05 March 2013

The Dow smashes record high, when will the crash come?

As I write this the Dw is at 14,276, well above the record high of 2007 and seemingly set for stratosphereic heights. What is fueling this surge? Let's see where we are:

  • Dow Jones Industrial Average: Then 14164.5; Now 14,276
  • Regular Gas Price: Then $2.75; Now $3.73
  • GDP Growth: Then +2.5%; Now +1.6%
  • Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
  • Americans On Food Stamps: Then 26.9 million; Now 47.69 million
  • Size of Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
  • US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
  • US Deficit (LTM): Then $97 billion; Now $975.6 billion
  • Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
  • US Household Debt: Then $13.5 trillion; Now 12.87 trillion
  • Labor Force Particpation Rate: Then 65.8%; Now 63.6%
  • Consumer Confidence: Then 99.5; Now 69.6
  • S&P Rating of the US: Then AAA; Now AA+
  • VIX: Then 17.5%; Now 14%
  • 10 Year Treasury Yield: Then 4.64%; Now 1.89%
  • EURUSD: Then 1.4145; Now 1.3050
  • Gold: Then $748; Now $1583
  • NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares
  • courtesy of Investment Watch

That takes a bit of the shine off, since the underlying economics simply just do not seem sustainable.

What to do? Maintain the ability to swiftly move your stock exposure at the first sign of a correction, anything over a 7-8 percent drop in the Dow, and take a look at options to any mutual fund accounts you have to move into a safethy zone.

And this time when the Dow crash comes, as it inevitably will, the safety of gold and especially silver will be where the money flows. Get there first.

No comments: