This Week in Barrons - 11-20-11

This Week in Barons: 11–20-11:

They are Dropping Like Flies…
Ann Barnhardt of BCM Capital closed her brokerage business this week because of the MF Global scam. Taking excerpts from her post: “November 17, 2011 10:27 AM MST. It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. I could no longer tell my clients that their monies and positions were safe in the futures and options markets - because they are not. And this goes not just for my clients, but also for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. MF Global, a firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let's not sugarcoat this - Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian roulette. I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg, and as the failures begin to cascade there simply isn't that much money in the entire system. I will not consider reforming and reopening Barnhardt Capital Management until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government.”

As you can see, Miss Barnhardt has no problem expressing her opinion. But, is she right or wrong? I think that she is right, and we are witnessing 40 years of fiat currency craziness all coming to a head. Can we clean it all up? I do not believe we can, because the problems are too deep, too widespread, and too interconnected. Sit back and ponder what we’ve seen during the past 4 years – Lehman Bros, Bear Sterns and MF Global are gone, while Greece, Italy, Slovenia, Belgium, Portugal, Spain, Ireland are all technically insolvent. U.S. housing is still falling, the poor are increasing, food stamps are at record usage, and joblessness is raging. And all of this is happening despite 2 rounds of Quantitative Easing, Operation Twist, Cash for Clunkers, cash for Window Replacement, Government owned General Motors, and our FED lending out $16 trillion to European banks that when asked ‘Who got it?’ - The Ben Bernanke responded: “I don’t know!” And currently The Jefferies Group is about to go belly up – due to their exposure to MF Global.

I think the most telling part of all this is that no one seems to notice. John Corzine was about the most connected person you could name, and was probably going to be the next Treasury Secretary – he’s done! David Tepper (we learned this week) has taken all his funds out of equities. Here are some facts about the poor that certainly shook me:
- Last year, 2.6 million more Americans descended into poverty. The largest increase since the US government began keeping statistics.
- In 2000, 11.3% of all Americans were living in poverty – today it’s 15.1%.
- 22% of the children in the United States are living in poverty.
- Over 20 million U.S. children rely on school meal programs to keep from going hungry.
- One out of every six elderly Americans now lives below the poverty line.
- 45 million Americans (15% of all Americans – one out of every 4 children) are on food stamps – increasing 74% since 2007.
- Today – 18% of Americans are on Medicaid – in 1965 only 2% were.
- Today – over ½ a million children are homeless!

So where can we invest our money safely? Understand, on any given day the $600 Trillion in outstanding derivatives could take down all the trading houses and all of the exchanges – which is why investing in physical Gold and Silver make sense to me. For your information, we’re beginning to hear of non-delivery of gold and silver after payment. And warnings are beginning to circulate telling everyone to cash out of all gold ETFs because the backing is questionable. I'm just hopeful that the right people get in power so that when the default hits, the reset is done correctly and our kids have a shot at a brighter future.

The Market:
Our market is broken. When 200 to 300 point swings are the ‘new normal’, you can bet all semblance of ‘real normal’ is gone. We have a $600 trillion derivative bomb lying in wait, ready to go off at any moment. We have Europe melting, and brokerages imploding. Without more stimuli – QE3 – the economy will continue to crumble. Last week the Fed heads were out in force talking about how Europe could force us to be more accommodative, which is a fancy word for "print more money". So it’s coming, and when it’s announced the market will put on a furious rush higher. However, until it’s announced, we're going to be in a ‘rinse and repeat’ moment. So we’re in a time where the market depends upon free money from The Ben Bernanke, otherwise we will ‘slosh and fall’.

So one tactic is to just buy silver and gold, take possession, and forget the stock market. The only other tactic I can recommend is for you to understand how to trade. Trading means – actively buying something today, and maybe selling half by the close and the other half a day or two or a week later.

