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Berlin, 2002.
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Depression2.tv - Michael Nystrom
MAY OBSERVATIONS
5-30-2002Things get serious.


5-28-2002Conquer the Crash - New Book from Robert Prechter


Conquer the Crash

Robert Prechter has just published a new book titled "Conquer the Crash." I have had the opportunity to read an advance copy, and it is well worthwhile. I'll be running a three part interview with Bob beginning this weekend. In the meantime, check this link to read the advance reviews.
5-23-2002Weekly World News


The cover of the May 28, 2002 issue of the World Weekly News.
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5-20-2002The World Smells Blood...
Dollar Down
6 month dollar (above) and gold (below) Gold Up
5-17-2002Oh, now I understand.

FREEDOM!
Look what I got in the mail today: Money!


Or, more accurately, "The Freedom to Purchase WHATEVER I WANT!" Look, it says so right there. This was at the top of the letter. Below it were three "convenience checks." "Convenient" because they conveniently increase profits for MBNA America, the company that sent me the letter. Also convenient, because they allow the American consumer the means to keep spending, and keep this economy floating!

Granted, I can have the money until Septemer at only 4.7%. Not really a bargain, as the same folks were calling me on the phone the other day trying to offer me the exact same money for only 1.9%. The trickey part comes after September, when the rates go up...who knows how high? The last time I carried a balance with these robbers, they were charging 19.99%. What ever happened to usury laws, is what I would like to know.

If you want to read some real interesting things about this company, check this link: MBNAsucks.org I cannot vouch for the accuracy of the information contained there, but it is certainly worth a look.
5-14-2002 Why the Averages Don't Tell the Whole Story
SPX drops WorldCom & US Air

NEW YORK -(Dow Jones)- Standard & Poor's said WorldCom & US Air are being dropped from the S&P 500 Index Tuesday...

Admittedly, its kind of late. WorldCom is trading around a buck and a quarter, down from the nosebleed seats of around 60. And letter U (US Air) is about $2.85, down from its cruising altitude of over 80.

But better late than never. After all, imagine the dead weight the index would have to carry around with those stocks at zero! Not good.

This is yet another example of how the headlines miss the real story. I recall being in a Schwab office, opening up a new account with the intent of buying shares in a bear fund. The broker nearly ridiculed me, pulling out a long term chart of the "market" - i.e. the S&P 500 - that showed that the trend is always up. And of course it is, because the losers get the boot! They don't count, they don't matter, they don't exist any longer (unless they happen to be in your portfolio, that is).

The above two stocks, with their downward sloping trendlines, heading towards oblivion, are to be replaced by Apollo Group (APOL) and BJ Services (BJS), both of which sport beautiful uptrends. Go figure.

5-9-2002 New Moon on Sunday!
New Moon, Sunday, May 12


















;-)

5-8-2002 Talkin' Story
CSCO Earnings Ignite Market!

TNX


It was plastered top, front and center of every financial news website I visited today: CSCO EARNINGS IGNITE MARKET! So it must be true!

It's true that the market had one hellacious rally today: The Dow & SPX up over 3% apiece, and the Nasdaq up over 8%! In one day! The NDX was up 10.62%! All started by a little tech stock that represents what was once the highest valued company in the universe, weighing in at over $600 billion, Cisco Systems.

But what was the good news? The president of the company is reported in the NY Times as saying, "We're not calling a turnaround, but we are seeing some early indications that are of interest to us." Hmmm...Sounds like he's been taking rhetorical lessons from Mr. Greenspan (early indications that are of interest!). Cutting more to the quick, he revealed that the company would not see rapid growth until its customers started reporting profits of their own.

So why all the fuss? That doesn't sound bullish to me, and it makes me suspect (gasp!) that the news is just making stuff up to justify the action. Why can't they ever just say something like, "Tired of going down for the past two months, stocks staged a powerful rally today. We're not exactly sure why."

The truth is, they have to pick something to focus on, and make sound reasonably plausible. Like the CSCO story, which sounds great until you actually look beyond the headline.

What if they wrote this story instead: (which is also true)

Fears of increasing Middle East violence drove oil prices to a new high, and sent yields on the Ten and Thirty Year bonds rocketing to their highest levels in a month. This, in turn, ignited the stock market.

Certainly, that would be a ridiculous thing to say. But only as ridiculous as saying, "CSCO Earnings Ignite Market."

Don't get caught up in the inevitable hype, the never ending spin of the circus that surrounds the market. The market is telling a story, and its not a difficult one to follow. Interest rates are on the rise; the dollar is on the skids; the unemployment rate is still going up; gold is at a 2 year high, and the market just had a nice, one day ejaculation. But keep things in perspective. The chart above (in case you hadn't noticed) isn't CSCO, it's the 10 year bond yield! And the chart below is a 3-year weekly view of the NDX, INCLUDING today's rally. Can you see it there at the end? Barely.

5-6-2002 Decision Point - A Binary Problem



Unable to keep my mouth shut at cocktail parties and such, I found myself ranting this weekend about how the dollar is a fraud, how overvalued stocks are, and how the only way to preserve value is through hard assets, like gold. Everything else, from stocks, to bonds to real estate, to the very dollar itself will go down - substantially - in value.

Needless to say, this is not popular cocktail party banter - especially not in Microsoft's backyard. Many a millionaire has been created on the back of pieces of paper with that corporate stamp. Many houses and condo's have been purchased with that paper in this town. That this company's stock will trade for pennies on the dollar is heresy around here. That overpriced homes and condominums will sell for half their value in this town is unbelievable. Unspeakable.

But speak such dasterdly ideas I did.

"Surely, you're crazy, Nystrom, if you think the dollar will be worthless!" I was being attacked! Ten at a time, with my back to the wall! I wasn't being polite, in this most polite of towns. Seattle is polite, but not friendly - don't confuse the two. With a cocktail in hand, speak of nothing but the weather, or at deepest, the recent success of the Mariners. I'm a native Seattleite, but I've heard the criticism enough to believe it to be true. You don't speak your mind in this town, possibly because you may offend someone richer than yourself, and that wouldn't be proper.

And it made me wonder, if indeed I was crazy? Can anyone imagine a world without a dollar? To be honest, I cannot.

And that is what makes theirs such an easy argument to buy: America is at the top of the world, the dollar is the most powerful currency, America is the most powerful nation. Can you imagine anything else? No. Of course not. The human imagination, outside the realm of children, is quite weak. Could anyone have imagined those buildings on 9/11? How about the Nasdaq up 86% in one year, then down over 65% in the following two? Could anyone have imagined this? Rags to riches to rags? Things aren't as solid as they seem.

But the "argument" of my opponents at the cocktail party was quite tempting, for it was not a refutation as much as it was a dismissal. "Oh, Nystrom, forget all of that. It is insane. Forget it!" And how I wish I could, believe me!

But I can't forget it, nor ignore the storm clouds I see gathering on the horizon! America has reached the summit, and there is but one place to go from here. Depressions happen for a reason. They happen when too much wealth has become concentrated among too small a minority of individuals or corporations. When this happens, demand sags relative to supply and a long cyclical downturn begins. This is where we are right now.

Where you think the market is going today will determine your financial position tomorrow. Listen to the mainstream press, and you may be very sorry. Again.

  5-3-2002  What channel would show it?
The Depression Will Not Be Televised
  5-1-2002  May Day                                                                                     


hui


Check out the 2002 predictions & other articles in the archives
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Rich!

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