The current secular bear market we are in and have been in since 2001 has many more years to go.  It is likely that investors will see great gains from some of the cyclical bulls that are going to occur within the secular bear market, but overall, it will be until at least 2014 or later until we are in a true secular BULL market.  Zeal LLC has some great articles on secular bear and secular bull markets and this weeks essay is extremely worth the read.  For anyone who hasn’t read Adam or Scott’s articles, I strongly suggest you take the time and read some of them.

This week Adam points out that the secular bear market that began in 2001 still has several years to go because most bull and bear markets run for an average of 17 years.  It takes this long for sentiment to completely change and for the financial markets to get their firm footing in one direction or another.  The good thing about being in a secular bull or bear market is the fact that there are always investments that make a great deal of money.  When stocks are in a bear market commodities are in a bull market.  We have seen this since 2001.  Some commodities have tripled in their eight year bull while most stocks have been flat or lost value.

Adam also does a great job of pointing out how history has a tendancy to repeat itself.  He relates the current secular bear market to that of the 1970s.  If any of you have memories of this, you know that stocks were flat the entire decade while commodities went to the moon.  Will this happen again?  It is very likely as not only are there bullish supply/demand factors in commodities, but there is also likely to be hyper inflation.

With Ben Bernanke doing everything he can to keep mortgage rates low, he has printed WAY too much money.  This means that the value of the dollar is going to decline and the price of commodities is sure to rise.  It will be very interesting to see when commodities start to see their parabolic rise, but I hope it does not happen soon.  When the parabolic rise starts, that is when we only have about one to two years left in the commodities bull.  I hope to have much more capital in commodities before we see this doubling or tripling of value within a year or two of the parabolic rise.

Overall, the secular bear market has many years to go.  If this bear is like most in the past, we will not see another stock market secular bull market until around 2018.  This is great news if you have been smart with your inflation investments and put your money into commodities such as Gold, Silver, Oil and Copper.  For more information on where to put your money make sure to access Zeal LLC.

Friehling’s lawyer, Andrew Lankler, has made no comments on the charges placed on his client.  Friehling faces up to 105 years in prison.  He surrended to the FBI on March 18th and is expected to appear in court later that day.  Authorities said the fraud went on from 1991 to 2008.

To put it in laymans terms, David Friehling claimed that he audited the earnings of Bernie Madoff but in reality just falsified numbers.  He took millions of dollars from Madoff to change the number to look realizistic and not portray any type of ponzi scheme.

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On February 13th, 2009, Bank of America started its year end compensation bonus package.  In one day, the struggling bank paid out $700 million and is expected to pay an additional $900 million in cash and stocks in the near future.  Where is this money coming from?  Is this the same company that is going to receive over $20 billion in government aid?  How can you possibly continue to pay bonuses when you asked THE AMERICAN PUBLIC to bail you out?!?

The irony of it all is that two days after paying out $700 million, Ken Lewis and his team decided to accept a tender offer.  The best part about this offer is that shareholders received a letter that the Bank of America stock is part of a mandatory reorganization or tender offer with no explanation.  Could you please elaborate Mr. Lewis?  Wait, what am I thinking?  You are the same “leader” that allowed John Thain, former Merrill Lynch CEO, to pay out $4 billion in bonuses a week prior to closing a deal to be purchased by Bank of America.  I guess you are just following in his footsteps?  You are ONLY at $1.7 billion Mr. Lewis, I am sure you can use our tax dollars to continue to pay out bonuses that were not earned.  Just in case you didn’t look at your operating statement, here are the facts:

YOUR company went from making $31.9 billion in 2006 to making $4.4 billion in 2008, great growth achieved Mr. Lewis!  Yes, that is correct, your buddy John Thain spent ALL of your earnings for his employees bonuses.  So this question is, where is the money coming from for the bonuses of YOUR employees.  My calculations show that you have $400,000 left, NOT $1.7 billion!

