The last 15 months through October 2012 remind me of the period of time from January 1999 through the first week of April 2000. A bubble takes a careful construction orchestrated by external manipulation that skews normal price movements by inordinate pressures. The stock market in April 2000 became a bottomless pit of price heaviness that progressed into sheer panic. The resulting intervention by the Federal Reserve creating the bubble of April 2000 literally imploded. Time marches on and 12 years plus has elapsed. It is written that “those who do not study history are doomed to repeat it.” The academicians who sit on the Federal Reserve led by a man that is far from a business person; lack the primary ingredient needed to attain wisdom, common sense.
Timing is always critical once a true recognition of the danger is realized. First, a rational person will look to common sense to realize a path that has withstood civilization stupidities throughout centuries. Rational people become prudent people by delving into their conscience to truly derive what is right from what is wrong. An open mind is the fertile soil for right. A closed mind is as fertile as a rock in the desert. Ben Bernanke’s mind is closed which is a fact that investors must be aware. Constructing a plan based on common sense must be made and endured. The tulip craze of centuries ago is an interesting intriguing read. Has anything changed from that scenario albeit a time passage of hundreds of years? No!
The punishment of the savers in the United Sates has relegated an entire post World War II society to ruin in less than a decade. Those who worked and saved in the 1950’s, 1960’s, 1970’s, 1980’s, 1990’s now are the vile ingrates that must be punished by the Federal Reserve for frugality, sacrifice and planning for the future. I am being somewhat facetious as the Federal Reserve did not plan to punish these people, but punish they did! The heart of America was capitalism, whereby industrious people with a dream were able to better themselves.
The key to making a big ‘kill’ in trading is recognizing a scenario of high pressure that must be equalized. The interest rate environment is very similar to the stock bubble of the first quarter of 2000. Please get your mindset ready to take the resolve to stay the course. It will take time. Meanwhile, I plan to see the potential 30 year futures bond drop of more than 20 points from the all-time highs.