Home Construction Falls — Again!

CBS Evening News, 7/18/2013

Source: Link

Did you hear the key points in the above video? 1) Housing prices have increased quickly. 2) First-time home buyers are finding it difficult to get into the housing market. 3) A home in Glendale, CA sold for $110,000 over the asking price. 4) “Right now the economy is only creating about 200,000 jobs a month and, Scott, that is barely enough to keep-up with new entrants to the workforce.”

Okay — well — that’s a bummer!

Let’s move on to personal savings.

Personal Savings Rate Data As Of 6/27/2013

From the late 50’s to the early 80’s, the personal savings rate averaged around 8.0 to 9.0 percent, it then began to plummet. For a brief time, following the housing market collapse and the beginning of the Great Recession, the rate climbed to, again, around 8.0 percent. That, however, did not last long and, today, it is hovering around 3.0 percent.

Personal Saving Rate (PSAVERT)

2013-05: 3.2 Percent   Hide Last 5 Observations





Monthly, Seasonally Adjusted Annual Rate, Updated: 2013-06-27 8:01 AM CDT

Source: Link

In inflation adjusted terms, Americans have essentially saved — ZERO!

Near-zero savings, excessive spending, maximum debt: Sounds simple, but Americans have been saving at a rate near zero for the past two decades. “As a nation, we have essentially no savings.” No protection in crises.

Source: Link

The above quote was taken from an article I read this morning entitled: “Critical Warning No. 17: Dow 5,000, crash of 65% Commentary: Sucker’s bull market of 1928 now repeating” It is an interesting read that investors may find valuable if one can look past certain commentary. The basic gist of the article is that we are currently witnessing the set-up for the mother-of-all crashes and that the recent market improvements we’ve seen lately have been nothing more than an illusion created by the Fed’s easy money policies. To quote from the article:

“The stock market is about to have a devastating decline; we will see Dow 5,000 before we see Dow 20,000.”

Beware: The sucker’s bull market of 1928 is repeating.

That’s Terry Burnham, former Goldman Sachs trader, biotech entrepreneur, money manager, author of “Mean Markets and Lizard Brains: How to Profit from the New Science of Irrationality,” on PBS. A former Harvard professor of behavioral economics, a guy on par with Nobel economist Daniel Kahneman; “Black Swan’s” Nassim Nicholas Taleb; and Dan Ariely, author of “Predictably Irrational: The Hidden Forces That Shape Our Decisions.”

Dow 5,000? Yes, investors, the big one’s coming, and it’s dead ahead. We’ve been reporting these warnings, maybe 20 this year alone. But, unfortunately, thanks to what Burnham calls the investor’s “lizard brain,” you can’t — you won’t — hear the crash coming. Till it’s too late.

Source: Link

We’ve heard these types of warning before from some of the same very intelligent people, so it is worth our attention. Unfortunately, for most of us, however, it is difficult to reconcile the negative commentary and warning signs with the positive stock market trends we have witnessed over the past four years. Though, we very well may be reaching the end of what appears to be a five year market cycle; so, please be careful. Should I continue investing? For the future — yes, but do so wisely and cautiously.

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