July 15, 2008
Buy-and-hold strategies do not
work in down markets and they will not work in this
market environment either. The economy and the
stock market have entered into the third major down
period in US history, officially, and the declines that
lie ahead will not only be significant but they will
also be extremely long in duration. Exact details
on this duration are available by reading The Investment
Rate (TM).
Anyone who has not yet come to
this same conclusion must do so now in order to protect
their assets from continued decline. Wealth
preservation is the first step to financial freedom and
current market conditions require it.
Unfortunately, most people only
become concerned with their wealth after economic
hardships have fallen upon them. In this
environment, the economic hardships that you see today
are just the beginning. Our financial system is in
turmoil for specific reasons unrelated to the mortgage
crisis that everyone repeatedly talks about.
The Investment Rate (TM) measures
consumer liquidity and it tells us that consumer
liquidity levels decline for the next 16 years.
Significant declines of this measure have never happened
before. In fact, the only two other times in which
consumer liquidity declined measurably were the Great
Depression and the stagflation period of the 1970s.
However, neither of these periods had a 16 year
progressive decline in consumer liquidity levels.
The Great Depression, for example, only had an 11 year
decline in consumer liquidity, and yet the Market
declined by 75% and it took 26 years to get whole again.
The risk of a Greater Depression
(TM) is real due to a few important factors unique to
today's economy. First, The Investment Rate (TM)
tells us that the market has already begun the third
major down period in US history. This is a fact,
and if you need supporting evidence please refer to The
Investment Rate (TM) at
http://www.stocktradersdaily.com/Main/services/investment%20rate.html.
With the phenomenon that The
Investment Rate (TM) describes accepted and understood,
additional correlating factors need to be considered as
well. First of all, government debt levels are a
major concern. Second, consumer debt levels are a
major concern. Third, our Social Security and
Medicare programs are soon to be bankrupt. Fourth,
baby boomers are on the verge of retirement and and
exodus of huge amounts of capital will flow from our
markets. These, amongst a host of other support
negatives, in conjunction with The Investment Rate (TM)
warn us of the troubles that lie ahead. Not only
will they be severe, but they will last for a very long
time.
Anyone with a 20 year time horizon
and the stomach to weather this storm should stay
exactly where they're at, on their hands, without doing
a thing.
But anyone else who does not want
to see their wealth decline by as much as 75% in the
face of a potentially Greater Depression (TM) should
take steps immediately to protect what they have worked
so hard for.
Shareholders of some of the most
prolific financial companies on the Market are already
well versed in this pain. Buy and Hold Investors
in Washington Mutual (WM), Bank of America (BAC), Lehman
Brothers (LEH), Fannie Mae (FNM) and Morgan Stanley (MS)
can tell you first hand that buy and hold strategies are
not working.
Proactive Trading Strategies are
the only way to make money in today's environment, and
that will continue to be true for the next decade.
Please refer to our Automated, Correlated Market Timing
and Stock Selection Tool using QID and QLD.
http://stocktradersdaily.com/Main/services/tradingstrategies/alertsviewer.html
If you stare risk in the face this
time, without respecting it, risk will come back to bite
you.
Good Trading.
Thomas H. Kee Jr.
Thomas H. Kee Jr.
President and CEO
Stock Traders Daily
http://www.stocktradersdaily.com
1.866.213.2067
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