Sell stocks. A tremendous crash is upon us. We will see the DJIA between 3000 and 6000 before the end of the month.

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Puetz (Sell Stocks) ID#222167:

Sell stocks. A tremendous crash is upon us. We will see the DJIA between 3000 and 6000 before the end of the month.

One indicator I watch ( and no other analyst that I know of does ) is open-interest in listed financial derivatives. Here are the totals:

October 1987: 15 million contracts

July 1999: 90 million contracts

October 1999: 163 million contracts

I won't go into the details here ( but I do in my newsletter ) , but this massive jump in open-interest presents a systemic risk to the financial system of the United States.

Should stocks fall much further, the writers of these derivatives face insolvency. You are not hearing any reports now, but should the DJIA fall to 9000 or lower, a few major derivative players ( writers ) face bankruptcy.

If you hear rumors about Morgan Stanley, Banc One, JP Morgan, or First Boston, you had better believe them. There is a major derivatives writer that has put on a massive bullish book during the past few weeks.

A major Wall Street firm faces bankruptcy if stocks decline any further. You have been forewarned.

Regards, Steve Puetz

-- Andy (2000EOD@prodigy.net), October 17, 1999

Answers

Derivatives are the hidden cancer which has stealthily been consuming the productive sector of the economy for the last several years. The fact of the matter is: Even if Y2K turns out to be a non-event, which is highly unlikely, the derivatives bubble is so enormous so as to doom the system to an early implosion. We can be sure that with the recent swings in the dollar/yin parity, there are going to be some huge derivatives losses. By the way: You are not all alone on the derivatives issue. Lyndon LaRouche has been warning us about these exotic financial instruments for years.

http://www.larouchepub.com/

-- Robert (worldpage@aol.com), October 17, 1999.


Andy: You've been spending too much time reading the forums at gold- eagle and kitco. Get a life!

A bear market is not a 'crash'. Bear markets are necessary and do good for the equities markets.

***straw***

-- straw (strawberry9@worldnet.att.net), October 17, 1999.


Hey Straw!

pot, kettle, black :)

BTW if you think a drop from 11k to 3-6k is NOT a crash then I'm a Chinaman :)

-- Andy (2000EOD@prodigy.net), October 17, 1999.


Andy,

I seem to recall a "short" watchlist that was posted here a while back that somehow indicated the mood of traders. Are there other methods you use beside the derivatives?

-- y2k dave (xsdaa111@hotmail.com), October 17, 1999.


Sorry dave this is Steve Puetz's analysis - I do go along with it however.

-- Andy (2000EOD@prodigy.net), October 17, 1999.


What's wrong with being a China Man?

-- China Man (stop@the.stereotypes), October 17, 1999.

Sorry. Old British saying stemming from the Opium War days :)

-- Andy (2000EOD@prodigy.net), October 17, 1999.

Goldbug info aside, (and I have to say, much of the GB info has been pretty good) I have been thinking hard about something Ed Yardeni said on his website that was later posted here.

He said that the institutional money he has been talking to plans to put it's chips on the side in December, that is to cease trading. When I first heard the audio, I had to listen 3 times before I believed what I heard.

Now imagine that you have a bunch of agressive portfolio managers using derivatives to hedge AGAINST VOLATILITY. Now imagine that VOLATILITY DISSAPEARS due to a lack of liquidity. How do you think those derivative instruments will behave? Not well me thinks. They could make gold shorts look like pikers. Anyway, just me thinking out loud, being happy to be cashed out. All my polly friends at work are pretty bummed out because I told them this would happen and it did. Even one GI failed to act soon enough. Complacency.

-- Gordon (g_gecko_69@hotmail.com), October 17, 1999.


Andy,

I have heard a little about Puetz and am intrigued by some of his work in lunar cycles. Does he have a web site? Do you have info on finding out more about him?

-- mike (maples@voy.net), October 17, 1999.


"They could make gold shorts look like pikers."

