STOCKS: 1999 REVISITED - Richard Spohr, SATC

STOCKS: 1999 REVISIED - Richard Spohr, SATC

Nov 21, 2003


This is 1999 revisited.

Stock valuations...at their 'greatest' P/E ratio madness since 1999.

When the 'greater fools' kept pushing the market higher in 1999 despite the insane valuations, I felt sorry for the impending financial doom they were about to experience.

Well...not this time.

They have heard the 'prophets of doom' telling 'em that the 1929 market bubble implosion took 25 years to bounce back. They heard the word about the 1989 Nikkei market bubble implosion costing investors 75% of their money 14 years after the fact. And they heard about the 2000 U.S. market bubble imlplosion taking a decade - at least - to bounce back.

But they ignored that latter warning.

And that's why I won't feel sorry for those greater fools this time around.

Personally, I hope the mindless speculation in the overvalued markets reaches new, all-time highs, because, as Jeremy Grantham notes, there is a stock market 'black hole' coming in 2005.

Or, as Warren Buffet notes, "the US dollar is doomed to drop 40%."

Or, as Templeton notes, "the markets are grossly overvalued and unworthy of any investment."

Or, as Pimco's Bill Gross says, "stocks are shockingly overvalued."

Or, as Jim Grant says, "the dollar is going to continue to tank and the markets have outlandishly high P/E ratios."

Or, as Morgan Stanley's Steven Roach says, "the market levels of today are not sustainable, given the horrendous global imbalances."

Or, as PrudentBear.com's Doug Noland says, "the debt bubble is going to bring down this whole house of cards that is the US economy."

Think about it.

Who do you trust?

Abby Joseph Cohen? Ned Riley? Joe Battipaglia?

Gimme a break!

Another 30,000 Americans declared bankruptcy last week.

In September, more than $15 Billion was added on to US consumer credit card debt.

Corporate insiders are selling 34 times more shares than they're buying.

The US trade deficit is at half a TRILLION dollars a year.

The US federal budget deficit is at a record half a TRILLION dollars a year and growing.

U.S. homeowners - because of the refi mania - now own a smaller percentage of home equity than ever before in history.

Manufacturing - which used to be a big part of the U.S. economy - now accounts for slightly more than 10 percent of the US economy.

Pension plan shortfalls are at panic levels.

State and local budgets are experiencing their worst shortfalls in 50 years.

U.S. federal government spending has increased 27 percent over the past two years.

The U.S. currency is falling faster against other currencies than at any time in recent memory.

P/E ratios of stocks are now at 2000 "bubble" levels.

And even the 'bears' are bullish.

It is to laugh.

Run it up.

Get those markets to new all-time highs.

And then reap the consequences.

Financial reckoning day is coming.

There will be no pity here.

Buy, buy, buy.

And hold.

And lose it all. Even as your pension plan implodes.

No pity here.

You don't deserve it.

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