Landmark Events In The Financial Services Sector Highlight The End of Capitalism And Traditional Investing
Saturday, 19. January 2008, 06:00:22
Introduction
Landmark events in the Financial Service Sector become apparent when one compares the trading history of its ETF IYF with the Russell 2000s ETF IWM; from these landmark financial service industry events one can conclude that the days of capitalism and traditional investing are over.
The financial services sector is the backbone of capitalism and is the foundation of traditional investing; its failure means that one can no longer invest long the markets; rather, one must now consider alternative investment strategies.
Timeline
The October 9th, 2007 Citicorp CDO Bust, set in motion a 'dissolution of wealth process' which has had greater effect on the Russell 2000 shares and the Financial Services Industry than the overall stock market.
The subprime mortgage debacle, unleashed in the US just three and one-half months ago, is quickly unraveling the 'very fabric of credit and investing' on a worldwide scale.
The epicenter for a dissolution of wealth is the US: it has a start on preparing for investing and social dislocations stemming from over-valued real estate; the rest of the world, especially the emerging markets, ie the Brazil stock market, EWZ, is just now facing its ramifications.
Global banks such as Citicorp, investment bankers such as Goldman Sachs, and insurance companies such as American International Group, packaged mortgage investments and in cooperation with home loan agencies, such as Fannie Mae and Freddie Mac, and guaranty agencies, such as AMBAC and MBIA, distributed them everywhere -- hedge funds, pension plans, and mutual funds; and now, the risk of over-valued mortgages threatens deposit capital, as banks are taking back the mortgages that we the investors thought had been sold off.
In the US, the sub-prime debacle has even adversely affected money market accounts--the state of Florida having had a run on a state money market account leaving a greater percentage of defaulted or downgraded debt than investment grade debt.
General Electric, GE, and Bank of America, BAC, likewise have had money market problems, with GE cashing out accounts at 96 cents on the dollar; and Bank of America, probably under pressure from the Fed having now acquired Countrywide Financial.
As investors, we have invested on risk expecting reward: some have invested in oil, USO, and in natural resource companies such as Transocean, RIG, and Occidental Petroleum, OXY, based upon the awareness of risk and reward stemming from the war on terrorism as well as the belief that the President would attack Iran to prevent the development of its nuclear industry.
Some have chosen to be invested in gold, GLD, believing that Ben Bernanke's dropping of money into and onto banks, in Helicopter like manner, debases the US dollar and inflates the price of gold.
The failure of Citicorp on October 8th, 2008, perhaps said better, heightened investor awareness of highly leveraged CDOs, and overvalued stock in relation to the real estate market, turned the S&P, SPY, and the small US companies, IWM, especially reliant on a functional credit system with capable financial services, IYF, continually and aggressively lower.
And most recently, shock waves came through loud and clear on December 24, 2007 from a toxic credit system and devalued dollar by the December 11th Fed's actions to lower interest rates and provide action process: the Yen blasted higher, the U.S. dollar fell, gold soared and stocks tumbled.
Now this week earnings reports are coming in disappointing.
Investors are taking flight from stocks; and are now aggressively short selling those stocks and ETFs, that have provided terrific returns since 2001.
And now with the Fitch downgrade of AMBAC, coupled with the ongoing troubles of MBIA, which have underwritten and insured the risk of municipality default, the spectre of the failure of capitalism is at hand.
Investment Application
The greatest and most financially rewarding investment that one could ever make has arisen: investment rewards beyond belief, are coming to those who have their retirement assets in the gold ETF, GLD, and who use margin credit to go short US Treasuries, TLT and short the closed end municipal bond fund VGM and its peers EIM, BKK, CXE and PZC; whose comparative performance is found by clicking here.
Here is the Stockcharts.com chart of VGM which shows the lollipop hanging man candlestick and a parabolic turn lower.
One's investment wealth should be tucked securely away outside of the US -- in tradable internet vaults such as BullionVault.com.
Landmark events in the Financial Service Sector become apparent when one compares the trading history of its ETF IYF with the Russell 2000s ETF IWM; from these landmark financial service industry events one can conclude that the days of capitalism and traditional investing are over.
The financial services sector is the backbone of capitalism and is the foundation of traditional investing; its failure means that one can no longer invest long the markets; rather, one must now consider alternative investment strategies.
Timeline
The October 9th, 2007 Citicorp CDO Bust, set in motion a 'dissolution of wealth process' which has had greater effect on the Russell 2000 shares and the Financial Services Industry than the overall stock market.
The subprime mortgage debacle, unleashed in the US just three and one-half months ago, is quickly unraveling the 'very fabric of credit and investing' on a worldwide scale.
The epicenter for a dissolution of wealth is the US: it has a start on preparing for investing and social dislocations stemming from over-valued real estate; the rest of the world, especially the emerging markets, ie the Brazil stock market, EWZ, is just now facing its ramifications.
Global banks such as Citicorp, investment bankers such as Goldman Sachs, and insurance companies such as American International Group, packaged mortgage investments and in cooperation with home loan agencies, such as Fannie Mae and Freddie Mac, and guaranty agencies, such as AMBAC and MBIA, distributed them everywhere -- hedge funds, pension plans, and mutual funds; and now, the risk of over-valued mortgages threatens deposit capital, as banks are taking back the mortgages that we the investors thought had been sold off.
In the US, the sub-prime debacle has even adversely affected money market accounts--the state of Florida having had a run on a state money market account leaving a greater percentage of defaulted or downgraded debt than investment grade debt.
General Electric, GE, and Bank of America, BAC, likewise have had money market problems, with GE cashing out accounts at 96 cents on the dollar; and Bank of America, probably under pressure from the Fed having now acquired Countrywide Financial.
As investors, we have invested on risk expecting reward: some have invested in oil, USO, and in natural resource companies such as Transocean, RIG, and Occidental Petroleum, OXY, based upon the awareness of risk and reward stemming from the war on terrorism as well as the belief that the President would attack Iran to prevent the development of its nuclear industry.
Some have chosen to be invested in gold, GLD, believing that Ben Bernanke's dropping of money into and onto banks, in Helicopter like manner, debases the US dollar and inflates the price of gold.
The failure of Citicorp on October 8th, 2008, perhaps said better, heightened investor awareness of highly leveraged CDOs, and overvalued stock in relation to the real estate market, turned the S&P, SPY, and the small US companies, IWM, especially reliant on a functional credit system with capable financial services, IYF, continually and aggressively lower.
And most recently, shock waves came through loud and clear on December 24, 2007 from a toxic credit system and devalued dollar by the December 11th Fed's actions to lower interest rates and provide action process: the Yen blasted higher, the U.S. dollar fell, gold soared and stocks tumbled.
Now this week earnings reports are coming in disappointing.
Investors are taking flight from stocks; and are now aggressively short selling those stocks and ETFs, that have provided terrific returns since 2001.
And now with the Fitch downgrade of AMBAC, coupled with the ongoing troubles of MBIA, which have underwritten and insured the risk of municipality default, the spectre of the failure of capitalism is at hand.
Investment Application
The greatest and most financially rewarding investment that one could ever make has arisen: investment rewards beyond belief, are coming to those who have their retirement assets in the gold ETF, GLD, and who use margin credit to go short US Treasuries, TLT and short the closed end municipal bond fund VGM and its peers EIM, BKK, CXE and PZC; whose comparative performance is found by clicking here.
Here is the Stockcharts.com chart of VGM which shows the lollipop hanging man candlestick and a parabolic turn lower.
One's investment wealth should be tucked securely away outside of the US -- in tradable internet vaults such as BullionVault.com.
WIDGETIZE