Monday, August 24, 2015

What To Do as The Markets Crash

Current weakness in markets should come as no surprise. It can be explained by classic Austrian School Business Cycle Theory.

I have been warning about China's economy and stock market for an extended period of time.

As for the US stock market, on July 24, in the EPJ Daily , I wrote:
Risk oriented traders should now switch and trade from the short side. 

Just two weeks ago, I wrote this on the Alert:
 An August unemployment number of 5.2% will very likely result in a rate hike, a 5.3% makes only a slightly less likely possibility. All this, of course, is based on the notion that there will be no stock market crash before the September FOMC meeting. And with every passing week of less growth in the money supply, the possibility of a stock market crash intensifies....

This is an extremely complex period. Maintain high levels of cash...

The kaleidoscope is going to turn soon and things are going to look very different, with our high levels of cash (combined with inflation protection hedge) we are well positioned for the volatility and changes that will occur.

Adding to the current complexity is the fact that the Fed may raise the interest rates they control at the September FOMC meeting. It is unlikely that simple downward activity in the stock market would dissuade them from hiking the rate, but a stock market crash would certainly do so. And if money supply growth continues to decline, the most likely time for a crash would be between August 15 and November 1, with the mid-September to end October period being the most vulnerable to a crash.

Thus, the likelihood of a Fed hike, I believe is fully dependent on whether we see a crash in the market before the September FOMC meeting.
There are extremely important developments that will occur this week, some well known, others known by just a few, that I will be monitoring this week to learn how to position for the period ahead. I will be covering these events in full in the Alert.

I suspect the advice I will give after these events will surprise many, but it will be the only way to protect your investments and savings in the period ahead. What we are seeing today in the markets is just the beginning of a very volatile period. Fortunes will be made by some, others will lose all.

You can subscribe to the Alert here and your subscription will start with today's issue, which will be the first of a series of very important  Alert's that will be out this week, discussing topics no one else will.



  1. . There was a trader (white with black splodges if that means anything) on the local chitown news after informing the viewer to just hunker down with their 401k that he couldn't see how there could be a rise anytime between sept and december it seemed more like a demand than a rational observation. but if the rest of wall st is like that well don't hold your breath.

  2. I think we are misinterpreting the theory. The credit bubble is enormous, built up over 60 years. It wants to deflate and the Fed periodically blows more money in.