What does that mean?

-- Carter Beaird (rcbeaird@excite.com), October 17, 1999.



Carter, try this LINK
-- Mike Lang (webflier@erols.com), October 17, 1999.

Hey Andy..Can I take that to the Bank???.....

WHICH ONE????

-- Larry (Rampon@cyberramp.net), October 17, 1999.


Speaking of crashes, here's some interesting info:

A Recession is predicted (12-18 months from now). Not from Gary North, but from Henry Kaufman, a major U.S. economist:

http://cbs.marketwatch.com/archive/19991016/news/current/loeb.htx? dist=hdlnbug&source=htx/http2_mw

"NEW YORK (CBS.MW) -- For the first time, a major U.S. economist with an excellent record of prediction is forecasting an economic recession -- and putting a date on when it will start."

"We can't go on generating these double-digit corporate profit increases every year." Henry Kaufman, Henry Kaufman & Company" "The next recession will begin in 12 to 18 months." So says Henry Kaufman, head of the influential international economic consulting firm that bears his name."

"Attention has long been paid to Dr. Kaufman, notably since the time he was the chief economist and an executive committee member of Salomon Brothers and he predicted, early on August 17, 1982, that interest rates had reached their peaks after six years of a rising trend. Later the same day the Dow Jones Industrial Average surged 39 points, or 4.9 percent -- its biggest jump in history till then -- and set off on the 17-year bull market that still continues."

-- Deb (v.mcclell@columbus.rr.com), October 17, 1999

-- Deb (v.mcclell@columbus.rr.com), October 17, 1999.


What's with this Puetz ID# 222167???

Is that his Big House address??



-- K. Stevens (kstevens@ It's ALL going away in January.com), October 17, 1999.


China Man: Andy didn't say anything derogative about being a China Man and he has no reason to apologize for it. The point is not that there is something bad about being a China Man, but that he is obviously not one, so the statement to which this comparisonn refers is also obviously not true.

Furthermore, you're getting rather politically correct on us, aren't you? Stereotypes always reflect a certain amount of reality; otherwise they would never have arisen in the first place. It's only when a group exhibits a particular trait in sufficient numbers that a stereotype of them as having that trait can exist. For example, the "inscrutable Oriental", which arose because of the vast cultural differences between Europeans and Orientals, which made it hard for Europeans to understand Oriental thinking. Like it or not, stereotypes reflect reality to one degree or another.

-- cody (cody@y2ksurvive.com), October 17, 1999.



Ahhh, don't waste time trying to explain it, cody. The dude is obviously some kind of foreigner.

-- King of Spain (madrid@aol.cum), October 17, 1999.

If Andy had said "China Mahn" then there would be something to gripe about.

-- (politicallyCorrect@orelse.com), October 17, 1999.

Andy, If China Man so smart...why he invent sticks to eat rice instead of spoon????

-- Larry (Rampon@cyberramp.net), October 17, 1999.

Andy:

I'd like your imput on some matters.

This week my father told me he has made a major new investment in stocks; he believes the market will not crash. I've warned him repeatedly that it will, but he won't listen.

My mother told me she made a call to her broker last Friday. He told her to "wait and see". I told her that broker is an idiot. She says she "may" do something this week. I told her it might be too late because of the "collective dope slap". She thought that phrase was funny. (She's not on the Internet.)

What would you tell my father and mother regarding their assets in the stock market? How would you make them understand that the herd is about to stampede over the cliff?

-- Randolph (dinosaur@williams-net.com), October 17, 1999.


What are you up to now, Andy?

Are you theorizing that when the market goes down...gold goes up? Are you suggesting that since YOU have gold you WANT the market to go down? Are you throwing a little panic-mongering over the market here to obtain that goal? (3000-6000 before the end of the month, eh?)

-- Anita (notgiving@anymore.com), October 17, 1999.


Anita, why do you always ask silly questions? Is it because you don't have any answers?

