As for Cass' sentiment-based concern driving his bearishness, any similarity to summer 1987 might be best likened to that in mid-September 1987 when the market's counter-trend reaction back up toward its late-August peak was nearing completion. This is to affirm the market vulnerable to spectacular collapse once completing its counter-trend rally unfolding since March 2009 bottom. Indeed, the ninety or so S&P 500 points Cass believes at risk here could come in their entirety at some trading day's open, this as a result of circumstance leaving little likelihood the market might bounce back soon after. This is the reality of risk currently hovering over what is fairly called a trash heap at the bottom of the capital structure, whose status as such is formed by a massive mountain of debt—likely to prove unpayable: illegitimate—saddling every corner of [ever diminishing] economic functioning, both in the private and public sectors.
If there is anything to take away from the Justice Department's weak, belated effort to bring civil charges against criminal ratings agencies and successful prosecution of “representations and warranties” improprieties occurring in the mortgage-backed securities derivatives market, it is that the age of free-reigning scam artists appears under pressure, if not drawing to a close. However neither of these judicial actions changes the fact today's global imperial system is rife with the fruits of misdeeds—scams benefiting a few at the expense of many—so let's not be deceived. Only with movement to radically alter the framework in which an otherwise hopelessly insolvent banking system is situated can there be cessation of systemic threats presented by an imperial, scarcity-driven, calamity-inciting institutional arrangement euphemistically rationalized in the language of the "free market." What does this likely portend, then? Only scams of an even greater dimension! We certainly should not suppose 2008 was the end of it.
* * * * *© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.
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