducks who will have much of their portfolio's gutted while inflation attacks the value of their money.  Though there's a tax penalty for early withdrawal, what's happening is too serious to allow anyone to consider keeping their money in a 401K. That's not advice, just my opinion.

It's best to do much research to determine what the right strategy is to save one's assets from severe depletion at this point.  For me it was clear getting out of an employer's 401K plan and owning my own business was the best option.  I don't make nearly the money I used to, but there are clear advantages to not having an employer.  To me, it makes no sense to keep a job as a sitting duck that only those in denial or in a bubble world could possibly continue rather than preparing their homes and personal lives for what lies ahead.

One other thing to note, word has it that Bank of America is set to collapse. (See Bank of America On The Verge of Collapse - Pat  For those who bank at BofA you know what to do with this information.

Many of the recent unemployed should be thankful they at least have access to their 401K for immediate access and conversion in preparation for what is to come.  Defensive weapons for likely rioting, security camera's and alarms, food, water, and bartering supplies should be a priority to common sense folks.