Currently the market is set for more down side. However, something happened this week that suggests to me that without something "real" like the FED coming out with QE3, or something really solid out of Europe – we are indeed heading lower. That ‘something’ was that the market rewarded the PUT buyers. You see people buy call options and put options to hedge their positions and to try and make money. Well, most of the time, the Market will generally move in the direction that will punish the most people, most of the time. It's called the "max pain" theory. Coming into this past week, to "punish" the most people the market would have had to trade sideways and slightly higher, but it didn't. This past week the market fell like the proverbial rock. It rewarded the bulk of the options holders who were destined to make the most money. So something went terribly awry, and could signal the shape of things to come.

I’m betting that (minus some rumor or news of a bail out) the market's going to go down and test the 50-day moving averages. On the S&P it has only 8 points to go, but on the DOW it’s got a couple hundred. So, we should be looking at a lower market this week. Normally Thanksgiving is a time for the markets to be fairly strong, so maybe they’ll all pitch in and try and save us, but it sure looks shaky.

Be careful out there, because we’re just one headline away from an all out crash, or a wild run higher.

Tips:
We’re out of virtually everything except:
- GLD at 157.49 – now at 167.90, and
- SLV at 28.00 – now at 31.55,
- And HDGE at 25.30 - now at 26.01.

As the miners continue to ‘relatively’ strengthen – thanks to Dave S for recommending Mines Management, MGN.
Now if things continue to roll over, I continue playing the short side using HDGE.

To follow me on Twitter and get my daily thoughts and trades – my handle is: “taylorpamm”.

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 11-13-11

This Week in Barons: 11–13-11:

These are the Worst of Times…

I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly. ~Michel de Montaigne

Are we there yet? Are we at the bottom? Can we trust people again? Well, according to Jack Abramoff (past DC Lobbyist): “As many as a dozen members of Congress and their aides took part in insider trading based on foreknowledge of market moving information, sometimes gaining several hundred thousand dollars. But it's basically legal, because the SEC has largely determined that trading stocks based on advance knowledge of action in Congress is not insider trading.” What? If you or I get a phone call from someone in a high level position at a public company, and we go and act on that news – you, the informant and I can all be imprisoned. But if you're a US Congressman and you get that same phone call; then, you can go act on the information, and it's deemed as "fine" by the SEC. How does such a double standard exist?

Is it safe? Have we solved the currency issues?
“According to China's National Foreign Exchanges Administration, China's gold reserves have recently increased. Recently China has been opening their own mines and buying mines around the world, thus accumulating both spot buying in the market, and their own production capacity.” For many years, U.S. Central Banks sold their gold holdings. They stopped selling in 2009, and became buyers of the metal again. Most nations want more exposure to gold; however, gold supply is limited and if everyone wants it at the same time, it pushes the price up. No one wants to buy anything that's been driven higher, so they have done everything they can to accumulate it, while at the same time, not disrupt the price.

Or are we simply re-arranging the deck chairs on the Titanic:
“Standard and Poor’s reported this week that ALL BANK earnings in Q3 were from Credit/Debit Valuation Adjustments (CVA/DVA). This is where the lenders booked profits as their credit-worthiness declined.” Yes – that is the same as a Bank making money – betting against itself.

And just when you thought it was safe to purchase GM stock again:
“The United Auto Workers retirement trust fund, which provides health benefits to over 820,000 people, has underfunded by almost $20B, due to rising medical costs and poor investment performance.” This week when the CEO of GM was asked about their underfunded pension, he flat out said: "I'm not going to talk about that".

And last but not least – those pesky European Banks:
“European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, in addition to all that Eurozone sovereign debt. Royal Bank of Scotland (RBS) is exposed to nearly €80B worth of risky mortgage assets, eight times more than its sovereign debt burden. Also: HSBC Holdings = €54B; Deutsche Bank = €51B; and ING = €36B.” The issue here is not only the amount, but also how far and wide the insurance on those amounts lead – U.S. fair warning!

So – can we still win the war or are we fighting a meaningless battle? Each day I get closer to moving in with the camp that says it's over. The Eurozone has had ample time to ‘fix things’ (over 18 months starting with Greece) – and they still haven’t – because they can’t.

