Rally will end the day after you buy into it

Rally will end the day after you buy into it
Hans Lysglimt

The signs of recovery are not real, the worst is yet to come. Thus the rally is fake. Yet, now that fear has gone away millions of investors are sucked into the catching up buying. That is why we see such strength in the upward moves, suddenly everyone is thinking they have to catch the departing train. Everyone except the dear readers of Farmann, who we are sure are tempted as well. Yes, we have missed a 50% rally from the bottom, that is significant. Yet, I want to put this into perspective.
The right thing to do in November 2007 was to sell, as we advised in Farmann – very strongly. We are still way below the highs of 2007.
The intermediary bottom came in November 2008, and we are – say 40-50% – up from there.
But! You would never have caught the bottom, it is practically impossible. So you might have gotten in, say after half. That’s a 20-25% return.
We predict very strongly that the markets will come crashing down again, and when it does it will happen so fast even your trailing stop loss might now be able to catch it. Say you have a 10% trailing stop loss, from whatever top there is. Then you are looking at a “loss” of 10-15% from not participating in this rally. If your trailing stop loss is less than disciplined (anyone feel called?) that 10-15% too is gone in the blink of an eye as well. You might even stickwith it downwards, new losses. You would have been square, at best.
So, in our book, even if the rally has gone 50% – we still think the right decision was to sell in November 2007, and stay out. And we recommend you to keep out.
The losses we see ahead will bring the markets down again, primordial fear will hit us. We even predict market capitulation, the psychology of the market is far from that right now.

On the stress tests.
Why are we not surprised that the stress tests came out good. We could have told you that before they even got started. It’s rigged, I hope you see that. They are trying to portion out the bad news so that thy can patch it up bit by bit. It’s like taxes in reverse, you can’t tax people in a yearly lump sum – you have to spread it out over many different targets. “It’s just another 75 billion dollars, now that we already spent XXX trillion.” And they will continue this all the way down the quagmire until they reach solid ground by pure luck.

Back to the markets.
We never like to be on the side of the majority, which should always be our wakeup call. So in February, when we predicted the markets further down we should have realized that as everyone was predicting the markets down, they would be wrong. And they were wrong.

Now everyone seems to think the worst is over, except for a few strongholds like your truly Farmann Magazine. The suckers are lured into buying. Fear has gone away, some economists are seeing signs of recovery, and some even predict the markets up 100% from here.

Our advice here at Farmann is more solidly backed when we are alone, due to the stupidity of the masses. Trust us when we are alone.

And, this I tell you, if you see us here at Farmann change our minds in the next few weeks and buy into it – that will be your sell signal, big time. We would most likely be the global last buyer sucked in.
You should apply this to yourself. You are still holding out, smart move, if you come to the day when your temptation to buy into the rally gets the better of you – that IS your big time sell signal.

If you do listen to us here at Farmann today, and decide not to enter into this. I hope you will take notice of the losses you will avoid. And drops us an email note about it when the time comes, soon enough.

One reader over in Bergen actually sent us a huge gold brick Swiss chocolate for appreciation! :) ; another sent us 10 trillion Zimbabwe dollars. Thanks guys!

Stay out of the markets.

Hans Lysglimt
Oslo, Norway
May 8. 2009

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One Comment

  1. Kris
    Posted 10 May, 2009 at 12:01 pm | Permalink

    This is probably a bear. Why? Because bull markets start easy, bear markets start violently and go up like never before. That makes the bear’s very spectactular looking, sucking people in, while the start of a bull market is calm and boring and everyone keeps saying that it will fall again b/c the bull just seems so ‘weak’.

    Of the last 100 bull markets since 1900, there is not a single BULL which startet as violently upwards as this one!!

    Farmann should get objective facts, not ‘thoughts’ .. You must live up to the old ‘Farmann’.

    Secondly, we might have hit bottom nominally! So we might never go back to S&P 666 or whatever it was. Is the market rising b/c better times ahead, or is it rising just because of inflation and devaluation of the dollar?