While most people ignore the warning signs and fail to connect the dots, those who move quickly and correctly can position themselves now to profit from what will be the biggest financial opportunity of the decade
Press and Testimonials
America’s Bubble Economy - Profit When it Pops
Chosen by Kiplinger’s as one of the 30 Best Business Books of 2007
Paul Farrel, Senior Columnist at Dow Jones Market Watch said on February 12, 2008,
"In short, America'c Bubble Economy's prediction, though ignored, was accurate".

Archive for September, 2007

Important Update – Stock Tipping Point

In the book, we promised that we would post important updates on the popping of bubbles on our web site.  In terms of the stock market bubble, it is increasingly apparent that we may have hit a peak in the market and not just a temporary pullback.  Three key indicators are clearly evident:

  1. Much more negative opinions toward the market and its future performance
  2. The dramatic and rapid pullback from 14,000
  3. What was termed “sickening falls” before the 1929 crash.  The recent drops in the market aren’t quite as substantial, but there has been a highly noticeable increase in the last few months.

Although we could see the market resuming its previous growth track, there are clear indications that we may have neared a peak in Phase I of the bubble collapse on the way toward entering Phase II. 

Hence, we suggest you start moving in increments away from stock and into gold.  We stress moving in increments, because the market could still turn around.  However, the likelihood of it not rising substantially is rising substantially!

Move a little now and, if you see more of the three indicators mentioned above, keep moving in increments.  Right now the market is in a private equity bubble that does not reflect economic or financial fundamentals.  It reflects cheap credit and not very bright credit investors who may brighten up quickly as they lose money.

Since fundamentals are not driving the market, it is very subject to crowd psychology and maybe even some manipulation, as was heavily practiced in 1928 and 1929.

The market has shown an incredible bias toward upward movement despite clear forecasts of deteriorating economic conditions.  This bias could return, which is why we suggest you move in increments and not all at once.  Since the market is clearly in a state of flux, we will make another update within 30 days.

2 Comments »

Important Tipping Point in Housing

In the book America’s Bubble Economy we promised you important updates on our web site. This is not a specific market update. Rather it is an update on an economic event that will effect all markets—stock, housing and the dollar. This update involves the much discussed sub-prime mortgage meltdown and our take on it.

We feel that the sub-prime market problem is the pin to burst the housing bubble. The bursting of the housing bubble, as we said in the book, will put pressure on the economy and ultimately on the stock market; it will collapse both.

The expected sequence of events is as follows:

  1. Sub-prime loans will fall dramatically in number by spring 2008 due to severe problems in selling these loans on the secondary market. Alt-A or “no documentation” liar loans will be decreased dramatically for the same reasons, as we just saw with the collapse of American Home Mortgage.
  2. The lack of sub-prime and Alt-A funding will put downward pressure on prices and new home purchases. As we have mentioned previously, even though the total number of sub prime and Alt-A loans is only 20% of the total market, it is more than 60% of new home buyer loans and it is the new buyers that set the prices for housing, not the people who already own houses. This is an obvious but important fact that is often ignored in discussions of the effects of the sub-prime meltdown.
  3. The fall in home prices will cause further problems with people who have refinanced into adjustable rate sub-prime mortgages and will cause a huge increase in foreclosures which we are already starting to see. It is hard for us to imagine that there won’t be at least 2 million foreclosure filings this year. Given that only about 6 million used homes are sold each year, that’s a lot of foreclosed homes coming on the market that will have to be sold, further pushing prices down.
  4. When price falls are big enough, say around 20%, new home construction will fall dramatically and greatly affect the economy. The amount of home equity loans will be falling thus reducing consumer spending. Some home equity loans will be lost entirely because there is not enough equity to cover them, causing serious problems for mortgage lenders. The ripple effects across the economy will start to be felt hard, unlike today when they are only beginning to be felt.
  5. These ripple effects will be strong enough to put the economy into a mild recession. This will collapse the stock market to below 10,000 over the next 18 months to 2 years and real estate prices will fall with it.
  6. The economic and market downturn will become severe enough that dollars will start to flow at a much faster rate out of the US than today. This will raise interest rates, especially mortgage rates, causing a further decline in real estate and all this will further depress the stock market. The decline in the dollar is the ultimate trigger for the beginning of Phase II.

minimum architect education price test

11 Comments »

To receive economic and investment alerts, enter your email address below:
Email:  


Copyright © The Foresight Group 2006, 2007, 2008 - All Rights Reserved