MARKETS… WE GOT TROUBLE: Debt & Brain-Dead Retail Investors Prop Up Stocks

As the Dow Jones Index hits another all-time high today, smart money is rushing to the exits.  You see, smart money knows when something is too good to be true.  Unfortunately for the retail investor who is suffering from acute BRAIN DAMAGE, they are doing quite the opposite.  As institutions sellout on each new market price rise, retail investors are happily buying… hand over fist.

And why shouldn’t they?  These are good times.  Well, maybe not for Americans living in Houston, parts of Florida, California or in Puerto Rico.  Whatever happened to the news on the massive flooding and hurricane damage in Houston, Florida and Puerto Rico?  I remember seeing videos of Miami Beach High-Rise Condos with seawater 5-8 feet surrounding the entire area.  Does anyone have an idea of what happens to electrical systems when salt water floods buildings?  It’s not good.

Regardless… the amount of destruction major U.S. cities have experienced in the past three months is like nothing we have witnessed before.  Regrettably, a lot of these homes and businesses will never be rebuilt.  Not only don’t we have the money to do it, more importantly, we also don’t have the available energy.  While the massive destruction by hurricanes, flooding and fire have not impacted the stock market currently, they will.

As I mentioned at the beginning of the article, retail investors are propping up the markets.  However, they aren’t the only ones, or should I say, the only factor in keeping the markets from falling off a cliff.  Thanks to Uncle Sam, total U.S. debt has increased by $590 billion in just the past month and a half.  Here is a table of U.S. debt  from the data published by the fine folks at TreasuryDirect.gov:

The U.S. debt ceiling was finally breached on Sept 8th as the Treasury added another $318 billion of debt in one day.  Since that day, the U.S. debt has increased by another $271 billion.  The addition of debt to the U.S. Government balance sheet had a wonderful impact on the stock market:

You will notice that the Dow Jones Index was running along the 50 Month Moving Average (BLUE line).   Any breach below a crucial technical support line could force selling by traders.  But, when the U.S. Treasury added another $318 billion of debt on Sept 8th, this propelled the markets higher.  While I don’t pay much attention to technical analysis, many professional traders most certainly do.

And… as the U.S. Treasury added another $271 billion in debt, the markets continued even higher.  So, what we have propping up the markets are DEBT and BRAIN-DEAD RETAIL investors.  This is not a good sign.  While the markets will likely continue higher, it will only give institutional investors more opportunity to sell out:

The ORANGE line represents SMART MONEY, the institutional investors.  Here we can see what a proper investment strategy should be during a rising bubble market when one doesn’t suffer from the same illness as the retail investor.  Furthermore, the savvy institutional investor is also able to understand the ramifications of the following chart:

The two lines in the graph have diverged considerably since the beginning of 2016.  The Economic Policy Uncertainty line represents the amount of negative news in the MainStream Media on the markets, governments, etc,… while the Equity Uncertainty line shows the volatility in the stock market.  Typically, these two lines parallel each other.  But, as we can see, they have gone in opposite directions.

Thus, an investor not suffering from BRAIN DAMAGE, (institutional investor), would take this chart as BIG WARNING, whereas the retail investor just wants to know is how quickly he can liquidate his life insurance policy to place an even larger bet in the STOCK MARKET CASINO.  

There is no telling how long the stock market will continue to rise as underlying fundamentals deteriorate.  However, all markets held up by debt and stupid money, must crash at some point.  Frustrated precious metals investors need to keep their distance from BRAIN DAMAGED investors as the disease is highly contagious.

My advice…. buy the GOLD & SILVER CHIPS and leave the CASINO while you can.

