What is a Bear Market?

We recently stated that this is a “Bear Market.” So what does that mean?

It’s not all that scary, at least not once the market really settles into bear territory. In fact, it can be a great time of opportunity for many investors, particularly away from stocks. It’s worth spending a moment contemplating what a bear market is and why it’s important.

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2019 Predictions!

A new year means a new start. Resolutions are made and we all hope to be better people. it’s also a time for predictions, which shrewd people can write in a way to not look bad in another 363 days. It’s not just about making them vague and easily attained, no – a good prediction can be an excuse for not being a better person.

That’s my way of saying that we can expect a lot of ugly in 2019, but we shouldn’t let that get us down. here’s what I see happening in the year ahead. Bookmark this and make fun of me if you want.

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Reacting vs Planning

Good decision making comes from experience, and experience comes from bad decision making. This has been one Hell of a year, but what did we learn?

If you are shivering and exhausted after being blasted by a firehose of news and information, you are far from alone. That’s the nature of our world, and generally you have two choices: do your best to take it all in and make sense of it, or unplug and have a good life.

But like Buddha’s choice between hedonism and asceticism, either choice has to leave you wondering: isn’t there a third, middle way? And there is. It’s about planning and learning, about enjoying the here and now without a lot of noise but staying on top, perhaps even above, the world.

If we have learned one thing from this year I would hope that it is that a series of reactions is never a substitute for an actual strategy.

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Endgame?

The endgame is approaching. The truth about Trump is being revealed. After disastrous midterm elections he is weak and has the stench of a loser attached to him. The most recent revelations are going to be the the last straw, and his part will finally abandon him. This week showed us why.

Of course, this has nothing to do with what’s been said in court. Nevermind that his longtime lawyer has completely turned on him, or the man who buried his secrets for decades. The Republican Party doesn’t care about illegal activities now any more than they did before the election – when it was just about as obvious as it is today, as chronicled here.

It’s the steep decline in the stock market that is the unforgivable sin.

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GM & the National Industrial Model

The layoff notices came right after Thanksgiving. GM, a symbol of American industry, was going to close four US plants and can over 14,000 workers. Despite the relatively low numbers of people involved, the symbolic value is tremendous. The company was once the symbol of American manufacturing might. Besides, after a bankruptcy and government bailout the company surely has had what it needs to bounce back, right?

Yet there is much more to the story than this. Automobile manufacturing is in a period of massive, completely disruptive change. GM has been in trouble for a very long time simply because it cannot possibly change, and there are reasons to believe that everything is only going to be worse.

Mary Barra, the CEO of GM, has been trying to explain the situation to members of Congress this week. It’s unlikely that she can, especially since the very fact that she is obliged to do so points to the real problem. The national industrial model is dead, and it is being replaced with a global market model. GM’s problem is that it simply has not adapted to this reality in any important way.

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Visit From St. Klaus

Long ago, I would occasionally write “news poems,” or silly li’l rhymes on current events.  This one, from a full ten years ago, highlights just how bad things were then.  This reminder of Christmas past is intended to help everyone get through the difficult times in the stock market which are surely a part of 2018’s present and future as a brand new bubble bursts. 

‘Twas the hours before trading, and there on the screen
The markets abroad were all tranquil and green;
In Europe and Asia they each held to their course,
With decent increases in bourse after bourse.
But yet I couldn’t sleep in the dark of the night
Knowing somewhere that something just possibly might
Take a dive, though the hour was terribly late
For the year wasn’t over, this bad two-oh-oh-eight.

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Mid-Term Entrenchment

Electino Day is 6 November. There is likely to be a ‘blue wave” that will change the US House and many statehouses to Democratic control, but the Senate is not likely to change. The net result is almost certainly going to be entrenchment and gridlock, meaning that nothing is going to be done for the next two years.

It’s important to take a break from the description of People’s Economics to consider why this is likely the case, and why the repudiation of Trump will not be complete. The short answer is that while America would like to move ahead in a different direction, it simply has not been properly defined.

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