You see, between 1944 and 1971 the world experienced incredible global stability and growth because the major economies of the world kept their currencies in balance with a basic gold standard. Debt loads remained manageable, because they could only create currency as long as it was pegged to a loose value of gold. Markets were free to set interest rates, and savers were rewarded with stable and realistic returns. As more people saved their money, pools of currency were created which banks could then lend to productive companies and create more jobs. But when the Bretton Wood accord was demolished in 1971, and President Nixon closed the "gold window", by 1974 we were thrown into one of the most horrid recessions of our modern history. Likewise, our current system of money supply creation, and constant borrowing is destined to fail, no matter how hard everyone "agrees" to keep things stable.

So what do we know? While the US dollar is still loosely recognized as the "reserve currency", everyone now understands that it's a fantasy. It's not stable, it's not pegged to anything, and a group of 12 people at the Federal Reserve can print as much money as they think they want or need at the drop of a hat. But behind the scenes there are choices. It seems to me, that the first big push is going to be for SDR's (Special Drawing Rights) to act as the new reserve currency. The only difference between SDR’s and the paper dollars we have now is that the International Monetary Fund and/or the World Bank would be the only issuers. And yes there are groups working on the concept of a Gold and Silver standard again. However, right now, to have gold be used as a reserve, the price would have to be somewhere around $7,000 per ounce, to "cover" the dollars in circulation, and to encompass all the world’s currencies the price of gold may have to reach $40,000 / ounce.

We predicted in 2001 that gold would be the single best investment idea, because we connected the ‘debt dots’ and those ‘dots’ added up to a picture that was unsustainable. We hit the wall in 2008, and now the entire world is suffering the consequences of printing too much currency, promising too many things, and not being able to shoulder the load. Hopefully when we emerge on the other side, we'll have the intelligence to realize that often simpler is better.

The Market:

Wild ride this week – ya think? Everyone knows that Greece is impossible to save, with Italy running a close second. Most believe that the PIIGS (Portugal, Ireland, Italy, Greece and Spain) are ready for slaughter, and as they fall away, it’s going to spread to the U.S. Now, I remember the days where you would ‘go long’ for 4 months, and you made your money as the market made long grinding runs. You didn't go short for a day, but rather you would go short for 2 months. But when today’s volatility causes a market to fall 400 points in a day, and then recover again in two days - trading houses make a years worth of profits in two days. In fact, during the month of October – if we totaled all of the daily swings – they totaled over 10,000 points! If you're addicted to charts, the pattern on the S&P is a bit scary right now. Unless we get some more points, and soon, we'll have developed a pattern of "lower highs". We desperately need a close over 1,275 on the S&P to give the bulls a glimmer of hope that this bullish run is going to last. If we put in another close or two below that, we could be in for more downside, before our next bounce. Unfortunately with this chop, I think you only have a few choices. You can just buy gold and silver and wait. Or, you can learn how to be more nimble by using the tools that modern investing platforms give us.

Just because you have a job, doesn't mean you can't put in conditional orders. By following me on Twitter, I might say that I like a particular stock over $30.00. Well, with today's advanced platforms you can put in a conditional buy order – to buy a number of shares that particular stock if it gets to $30.05. If it does and your order gets filled – you can then put in a conditional ‘stop/sell’ order at $29.70. In some ways I find that it works better than sitting in front of a screen all day. It takes the emotion out of the decision. You don't double guess yourself out of a trade. You have a defined entry, and a defined stop. We let the market take care of the rest.

Tips:

We have some profits in our long positions, but I'm guarding them closely. I'm not yet convinced they're going to get this market up yet, so we might have to cash out and wait on a better market "mood". If we don’t get more bad news out of Europe on Sunday, we might be able to add to Friday's gains. Our current short-term holdings include:
- GLD at 157.49 – now at 174.05, and
- SLV at 28.00 – now at 33.7,
- DIA at 121.24 – now at 121.55,
- MRVL at 14.66 – now at 14.92,
- NBR at 20.00 – now at 20.53.

