As to the markets own mental faculties. little has changed. Relief that poor earnings are (in some c...
Join Mike Larson LIVE at The MoneyShow Orlando!
Join Mike Larson LIVE at The MoneyShow Orlando!
Knowing When It's Time to Hit the Panic Button. See You in Orlando!
01/30/2018 1:32 pm EST
Is it time to make a call for this bull market in stocks? Is it time to forecast another major top – a historic turning point that portends dire times ahead? Hopefully, you’ll join me at The MoneyShow Orlando for the answer, writes Mike Larson, senior analyst at Weiss Ratings.
Is it time to hit the “panic button”?
That’s the question I’m going to attempt to answer at the Orlando MoneyShow in early February. My presentation called “Bitcoin, Bonds, Bubbles, and Busts: Is It Time To Panic?” is scheduled for Saturday, Feb. 10, and you can register to see it ... and all the other informative, hard-hitting sessions at the conference ... by clicking here.
I certainly can’t give away the store here. But I have hit that button in the past. As hard as I can. So it might prove instructive if I explain the circumstances that caused me to do that then, and you can decide for yourself if anything similar is occurring now.
The year was 2004. My background in the business was (and still is) as a specialist in the mortgage, real estate and interest rate markets. And what I saw happening in housing worried the heck out of me.
The out-of-control speculation. The huge run-ups in home prices, increases that far outpaced underlying wage or salary growth. The ridiculous collapse in loan approval standards, which let anyone who could fog a mirror to get a mortgage.
Heck, here in my own South Florida backyard, you had hordes of ill-informed home flippers and so-called real estate “investors” going nuts. They were camping outside sales trailers for not-even-under-construction-yet condo buildings, eager to throw their money at any two-bit salesperson with a slick pitch, a glossy brochure, and a few architect renderings on the wall behind him.
It had all the makings of a classic bubble. So, I issued increasingly dire predictions and warnings to my subscribers and clients. I told them a day of reckoning was approaching, and that they had to batten down the hatches and prepare for it.
But even so, I knew it was likely too soon to jump the gun and short the market aggressively. I recognized that momentum could carry us further than many thought possible. So I varied the tone and content of my warnings – with different recommended steps at each stage in the process.
It wasn’t until mid-2005 when I finally went into full panic mode – and punched that proverbial button! In our flagship Safe Money Report newsletter, our founder Martin D. Weiss and I published a lead story titled “Final Stage of the Real Estate Bubble!”
We warned that “When it pops, stocks of big banks, construction companies, and mortgage lenders will be shattered” and we listed stock after stock that investors had to dump immediately. This isn’t revisionist history, by the way – you can see the cover for yourself.
Several signs made me confident the call was accurate ...
--Turmoil behind the scenes in esoteric derivatives and credit markets many investors either didn’t know existed or didn’t pay any attention to.
--News of the first few small lender bankruptcy “dominoes” falling in the subprime mortgage industry.
--My own boots-on-the-ground research on supply, demand, and pricing in the housing business.
--Technical trading action in the home building and lender stocks, among others.
All of it played a role. And my call on real estate turned out to be one of the best I’ve issued in my entire career.
So, is it time to make a similar huge call for this bull market in stocks? Is it time to forecast another major top – a historic turning point that portends dire times ahead for unprepared investors?
Hopefully, you’ll join me in Orlando for the complete answer. It’s free to attend; All you have to do is register here. But look around you and ask yourself whether stock and credit markets are starting to crack ... whether you’re seeing signs of true euphoria among stock investors you hang out with at work, at cocktail parties, or at the clubhouse ... and whether recessionary warning signs are apparent in the economic data.
If you do that, I think the answer will become increasingly clear. See you in Orlando!
Until next time,
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