Binary Options and Inflation The word “inflation” is one that has become a very familiar one in the vocabulary of traders and everyday people, especially since the global financial crisis of 2008. The reason why inflation strikes fear into the minds of people is that it is a phenomenon that reduces the purchasing power of individuals. Typically, salaries and wages do not increase commiserate with level of reduction of the purchasing power of the currency, and fixed investment vehicles such as the money market do not provide enough earning power as to cushion the effects of inflation. That is why it is important that people are made aware of other forms of investments that can overcome … [Read more...]
Stocks Typically Fall Faster Than They Rise
Online stock market investing is a risky prospect these days. For a limited time you can download a free copy of the May issue of Elliott Wave Financial Forecast to help you decide how you should proceed for the rest of 2012 and beyond ~editor The Smell of Fear: Detecting the Dow's Scent Stocks typically fall faster than they rise Rising stock prices vs. investor fear: When one is present, the other is usually absent. Yet the two were actually in each other's company around the time of the most recent high in the Dow Industrials (May 1): This week the Dow carried to a new recovery high without generating a corresponding new low in the VIX. This suggests a sudden hesitancy compared … [Read more...]
How to Speculate your Way to Success
Everybody Forced to Speculate? According to an interview with Doug Casey, "Everybody is going to be almost forced to be a speculator to try to stay in the same place. Speculating means capitalizing on politically caused distortions in the marketplace." ~editorHow to Speculate your Way to Success Source: JT Long of The Gold Report (4/20/12) So far, 2012 has been a banner year for the stock market, which recently closed the books on its best first quarter in 14 years. But Casey Research Chairman Doug Casey insists that time is running out on the ticking time bombs. Next week when Casey Research's spring summit gets underway, Casey will open the first general session addressing the … [Read more...]
Inflation Adjusted Stock Prices
Adjusted Stock Price Financial advisors will often tell us of the steady increases available only through the stock market and present us with beautiful charts showing the relentless march of the the stockmarket ever higher and to the right. But what about inflation? How does the stock market perform when inflation is taken into consideration? After we take the loss of purchasing power into account have all the gains disappeared? When adjusting stock prices for inflation we typically use the US Bureau of Labor Statistics Consumer Price Index CPI-U. Prices are then calculated in "real" dollars. That means that the price is adjusted so that we can see what it would have cost if prices … [Read more...]
Inflation Adjusted Gold vs Stocks vs Bonds
Recently our good friends at Casey research published the following chart comparing the inflation adjusted Gold returns to stocks and bonds for the period 1971 through the present. From this chart we can see that as bonds fell during the late 1970's gold rose equivalently and stocks were basically flat. During the 1980's bonds rose and gold fell while while stocks rose slightly. During the 1990's stocks rose sharply gold fell and Bonds were volatile but basically flat to slightly up. During the 2000's gold was up sharply, stocks were volatile and bonds were pretty flat. … [Read more...]
Is There a Correlation Between Inflation and the Stock Market
When inflation is high and commodity prices are rising on what seems like an almost daily basis, have you ever wondered how that might affect the price of stocks? Recently I received the following question: "In the years leading up to the great depression and the great recession, the DJIA nearly quadrupled. My question is... what the cost of living did in these time periods and if there is a correlation between the stock market and the cost of living? John Kelsch" ************ John, Great question! You would think that if all commodities are going up stocks would probably go up as well, since companies produce commodities. But that isn't always the case. Often high … [Read more...]
The Top 10 Market Myths Exposed
The Market Myths Exposed eBook sets the record straight Not knowing the truth can be hazardous in just about any type of situation, but especially when it comes to your financial future. To help you decipher market truth from myth, Elliott Wave International put together Market Myths Exposed, a free 33-page eBook that takes the 10 most dangerous investment myths head on and exposes the truth about each in a way every investor can understand. Originally published in 2009, it's still just as valuable as ever. Get your free eBook here. Here are the first two myths from Market Myths Exposed: … [Read more...]
Markets Fear Deflation
The best way to know the future is to survey millions of people and analyze their responses. That is exactly what the market does every day. And even better Mr. Market knows not only what people say they believe but where they are putting their money as well. In the following article Chris Ciovacco, the Chief Investment Officer for Ciovacco Capital Management shows us how the markets view the current possibility of deflation. Chris has an amazingly simple chart that shows us exactly what the market is thinking right now. That chart is the ratio of Treasuries to Treasury Inflation-Protected Securities (TIPS). Currently the ratio is indicating a deflationary bias in the market. When you think … [Read more...]
What is the Economy Usually Doing When Gold Goes Up?
Traditionally when does Gold rise and when does it fall? What economic indicators predict gold prices? In this article Robert Prechter looks at the economy and Gold Prices. ~ editor By EWI President Robert Prechter ...If gold isn’t going up when the economy is contracting, when is it going up? Table 4 (see chart on p. 24 of this free Club EWI report ~ editor) answers the question: All the huge gains in gold have come while the economy was expanding. This is true of the three most dramatic gold gains of the past century: (1) Congress changed the official price of gold from $20.67 to $35 per ounce in 1934, during an economic expansion. The gain against the dollar was 69 … [Read more...]
Stock Market vs. Gold
Editor's Note: Often people are skeptical about the Government's Inflation numbers and I frequently get questions like "Are they fudging the data?" And to some extent they might be. Since Gold is the original money and it is freely converted to cash, it is still a reasonable scale to gauge other prices against. If gold was a true inflation indicator, the gold price in dollars would progress steadily upward with very few downward periods and the inflation adjusted price of gold would be constant. Although this is not the case, never-the-less gold is a good scale to use for comparison purposes. So the following article on Gold vs. the Dow Jones Industrial Average is a good place to … [Read more...]
