Michael's Personal Notes

An old friend walked into my office the other day and told me I was dead wrong about the stock market being overvalued and overbought. “Michael, it looks like key stock indices can go even higher next year.” His reasoning: the Fed won’t stop printing and that means…

Detroit, the “Motor City,” has been approved for bankruptcy. In making the ruling, Judge Steven W. Rhodes, who sits in the United States Bankruptcy Court for the Eastern District of Michigan, said, “This once proud and prosperous city can’t pay its debts.” He added, “It’s insolvent. It’s eligible…

On the surface, the recent U.S. GDP numbers looked great. I hear the U.S. economy grew at a revised annual pace of 3.6% in the third quarter of 2013—its fastest GDP growth rate since at least the financial crisis. (Source: Bureau of Economic Analysis, December 5, 2013.) But…

In the first 11 months of this year, key stock indices like the S&P 500 have gone up 26%. But as this happened, we saw optimism towards stocks increase and fundamentals became weak—two major negatives for stocks going into 2014. According to the Investment Company Institute (ICI), U.S.…

As gold bullion prices continue to take a beating because of the belief that the easy money policies of the Fed won’t go away anytime soon, silver prices have fallen into the same rut. Just like gold bullion, the silver market has also become a place where bears…

For its fiscal year (ended September 30, 2013), the U.S. government posted a budget deficit of $680 billion…that’s after four years of annual trillion-dollar budget deficits. And with the onset of a new fiscal year, the trend continues. (There are projections the U.S. government will have a budget…

The direction of prices in the housing market has historically been dependent on the direction of mortgage interest rates. If mortgage rates start to increase, it makes homes less affordable for those who want to buy. The math is simple: the higher the mortgage interest rate, the higher…

The strong jobs market report last week started the chatter again that the Federal Reserve would start to reduce the pace of its quantitative easing program. Some have said the Fed will reduce the amount of its asset purchases as early as December, while others are saying the…

It’s “fairly good protection against fluctuation of the Dollar and risk diversification,” said the President of the European Central Bank (ECB), Mario Draghi, about gold bullion recently at Harvard University. He added, “Central banks which had started a program of selling gold a few years ago substantially stopped;…

Consumer confidence in the U.S. economy is falling fast. This phenomenon will bring key stock indices lower. But sadly, no one is really talking about this. “Buy, buy, and buy even more” is the theme among stock advisors. Optimism is increasing, and so is stock market risk. The…

We have seen cities like Detroit and others in California tell their municipal bonds investors, “Sorry, we can’t pay you.” The reason behind this? Their budget deficit was out of control, they reached the breaking point, and they filed for bankruptcy. But the troubles of municipalities and cities…

There have been many instances when the adage “buy when there’s blood on the street” has turned out to be the best investment strategy. March of 2009 was one great example of this—there were not a lot of stock advisors saying buy stock back then as panic had…

The Federal Open Market Committee (FOMC) decided this week to keep quantitative easing and easy monetary policy going. The statement by the Federal Reserve said, “To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary…

If you are a stock market investor, you’ve probably come to the same realization I have: the stock market is behaving irrationally. These days, the fundamentals don’t really matter. What’s even more frustrating is that when you do talk about the fundamentals behind the market’s continued advance missing,…

Even amateur economists will agree with me on this: when supply declines and demand remains the same, prices increase. Well, it wasn’t too long ago when I said that if gold bullion prices remain suppressed for long, we will see the supply decline. This phenomenon has started to…

More evidence consumer confidence in the U.S. economy is plunging… The monthly Bloomberg Consumer Comfort Index, a consumer confidence indicator that shows the expectations of Americans about the U.S. economy, plunged to its lowest level in October since November of 2011. The index stood at -31 in October,…

Keeping up with the subject of irrationality, it’s not just key stock indices working in reverse to the fundamentals; I believe gold bullion prices are facing the same issue. They are moving in the wrong direction in spite of fundamentals suggesting otherwise. India, the biggest gold bullion-consuming country,…

No one wants to hear this… The most basic factor of economic growth in this country, consumer spending, is flashing a warning sign about the U.S. economy. According to Gallup, weekly U.S. economic confidence for the week of September 30 to October 6 plummeted the most since the…

In 2010, on average, for every one dollar in sales posted by the S&P 500 companies, $0.135 came from Europe. In 2011, this number declined to $0.11. In 2012, sales from Europe accounted for only $0.097 for every one dollar of sales generated by the S&P 500 companies.…

Income is the largest factor when it comes to determining changes in the consumer spending. Unfortunately, personal income is declining in the U.S. economy—not a good indicator; no matter how anyone tries to spin it. In the first eight months of 2012, the average change in real personal…