Why the Market is Really Going Up


If you would prefer the video format, you can find it here.

 Why the Market is Really Going Up

This past week, I had conversations with three perspective money management clients from very different backgrounds.

Though, they all had the exact same concern.  I want to talk about that concern with you. 

It was the (is the) conflict between bad economic news (or data), and what is happening in the stock market.

When there is more bad news, the stock market goes higher.  What gives?

The answer can be captured with the image below. The line below the image is, “And Then We Told Them The Fed Would Bail Them Out.”

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You see, macroeconomic data and microeconomic data, and any other type of data is pointless, useless, and broken right now.

Look at the small list of economic data below.

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That is some negative economic data.  And, people (employees, employers, business owners, you) are feeling it.  Does the stock market know something that we do not know?

After all RC, isn’t the stock market forward-looking?  Maybe the stock market is seeing a recovery in the near future that humans are not able to see.  Maybe the global economy actually is getting better…

It would be great if that were true, but it’s not.  Let me tell you why the stock market is really going up.

The answer is in the image just below.

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Japan and The U.S. of A. are printing $170 billion dollars a month or more!

That money is being funneled directly into stocks, bonds, mortgage-backed securities, and who knows what else.

When Japan prints money, the Japanese see what is happening (and going to continue to happen) to their bonds and currency, and they are getting out of their bonds, and into US bonds/stocks/etc. 

The additional citizens of Japan are bringing even more money into U.S. bonds/stocks, which is driving prices up even more.

This is what bad economic news is up against; a historic amount of money printing.  Look at the chart below.

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This is the adjusted monetary base just for the Federal Reserve.  It is impressive, isn’t it?

You can throw a lot of negative news (or you can cover up a lot of negative news), by printing that much money.  This is in addition to a trillion dollars a year in deficit spending by the U.S. government alone. Add to that, Japan printing another trillion dollars a year, and Europe dropping their rates to half a percent (which is the lowest it has ever been), and you start to understand what is happening.

That much money printing can cover up a lot of pain.

Look at the graphic below.  What we have here is a teeter- totter.  On the left, we have economic data, which I am calling “negative economic data”.  On the right side, we have Bernanke and Kuroda printing money.

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As long as they continue to print money, they are going to levitate (or cover up), all negative economic data, and the stock market is going to continue to go up.

This is the Lance Armstrong Stock Market.

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There is Lance in the front.  Lance is being sponsored by the U.S. and Japanese Central banks.  That is why you see the S&P 500 logo on his shirt.

Behind Lance (aka S&P 500), you see the rest of the world indices falling behind and trying to catch up. This is happening because the U.S. stock market is the best looking horse at the glue factory.

Look at the chart below.  The blue line is the S&P 500, and the red line is the global stock market (minus the U.S.), from September of 2011 until this week.

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Notice the difference between the two.  Americans are buying more U.S. stocks, Japanese are buying more U.S. stocks, and Europeans (who are scared of their own stock markets), are buying more U.S. shares. 

The Bank of Japan is buying the U.S. Stock Market!  People are feeling like they have to be on board, even though they do not necessarily want to be.

Look at that difference between the two. The S&P 500 is up 40%.  Meanwhile, the Global index is up 18%.  That is more than twice as much.

This is what happens when you pump enough drugs into a market, or a bicyclist; you are going to get pretty good returns… until you don’t.

That is what happened to Lance.  He was on top of the world until it finally, indisputably, came out that he was doping the entire time. 

The market is doping right now; we just call it money printing. 

These are, and can be, scary times.

What has made sense in the past is no longer making sense today.

To avoid getting crushed when the market moves to its correct price, you have to be invested in strategies that can adapt to whatever manipulation (or interventions) that are happening.

Use and follow a strategy that does not take sides; one that only looks to be on the right side of the market.  Right now, being long in the stock market, is being on the correct side.  But, that can change very quickly, in what many people call the “bang moment”.

This is why you will often hear me say, Diversify into strategies, not stocks or sectors.  It’s the strategies that you own that will define your outcome, your future, and your retirement.

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The next Monthly Strategy Gathering is coming up on May 14th.  I’m starting it earlier for all of my East Coast subscribers, and will continue to bring them earlier into the day, since most of them will be online and streamed over the internet. 

We will cover how to take advantage of all the money printing in more detail, while making sure you are prepared for the eventual correction in the markets.

We will cover how to manage and leverage the big correction in gold, so that when that market corrects to its true value, your money is properly positioned.

And, of course, we will talk about the Markets, have a round of Speed Investing, I will have LIVE Extensive Q&A, and provide any updates or changes to the Strategies.  If we have time, we will delve into the Market X-Ray.

I hope you have a great week.

Together, we are growing and protecting your wealth,

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Editor’s Note: My team and I have spent the last decade, and nearly $1 million, designing an overall system to take the human error out of investing…and help you beat the market over the long-term.  It’s simply called The Fearless Wealth System.  Large hedge funds spend millions of dollars for these kinds of results. Click here to learn more about how regular investors are using it to profit right now.

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