The party has now begun — for those of you who have heeded my warnings about a big slowdown in the U.S. economy, persistent (and rising) inflationary pressures and a potential looming bear market.
On Oct. 25, I wrote an article entitled ‘Checkmate' in which I told our readers that the Federal Reserve was stuck between a rock and a hard place — that any interest rate move by the Fed would likely have negative economic and financial consequences.
The situation has recently gotten worse, as oil prices rose to an all-time high last Wednesday, the exchange value of the U.S. dollar has resumed its descent against other major world currencies, and more and more economists are now expecting the economy to enter a recession by the end of the first quarter of 2008.
Merrill Lynch's Chief North America Economist David Rosenberg, claimed in a research note to the firm's clients on Monday that the U.S. economy is actually already in a recession.
It's been a great year for our new ETF Strategist service-and a very profitable one for our subscribers. Since inception back in September our portfolios are up +19.7% and +8.4% compared to a LOSS of 5.9% for the S&P 500.
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So, while the Wall Street Cheerleaders begin using the term "market correction" — one of their favorite terms to excuse their poor investment advice — I urge you to remember what you learned as a toddler:
Humpty Dumpty sat on a wall.
Humpty Dumpty had a great fall.
All the king's horses and all the king's men couldn't put Humpty together again.
In other words, stock prices are headed for further losses in the months ahead.
Even if the Fed tries to come to the rescue by continuing to lower short-term interest rates, stock prices will likely continue to trend lower, after perhaps rebounding for a couple of days.
The reason? Any additional interest rate cuts will kill the U.S. dollar and lead to more inflationary pressures. Gold investors are keenly aware of this predicament, pushing the price of gold to another all-time high.
So, I urge you once again to ignore the so-called Wall Street "experts" and to avoid investing in stocks at this time.
However, if you're interested in profiting from the continuing decline in stock prices, you may want to try our new investment service, The ETF Strategist. Our top-three ETF recommendations are now up 16.2 percent, 25.6 percent, and 33.6 percent since the inception of this service on September 18, 2007.
Only one of our recommended ETFs is currently down in price (-6.8 percent), while the S&P 500 Index fell 5.9 percent during the same period
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