If things roll over consider playing the short side using HDGE.

And to all the Vets out there, I salute you for your service.

To follow me on Twitter and get my daily thoughts and trades – my handle is: “taylorpamm”.

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 11-6-11

This Week in Barons: 11–6-11:

Misery Loves Company:

This week was a little bit of a travel week for me – and as I settled back into my room on Friday night – I noticed that Suze Orman was on. For those who don't know who she is, USA Today called her a ‘one-woman financial advice powerhouse’. She is undeniably America's most recognized expert on personal finance. Combine her with Jim Cramer – and I’ve spent a fair amount of time (over the years) denouncing their collective wisdom as an absolute train wreck. Suze Orman shocked me on her show when she said: "Up until 2007, I thought I had it all figured out. But then it all went horribly wrong. What I didn't take into consideration was that - I trusted the people at the top to be giving us the truth. But we found out that the truth wasn't there, and we were in a time of lies and corruption". So here is America’s most recognized expert on personal finance telling everyone that what she and the rest of us have been getting fed is a pack of financial lies. For the next hour she told people: (a) get back to the basics, (b) get out of debt, (c) train your kids to get out of the "buy me this" syndrome, (d) don't buy stuff you can't afford, and (e) save your money because there are very bad times ahead. This was such a turn around from the last time I heard her speak that I said: “Misery Loves Company!” Don’t get me wrong – Suze Orman knows more about the taxes on 401K's and Roth IRA’s than my accountant. Suze knows more about FICO scores than I'll ever know in my lifetime. My point to all of the above is that it’s one thing for someone to make a mistake, but it's very different when you openly mislead people. Suze Orman is now saying what we’ve been saying for years - 90% of the financial information that you are seeing and hearing is misleading information. If this economic crisis has taught us anything, it is that you have to listen and decide for yourself the financial elements that make sense for you. Sometimes it's not easy going against the grain. Welcome Ms. Orman – welcome back to the land of the living! In early 2001, we decided Gold was to be the ultimate investment, and we bought as much as we could afford. Then in 2007, we decided that Silver was the next best investment, and again we bought as much as we could afford.

To the fundamentals:
- The percentage of the population working full time now stands at 47.2%. We need to go all the way back to 1975 to find a ratio that low in October. So The Ben Bernanke, with the working population and wages being stagnant or down - Where’s the Growth?
- Of the 280 most profitable companies in the U.S., 78 paid no federal income tax in at least one year over the last three, and 30 reported a cumulative negative income tax over the period. The country is in debt to it's eyeballs, and one of it's biggest companies GE pays NO taxes, yet it's CEO trots around with Obama and preaches jobs creation, while shipping his own jobs over to China.
- U.S. investors have pulled $80B out of equity funds this year, but this has been more than offset by $200B in corporate stock buybacks. With the cost of debt being very low, and the cost of equity very high, many find it logical to float debt to repurchase stock. Did you know that while boosting their share prices by buying so much of their own stock, we’ve also created the largest corporate debt load in US history? Companies have borrowed heavily on the heels of Bernanke's 0% interest, but (like Greece) one day it's going to have to be repaid.

And then there’s Goldman Sachs with over 30 alumni stationed in power positions all around the globe, we’re seeing:
- MF Global, run by John Corzine (a Goldman alum – who helped bankrupt New Jersey) is now in the hole for $1.6 Billion, and we all know he won't go to jail.
- Gary Gensler (also from Goldman), the chairman of the U.S. Commodity Futures Trading Commission under President Barack Obama – overseeing over $5 Trillion in commodities trading each day. Mr. Gensler worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history. Gensler also worked on the deregulation of electronic energy trading, which led to the downfall of Enron, and supported the Gramm-Leach-Bliley Act, which allowed American banks to become "too big to fail"

Do you think it's possible that what these people do as far as global economic policy might all be in favor of shielding, abetting and strengthening Goldman?

