- The bull market is dead. It was shot in the head and
gutted - and its decaying carcass has been smelling up the neighborhood
for the last three years. Even last summer, I can recall so-called investment
experts who claimed that the bull was just taking a nap - it is now in
fashion to insist that because of the success of the war in Iraq, a reinvigorated
economy and revitalized bull market are just around the corner.
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- This, ladies and gentlemen, is nothing more than the
ripest, rankest bovine excrement.
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- The first lesson is: Believe nothing from the financial
media. They make the ABCNNBCBS news cabal look honest - Friday morning,
the consensus prediction on a decline in March Nonfarm Payrolls was 29,000.
But hours after the release of the data, which was 372 percent worse than
predicted, the same news source was citing "a whopping loss of 108,000
jobs vs. the expected loss of 60,000 jobs in the U.S. economy in March."
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- Even worse, the headline was an attempted spin to the
positive, "Blue chips move higher despite jobs data." Let's see,
should we write about the massive and unexpected loss of jobs, or the Dow
going up one-third of one percent? That's easy! Buy! Buy! Buy!
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- Here's the facts. The average market-weighted price-to-earnings
ratio at a bear-market bottom historically averages 7.4. The current P/E
ratio for the Dow is 22.9, down from 44.7 at peak - and that's if you buy
into the official earnings with their fictional pension returns and unexpensed
options - the real P/E is probably close to 70 right now. Furthermore,
the average dividend yield at a bear market bottom is 8.3 percent, whereas
the Dow blue chips are yielding all of 2.3 percent. Yeah, them's some real
cheap stocks right there!
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- Now, I have no doubt that the Federal Reserve, believing
as it does that a failure to print enough money caused the Great Depression,
will eventually cut interest rates to zero and print scads of money too.
But it won't work. Growth through inflation has not worked since the first
king got the bright idea to debase his gold coins, and it won't work now.
The bull market of 1999? It's called asset inflation, and it's going on
right now in a house near you. The truth is that the Federal Reserve, also
known as the Magic Inflation Machine, is an unmitigated disaster. Yes,
it's unconstitutional, and yes, it's nefarious, but even worse, it's hopelessly,
stupidly incompetent!
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- Which is frightening to consider, when you realize that
the Fed's main task at hand is shock-starting the bull market. Ignoring
the stink of rotting flesh, the director of the Fed's Division of Monetary
Affairs recently came right out and said: "If asset prices don't adjust
sufficiently to stimulate spending, then open-market purchases of long-term
Treasurys in sizable quantities can move premiums lower."
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- Translation: If the markets don't go up soon, we're going
to inflate the smack out of this dead pony!
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- I tell you truly: Any rally given momentary life by a
250-amp monetary infusion will not so much be a bull as a shambling, undead
zombie beast with horns. So here's a prediction you can hang on your refrigerator:
By the time this Great Bear has finished shredding the viscerals of the
American equity, bond and real estate markets, the Dow will be at 1,500
and you will be able to purchase the entire index with a single ounce of
gold. This process will take years and will be extremely painful for the
vast majority of those concerned.
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- So what to do? Save, don't spend, but hold your savings
in gold, not cash. If you refinance your house, use the savings to pay
down your mortgage to provide cushion for when the real estate crash hits.
Subscribe to Zeal Intelligence. Read the the Mogambu Guru. Ditch your tech
losers and mutual funds and invest something like the Prudent Bear Fund.
Above all, don't believe the hype!
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- Personal note: Readers of this column know that I stand
second to no one in my contempt for the mouth-breathing mainstream media.
But Michael Kelly stood out from the pack - a lion among jackals, with
his common sense and genuine interest in the truth. He was a talented writer
and a warm-hearted man whose love for his family and his country never
ceased to shine through his writing. May he rest in peace.
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- Vox Day is a novelist and Christian libertarian. He is
a member of the SFWA, Mensa and the Southern Baptist Convention. He has
been down with Madden since 1992.
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- © 2003 WorldNetDaily.com, Inc.
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