-- King of Spain (madrid@aol.cu), October 17, 1999.

KOS:

I like to VARY my silly questions. "Do you like to mudwrestle?" gets old after a while.

-- Anita (notgiving@anymore.com), October 17, 1999.


Larry,

Chopsticks are used to dine because only a barbarian wields a knife at the table.

-- flora (***@__._), October 17, 1999.


Randolph;

Just my two cents:

I would explain P/E ratios and the effect of a triple whammy on stock prices:

If a XYZ Inc. earns $4 with a P/E of 25 the stock price would be $100. Everyone that owns shares of XYZ values his/her shares at $100. But that is only true when the market is stable with a balance of buyer and sellers.

Today the market is not stable.

What happens if interest rates go up; earnings go down; and the P/E goes down as sellers outnumber buyers. The $100 share could drop to $30-40.

Ask them what would be the effect on stock prices with:

1. Increased interest rate - see Greenspan recent comments and Sept. PPI.

2. Lower P/E ratios - see historical averages over time.

3. Earnings - see 3rd qtr reports from bell weather companies.

4. More sellers than buyers - see recent Advance-Decline lines and recent new highs vs new lows.

At the very least, they may wish to write covered calls as a downside insurance against a drop in portfolio value. This MIGHT protect against a 5-10% drop in share prices and could be done at probably less tax consequence than selling the entire portfolio. The risk is that stocks go up and your call might get exercised in which case you sell the stock at the strike price of the call.

-- Bill P (porterwn@one.net), October 17, 1999.


Randolph:

Why not simply point out to them that it doesn't make sense to buy when the market is high, and even with the downward drift since late summerk it's still very high.

-- cody (cody@y2ksurvive.com), October 17, 1999.


Bill P and Cody:

My mother might be the one to use common sense and get out of the market this week. She says she listens to what I say. Of course, when she takes no action, then she is telling me something else.

My father is a lost cause, as is his brother, his brother's son-in- law and daughter. They plan to remain in and ride it out.

But when the market begins to tank fast, they will experience that "collective dope slap" and rush to sell SIMULTANEOUSLY AS WILL A BAJILLION OTHER STOCK HOLDERS.

Duh. Too late.

-- Randolph (dinosaur@williams-net.com), October 17, 1999.


I sympathise Randolph - just keep badgering them!

Get them to listen to the last couple of McAlvany interviews on his web site on real audio.

he is VERY persuasive - it may do the trick...

FWIW my brother in LA is approaching teirement (7-8 years) and has his life's savings in his 401k.

I repeatedly told him to move it into a money market account with his firm - he still hasn't done it.

toast.

-- Andy (2000EOD@prodigy.net), October 17, 1999.


Anita,

you have sunk to new lows

you are effectively accusing me for WISING for the market to crash, so that all the insiders make it big while shorting it, on top of all the money they have fleeced all these years, whilst leaving joe 6- pack and his 401k to be DECIMATED

you are some Bitch lady

-- Andy (2000EOD@prodigy.net), October 17, 1999.


Randolph,

No one is listening to me either, and there's SERIOUS money at stake.

I tried to get people to understand that it's an opportunity to get the market to pay your capital gains taxes of the last several years (at least).

They're all blinded by DOW 36,000.

My brother said, "I'm not used to this kind of behavior from you."

I'm usually the rational, steady, even-keeled member of my extended family.

The only words that come to mind are... duck and cover.

I never thought people would be able to call me Cassandra, but there it is.

-- nothere nothere (notherethere@hotmail.com), October 18, 1999.


I'm usually considered the smart one in my family and now I'm being called irrational.

Do you know how hard it is to warn people of any kind of impending doom? Try to get someone to stop smoking sometime by telling them that they will get cancer. You just can't do it. A person has to hear a warning several times, plus have encountered the same situation in the past (like a hurricane) and then they might listen.

-- Amy Leone (leoneamy@aol.com), October 18, 1999.


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