The Market:
Greece is toast. The EU is disintegrating. Each hour of every day brings a new scheme, a new plan, or a new idea. Nothing they are doing is going to get the debts repaid, thus at some point default and defection become the fact.

Right now there are several forces tugging at us, and that makes it a bit harder to figure out the short-term direction.
- U.S. investors have pulled $80B out of equity funds this year, but this has been more than offset by $200B in buybacks. It’s obvious that John Q. Public is scared over global events. However, insiders are simply using the cheapest credit rates in history to juice their stock. If you're a CEO and you have 10 million shares of company stock, why not go borrow a billion dollars, and buy company stock? The stock rises making you richer, and if something happens the Company takes the hit.
- Each hour, some form of news comes out of Europe concerning Greece and also a bankrupt Italy - making for a huge market chop.
- It’s the Holiday season, where November and December have historically been the two best months for the fund managers to make their giant year of end bonuses. So fund managers want the market up, and the under performing ones will go for broke putting the last of their money to work.
- Quantitative Easing 3 (QE3) is on the way. There's no question Bernanke will unleash more stimulus, starting with buying more mortgage backed securities (MBAs), and from there, who knows how much he'll print and spend.
- Finally, each time the world is in an economic funk, we create a war. Tensions over Israel and Iran are now white hot – so watch for missiles flying sometime soon?

Right now it looks like we might be in for some short term selling, but they'll offset that with random, well timed rumors that will reverse any selling for a short-time – so please be cautious. If we can get the DOW and S&P to hold over their 200-day moving averages, we could see more upside. But if these averages hold as upper resistances, then we should be moving lower. Right now - my guess is that we end the week lower than we start it.

Tips:
We trade stocks. We try to trade based upon fundamentals, but there are none. We try to trade on based upon the technicals, but because we're in a world of rumors, designed to move things "their way" – we can’t do that either. We’re stuck trading on the insanity of the moment, and unfortunately it’s working! The moment we see the dollar dropping we buy materials and commodity companies like ANR, CLF,etc. If the dollar drops, U.S. stocks move up, and materials and commodities move the most. Like I said last week - desperate funds are going to seek high “alpha” stocks like: Apple (AAPL), Amazon (AMZN), Caterpillar (CAT), and Deckers (DECK). Funds that need dramatic returns won’t take chances with regular companies – so also look at Priceline (PCLN). And consider the technology ETF the XLK. Although it's not a rocket, the Holiday season is a big tech time and if Apple or Priceline are too expensive, the XLK may fit in nicely.

We stopped out of many of our short-term holdings (with gains) last week, and we’re left holding:
- GLD at 157.49 – now at 170.75, and
- SLV at 28.00 – now at 33.25.

If things roll over consider playing the short side using HDGE.

To follow me on twitter and get my daily thoughts and trades – my handle is: “taylorpamm”.

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 10-30-11

This Week in Barons: 10–30-11:

Making Giant Dollars on Fraud

This past week we bought and sold NTES for a $6 per share gain, sold the SPY’s for a $20 gain, Silver (SLV) is sitting on a $6 gain, Gold (GLD) is sitting on a $12 gain, and we purchased Amazon (AMZN) for $208.50 on Friday and it ended the day at $217. I am not saying this to pound my chest or to gain more twitter followers – but rather to tell you that the market is NOT running up on fundamentals. The market is running up on the "new paradigm" which is all FRAUD all the time. You really can’t believe that Merkel and Sarkozy just solved all of Europe’s problems. Nothing is solved; it's simply pushed off a few months. Soon we'll hear about Ireland wanting to discharge 50% of its debt, and then we'll hear more horror stories out of Italy. And then the German people (who have created the biggest economy in Europe) are going to revolt against the Merkel régime.