Related Posts:

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Who Pays $87,784 For An Area Rug?!?  Merrill Lynch CEO John Thain

UPDATE: A tender offer is usually a premium of the current stock price as shown here on Wikipedia:

To induce the shareholders of the target company to sell, the acquirer’s offer price usually includes a premium over the current market price of the target company’s shares. For example, if a target corporation’s stock were trading at a value of $1/share, an acquirer might offer $1.15/share to its shareholders on the condition that 51% of shareholders agree. Cash or other securities may be offered to the target company’s shareholders as consideration, although a tender offer in which securities are offered as consideration is generally referred to as an “exchange offer.”

While this sounds great, it is likely that the premium will not be that lucrative.  Many of you have held this stock from much higher prices, so do not expect this tender offer to gain much of your losses back.  We will see how the stock reacts in the morning.  Stay posted to Subprime Blogger as we will keep you updated.

This morning Bank of America issued that statement that their stock is part of a mandatory reorganization or tender offer.  This is due to the purchase of Merrill Lynch, who subsequently has caused many problems for Bank of America.   A tender offer a “public, open offer (usually announced in a newspaper advertisement) by an acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to the tendering of a minimum and maximum number of shares. In tender offers, the bidder contacts shareholders directly, inviting them to sell their shares at an offer price.”

This question is, who is going to make this public offer for MANY of the Merrill Lynch shares that Bank of American currently holds?

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In previous articles, we mentioned that inflation is likely to happen in the United States in the very near future.  The government has given too much money to banks and lending institutions which will cause a decrease in the value of the US dollar and a subsequent inflationary period.  The stock market has been a horrible investment over the past year as the overall market has been down over 40% and many investments have seen a loss of greater than 75%.  This is causing many investors to weigh their options on future investments.  There are a few options when it comes to investing in an inflationary period, but one investment vehicle seems to ALWAYS outperform.

Gold is the best investment during an inflationary period.  It is the one asset group that has stood the test of time.  Throughout history, this is the ONLY asset to remain intact.  Many market pundits will say that gold is a horrible investment, but look who is talking now.  Investing in gold in in 2001 around $260 an ounce would have netted a gain of over 260% if held through today.  During that same period, an investment in the overall stock market would have netted a loss of over 31%.  The same held true during the inflationary period of the 1970s and early 1980s.  Gold was up over 1700% during that period which made many investors a great deal of money.  The majority of the gains were seen in 1980 with a meteoric rise from $200 an ounce to over $800 an ounce in less than one year.

Is this possible today?  With the actions by the Federal Reserve Bank, it seems quite likely that we will see a strong push higher from gold.  A strong push like that of 1980 would increase the current price of gold to over $3700 an ounce.  With this knowledge, you may ask, “what is the easiest way to invest in gold?”  Buying gold coins is an option and often a fun hobby, but the easiest method is to buy shares of the GLD, the SPDR Gold Trust etf, on the New York Stock Exchange.  Other options include the DBP or DBL.

We will offer much more on the opportunities during an inflationary period in the coming months.

Related Articles:

Inflation is Coming…Where Should You Invest?  Part I

Inflation is Coming…Where Should You Invest?  Part II

The PORTAL Alliance Could Be the Destruction of Our Economy and We Don’t Even Know What It Is

Bailout, Rescue Plan, Stimulus Package, Toxic Assets, Subprime Mortgage Crisis and Bad Banks are just a few of the buzz words the financial media has filtered to the American public over the last year.  On a daily basis CNBC, CNN, FOXNews, and many other media outlets continue to tell us about the “unprecedented” financial times in which we are living and what may have caused this disaster.  There is something that they left out that may very well be a huge part of the entire financial disaster: the PORTAL Alliance.

The PORTAL Alliance is “an open, industry-wide platform for the offering, trading and centralization of information in privately placed 144A Securities.”  The founding members of the PORTAL Alliance include:

• Bank of America – BAC – down 86.65%
• Barclays Capital – BCS – down 84.31%
• Citi – C – down 89.89%
• Credit Suisse – CS – down 53.42%
• Deutsche Bank – DB – down 75.87%
• Goldman Sachs – GS – down 54.77%
• JP Morgan – JPM – down 38.1%
• Merril Lynch – bought out by BAC
• Morgan Stanley – MS – down 57.57%
• UBS – UBS – down 73.03%
• Wachovia Securities – WB – down 86.37%

Does anyone else find this list to be the who’s who of financial fall outs on Wall Street?  What makes this even more interesting is the fact that this “open platform of trading” was created in November of 2007.  To help illustrate how poorly this group of institutions has performed over the period of time since the inception of the PORTAL Alliance, the stock performance of each security is listed.

