Prepare for Earthquakes
“Southern California’s section of the San Andreas Fault is ‘locked, loaded and ready to roll,’ a leading earthquake scientist said Wednesday at the National Earthquake Conference in Long Beach,” reports the LA Times, May 4, 2016.
The LA Times submits, “The San Andreas Fault is one of California’s most dangerous, and is the state’s longest fault. Yet for Southern California, the last big earthquake to strike the southern San Andreas was in 1857, when a magnitude 7.9 earthquake ruptured an astonishing 185 miles between Monterey County and the San Gabriel Mountains near Los Angeles.”
It has been quiet since then — too quiet, said Thomas Jordan, director of the Southern California Earthquake Center.
“The springs on the San Andreas system have been wound very, very tight. And the southern San Andreas fault, in particular, looks like it’s locked, loaded and ready to go,” Jordan said in the opening keynote talk.
It’s never the bus you see that can disrupt your day when crossing the street
As I am fond of saying, “It’s not about the prediction, it’s all about the preparation.” Whether shock and awe is the result of a serious earthquake to land or to markets, my job is to help you to get ready to do what you can to keep your assets intact. This way you may be on the news telling your story instead of a statistic in the news, where other people are talking about how much you, or your money, are missed.
With the S&P 500 year to date return, 0.35% on May 4, 2016, according
to CNN Money, it may be that the markets have too quiet too. The May 3,
2016 ‘big sell-off notwithstanding, it is pretty clear that after
a big run, we could be in for some volatility, especially this summer.
The one thing that the markets almost always respond negatively to, and
this is even more so than bad news, is uncertainty. And no matter how
you slice it, we won’t know who will be president until after the
election in November. It looks to be a Hillary Clinton versus Donald Trump
match up, and the fireworks likely are just beginning,” said Lee
Jackson at 24/7 Wall St on May 4, 2016.
Stan Druckenmiller, who runs Duquesne Capital, says that “the bull market has exhausted itself” after eight years of a “radical monetary experiment.” Yahoo Finance, May 4, 2016 Druckenmiller said that “policymakers have no ‘end game’ for ending years of ultra-easy monetary policy, which central bankers unleashed during the financial crisis.”
The sell-off was fueled at least partly by investors' concerns about China slowing, the US grinding to a halt, and corporate profits falling, according to Yahoo Finance, May 3, 2016. That sell-off continued through mid-February before a surprisingly sharp bounce that sent markets positive for the quarter.
“It was a strange quarter,” hedge fund manager David Einhorn, the founder of Greenlight Capital, wrote in a letter to his investors dated May 2, 2016. “The S&P 500 (^GSPC) spent the first half of the quarter going straight down. Then in the spirit of ‘never mind’, it turned on a dime, recovering all of the loss and then some,” he wrote.
Einhorn went on to warn that ‘many companies are only beating earnings estimates because expectations have been lowered. For the most part, when companies post earnings that are higher than analysts’ estimates, the shares tend to trade higher. If the earnings results miss, the share price usually falls. Many companies right now are simply beating a lowered bar.”
In his May 2, 2016 message to subscribers Harry Dent wrote, “This ‘market on crack’ is like a Pavlovian dog trained to just go up on any news. The Fed and central banks around the world have left no other place for investors to put their money. The market has really, really tried to rally to new highs, with total faith that the Fed will never let them down. Whether they make it remains to be seen, but I have my doubts.”
Dent has been using a rounded top pattern since late 2014 and it has shown a clear pattern over the last two years. The chart below indicate that the markets may have gone as far as they are going to go, unless they do actually achieve new highs from here;
Mother Nature & Father Time hold trump cards
This year, for the first time ever, the US has 76 million people ranging in age from 52, like Michelle Obama to 70, like George W. Bush. As has been shown here, thanks to the US Census Bureau, the buying patterns of ordinary people look like a water fall, in decline year after year from age 55 forward. The fundamental news keeps working against central banks efforts to cause consumers to spend. Dent submitted on May 2, 2016 that there are four headwinds. “Slowing retail and luxury sales and manufacturing. Slowing earnings over the last year and disappointing earnings recently for the top tech and growth companies, like Apple, Microsoft, and Starbucks. Continued terrorist attacks across Europe. First quarter GDP has come in at just 0.5%.”
It is my recommendation that savvy investors take the time now to see what they can do to participate in market growth as they identify strategies that may provide some relief during significant market downturns.
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