The Transylvania Times -

Holding The Bag - Again!

 

February 26, 2018



Monday’s ‘Markets Are Up’ letter only got it half right.

The Dow is at orbital levels.

Blame it on The Banking Crisis of 2008. Ten years later we are finally coming out of its horrific recession. The stock market’s recession ended in 2009.

Look closer. The Fed tried to stimulate loans to businesses and revive the economy by cutting interest rates, effectively to “free” for any qualified banker. These loans were supposed to go to actual job creators, but were snapped up by stock traders as free margin loans.

Fed money has been so cheap for 10 years it’s been dumb to not borrow from the government. Big-time stock traders took advantage of this welfare for Wall Street. They used free Fed money to multiply the shares they traded – 100 million shares instead on only 10 million.

Fueled by Fed-financed computer mega-trades, the stock market couldn’t help but to go up like a rocket.

Corporate earnings never justified such trading. Never.

Anyone in today’s market is investing in a ginormous bubble. One thousand-point losses followed by 500-point gains in the Dow are early warnings of the massive “correction” to come when the Fed stops nitro-fueling the markets.

Free margin loans are about to dry up. Big-time traders will stop pumping for the first time in 10 years. They’re getting ready to dump. They will earn massive profits because only they know when it’s time to bail out.

You won’t know until the market has already crashed. Small-time traders will be holding the bag. Again.

Bill Harrah

Pisgah Forest

 
 

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