NASDAQ’s Chief Executive Bob Greifeld made the statement “We’ll have great growth stats in the years to come with respect to the volume of trading.”  Well, Bob, little did you know that the opposite would happen.  Is it possible that creating this alliance to trade $100 million investable assets amongst themselves is a large part of this economic crisis?  Why has there been no media coverage on this topic?

We will dive deeper into this subject in the days ahead…

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NASDAQ in February of 2000

Oh how they mighty have fallen.  If we flash back three years, there was no better buy on the NYSE than BZH and the homebuilders.  Are most of them going to fail?

With the Federal Reserve printing money at will, let Subprime Blogger help you with your inflation investments.  By making the correct inflation investments over the next few years, you could make a ton of money.

Fear is an emotional response to threats or danger.  Fear on the stock market is measured by the VXO, the exchange volatility index.  The greater the amount of volatility, the higher the VXO will rise.  Historically the VXO fluctuates between 10 and 35.  On October 19th, 1987, the VXO skyrocketed to 150.2 at the close of the market and accelerated to 172.8 intraday the following day.  These numbers are quite extreme as that was the largest single day decline in the history of the markets and would have never happened with any type of technologies to stop trading.

The first day after the US House passed the Bailout Plan bill in 2008, fear reached a level that had never been seen before.  The VXO rocketed to 69.4 intraday which was a post 1987 record.  The current VXO has recently accelerated to over 100 in early October.  These are numbers never seen in the modern stock market.  Fear in the current market is the highest it has been since 1987.  It took almost TWO years to regain the one day crash in 1987, so who really knows how long it will take to regain this multi-month crash?

During this time, the Federal Reserve Bank has decided to stimulate the economy by making it easier to borrow money.  They do this by lowering the Fed Funds Rate.  The Fed Funds Rate is currently 1.0%, but the unsettling part is, we cannot go below zero.  At one point, decreasing rates has to stop.  This is a VERY interesting time in history as rates are low and inflation is up.  Anyone have any ideas on how this will work itself out?

Read more about the stock market at “We Haven’t Seen the Bottom in the Stock Markets Yet”

Please use Subprime Blogger to assist you in getting low mortgage rates.  By saving money on your mortgage payment, you could put money to use in other important areas of your life.

Isn’t wealth a direct correlation to success is a question that must be analyzed.  In a article on Campus Corner there is a dataset that depicts the value of higher education. In 2006, the mean salary of a working adult with a master’s, professional or doctoral degree was $79,926.  The mean salary of an individual with a bachelor’s degree was $54,689 and the mean salary of an adult with solely a high school diploma was $29,448.

These statistics do not surprise me as we live in a Capitalist economy that bases success on wealth.  Capitalism is defined as by wikipedia “economic system in which the means of production are distributed to openly competing profit-seeking private persons and where investments, distribution, income, production and pricing of goods and services are predominantly determined through the operation of a free market in which anyone can participate in supply and demand and form contracts with each other, rather than by central economic planning.”

While I know not everyone has the opportunity to higher their education, most do!  College loans are accessible to almost anyone who wants them.  If our goal as Americans it to become wealthy in a free market system, why should we be taxed at a greater rate because of our success?

From Barack Obama’s taxcut website, a single individual with no dependents making over $100,000 a year will receive NO tax breaks, while individuals making less than $100,000 who are married with dependants will receive tax cuts.  So we are encouraging individuals to get married, have children and have no desire to gain true wealth?  Can we find a correlation between this and the divorce rate in America?  Why should I be punished because my Capitalist mindset is to gain wealth before children or marriage?  Why can’t taxes be equal across the board on a percentage basis?

Once again, I am neither Republican nor Democratic, but I am DEFINITELY Capitalist and my goal is to be single with no dependents and make over $100,000! Sorry Mr. Obama, you can’t help me with my taxes, I will

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