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26 Comments on "MARKETS… WE GOT TROUBLE: Debt & Brain-Dead Retail Investors Prop Up Stocks"

  1. “There is no telling how long the stock market will continue to rise as underlying fundamentals deteriorate”

    TPTB will keep this market up as long as they can print fiat with abandon and buy stuff with it. Who can stop them? Why is this so hard to understand? There is no struggle, just tappidy tap on a keyboard or the click of a mouse. All you need is the will to print and buy. But how long can they do this without consequence? I say as long as the world accepts the dollar as its reserve currency. When the dollar is rejected, then that power to print melts away like the wicked witch of the west…..until then what’s to stop them? ( crypto currencies? shhhhhhhhhhh)

    • Ahhh, but the world is already rejecting the $$$ as a transaction medium, not to mention, the yen and euro. So what will TRULY spark the reset and the disastrous downturn in bonds and equities? When the brain dead refuse to accept the $$$ in exchange for their labor. At this point, labor and subsequently taxes, are the only economic activities that give the dollar ANY value. This is why in 2008, the dollar value dropped as unemployment rose. And, why we haven’t seen the inflation level comparable with the 4X rise in base money. (This is also why the Fed isn’t touching the crypto space—it gets them out of a jam with the ever-growing government debt that will never be repaid because inflationary requirements are exhausted, shhhhhhh)

  2. meltdown Mike | October 20, 2017 at 4:39 pm |

    Crypto currencies wont stop them but they will survive the currency destruction event and be ready to take over and steam forward #Litecoin

    • Two things…

      First…Cryptocurrencies aren’t currencies. They are digital (risky) assets. They are trying to be a currency, but they rely on another currency. How does that work out? 3 years ago 5 Fortune 500 companies accepted Bitcoin. Today, with Bitcoin’s exponential growth compared to 3 years ago where it is much more popular today than it was 3 years ago…..you only have 3 Fortune 500 companies accepting it. So despite Bitcoin becoming much more mainstream 2 less Fortune 500 companies accept it today compared to 3 years ago.

      Second…Craptocurrency means nothing to anyone who isn’t connected to the internet 24/7. it’s just as fake and intangible as fiat. Who gives a **** about the block chain. If there is a societal collapse and the power is intermittent because of massive shortages, the last thing anyone wants to see is some ****sucker with a smartphone holding it up and going “I’ll give you some of this digital bull**** for real world food and water”. I’d shoot the ****er on principle in a situation like that.

  3. Those brain dead investors have been right for more then 8 years now, while you and other prognosticators of doom, metal shills, mining stock pimps, etc. have been wrong.

    I’m not necessarily saying to get in the stock market, but I am saying this: don’t waste your time with gold and silver. The “dumb money”.

    If you don’t want to play the game, just earn and spend cash and live life.

    • Silver and gold is “Dumb money?”

      Our great founding fathers are rolling over in their grave. But hey, you are probably smarter than they were.

    • Agreed, let’s drink some burgundy wines while we still can !

    • Bernie Madoff started his investment firm in 1960. He went to prison in 2008. A lot of people were paid a handsome dividends before they lost their principle.. Just saying…the fundamentals tell you this market is unsustainable. Like The Madoff ponzi this market can continue for a long time, but at some point investors will lose their principle in part or in its entirety. Everyone in the market knows this. They’re either greedy or desperate for a return. They all think they can beat the markets long enough to bridge retirement, buy a house, or send their kids to school. It’s like a Vegas gambler that can’t leave the tables because he lost too much already. I hope they make it, but Last I checked hope wasn’t a very good strategy.

      • Things will continue until they can’t. The upper 1% knows what’s the alternative when eventually this all comes crashing down. That’s why many of the “Elite” are buying underground bunkers. Until that time comes “it’s party on dude”.

    • Sure, it is very logical that Tesla that loses money like mad, and will continue losing billions until the gov. tit is removed and dies a natural death is valued at 58 Billion dollars, valuation for Amazon and Netflix are also very logical.

  4. 99.99% of the USA never heard of Bitcoin. The cuurrency is the dollar,like it or not. If the dollar fails, rampant Furguson riots will be throughout the USA Ask all in Puerto Rico without internet what Bitcoin is doing for their daily needs? The future of the dollar is to devaluate. Inflation will do its job. The currency has collapsed in Venezuela,but the Bolivar is still their day to day money. Over the years Italy’s currency failed, the Peso in Mexico and all that has occurred is devaluation.

    • That’s because people don’t have a choice. We have to wait until people don’t have a choice 2.0. That’s when the fun starts.

  5. Technically sound analysis – which hasn’t mattered for a long time. Luckily I was brain dead enough to buy some stocks that on average quadrupled (and counting!) over 8 years. On the other hand, my PM’s have been down or even at best. The “alt” investing community can hate on the market all they want, but totally discount the great gains everyone is making. I’ve heard about the impending crash for a long time. Even 08’ rebounded quickly. Until (IF !!!!) it happens, it’s just an opinion, and a wrong one so far. Don’t get me wrong, I’d love to see honest, sound markets, but I think those are forever gone.

  6. Hi Steve,

    Thank you for your excellent explanations of eroei and in particular, lately, the elucidation on loss of net energy in every oil barrel and how this can only result in permanently low oil prices and a crushing deflationary collapse.

    You continually contrast Silver against stocks, bonds, real estate with PM being the obvious smart choice and I/we totally agree. However, I am here asking for your opinion on the second competitor to silver in a crash, a contrast that you never mention. That being plain old cash as in FRN’s out of the banks in citizens possession.

    Yes, I understand about reserve currency and petro dollar. Regardless, we are still talking it seems about deflationary collapse or more likely a mix with inflation. Seems like deflation could last many long years before any hyperinflation kicks in. In food price anyway

    Okay this is serious,about helping people stay alive, about being able to buy food/pay property tax and nothing else. IMO you would perform a great service by addressing it just this one time, Tom Cloud’s support aside.

    Imagine a couple whom have gotten far enough along to get out of banks and have enough cash to eat simply for several years assuming price deflation in food is King, or at least stays about same. This seems likely, and is already happening it appears. We are assuming Mad max doesn’t happen, as not survivable.

    Silver very risky. Main risk being the goverment could outlaw transacting in it and the black market would be too dangerous. Or sale of could be so heavily taxed as to make metal worthless. Or dealers too far away to reach with tight gas supplies. Many problem scenarios. Whereas cash in hand would be much more fluid and safe, and likely more valuable then now,for awhile at least, accepting that supply of all goods would be tough to find

    So decision to invest greenbacks in silver now could ensure early starvation and death

    Only way Silver is sure to win is if US gov falls, or if Feds change the bills and ask lot of questions if try to exchange.

    Got sucked into this post by wondering where your “institutional investors” are now putting their money, but that’s a question for another day I guess. Please expound on the whole cash/food issue. What do you see happening to cash value and over what timeline? What about capital controls on pm’s sale and how bad do you see this whole shamolley getting say 5 years after crash. Gov vanishes likely or currency change by then?

    Obviously you can’t know anything for sure and can never have adequate data and no one can hold you to anything but you’ve been dwelling on this longer then anyone else and your rough guess would be very treasured.

    Me, I’m really lost on this and getting quite vexed. Generally I keep my mouth shut.
    Prefer a postal address for contributions rather then your method

  7. silverfreaky | October 21, 2017 at 2:34 am |

    Brain dead seems to be a good property in terms of money making?

  8. I do not see any problems, there more the public debt rises, the more financial markets will go : capitalism 2.0

  9. DisappearingCulture | October 23, 2017 at 5:35 pm |

    This is worth a read:
    Why the next stock market crash will be faster and bigger than ever before
    https://www.sovereignman.com/investing/why-the-next-stock-market-crash-will-be-faster-and-bigger-than-ever-before-22534/

  10. Sorry to be a fly in the ointment but it seems to me that the only sector financially capable of propping up the stock market are the brain dead institutional investors. Multi Billion Dollar pension funds who really have nowhere else to put their money and couldn’t be bothered anyway.

    • Huge Q3 GDP numbers, WS titans stocks are delivering incredible results.
      5 trillions for FANG in 2018 : chinese eunuchs can continue to dream…

  11. Interesting analysis but would be better if it was a little less sensational.

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