According to a recent survey, about one-third of small business owners polled by Gallup say they are concerned about going “Out Of Business.” And approximately one-third said that they might need to lay off workers. The biggest small business problem is complying with government regulations, followed closely by falling consumer confidence in the economy, and lack of consumer demand.

The market is running up on many "things" but none of them have anything to do with sound fundamentals. Unemployment continues higher – as on Friday Whirlpool announced that they are seeing "recession-like demand" and are closing a plant in Michigan, laying-off 5,000 people. Housing is a massive disaster, and Uncle Sam is working on literally "nationalizing" the whole lot of foreclosed houses. Healthcare has risen by another 8% this year, and projected to rise by at least 6% again next year.

The Market:
So if nothing has fundamentally changed – then why is the market moving up?
- The European summit absorbed the risk of a Greek default by punting the ball 6 months into the future – which relieved us of the burden of waking to a Greek disaster.
- The fall months of October, November and December are historically the best months of the year for the stock market.
- Almost 40% of all the hedge funds are "behind" the market, and to stave off redemptions, they will have to "get in the game" quickly (by making big bets) or risk losing investors.
- But if a fund loses an investor, the investor usually goes to another fund that has been doing well (normally a fund that has been buying heavily.) As "heavily buying” funds get more and more money, they will continue to buy heavily, and this becomes a viscous circle.
- Then we have the Federal Reserve and the "Plunge Protection Team" – officially known as the "Presidents Working Group on Capital Markets". Their job is to keep the market from plunging – because it instills consumer confidence when markets rise. This "wealth effect" is very real. When the stock market is rising, people feel better and spend more money. One firm recently compiled the data going back 30 years, and found that a rising market (especially around an important holiday) boosts spending by 16% over the same holiday in a sagging or flat market.

So, in total you have:
- 1 - A "Deal" in Europe that solves nothing, but does give them more time to make more plans.
- 2 - Almost half of Wall Street desperate to make some money, so they can get their bonuses.
- 3 - A Government, and a Federal Reserve that desperately want the market higher so that consumers (who should be saving) spend that additional 16%.
- 4 - Beaten down hedge funds, getting redemption calls daily - that "need" to “risk it all” and go for broke.
- 5 - And the very real possibility of another huge stimulus project out of our Fed.

All that has caused a market to run from 10,400 to 12,200 in 3 weeks. The run was not caused by fundamentals or improving economies, but simply by “animal spirits.” Now – does it continue? I think it does.

There is no resistance until 12,400 and then again at 12,724. We've gotten over the 200-day moving average. So, although we won't get there in a straight line (and currently we're tremendously "overbought") all the obstacles have been removed for a gallop higher. What makes sense to me right here is some back-filling. As people pile in because they're afraid that they have now missed the boat, Wall Street will oblige them by taking their money. But after a brief downtrend, I'd imagine the market would turn around and drive us higher again. Because we're carrying 6 long positions in our short-term account, and 5 of them are insanely profitable, I won't be shy about cashing out on a pull back and then re-entering on the way back up.

Tips:
These desperate funds are going to seek all the “alpha” they can get in a short period of time. That means they'll pile into the LEADERS that should be safe for them and give them a return. Think leaders like: Apple (AAPL), Amazon (AMZN), Caterpillar (CAT), and Deckers (DECK). Currently the market is extended, and is overdue for a pause. But when it perks up again, the leadership stocks will continue to lead. The funds that need the dramatic returns won’t take chances with regular companies – so look at Priceline (PCLN). Also consider the technology ETF the XLK. Although it's not a rocket, the Holiday season is a big tech time and if Apple or Priceline are too expensive, then take a peek at the XLK.

In the short-term holdings account I’m carrying:
- SPY at 108.54 – now at 128.23,
- AMZN at 208.50 – now at 217.20,
- GLD at 157.49 – now at 169.25,
- SLV at 28.00 – now at 34.37,
- CLF at 66.55 – now at 72.83, and
- CMI at 100.06 – now at 102.61.

I did take a lot of profits last week – but there’s still some more there to be taken. I’ll hold them for a bit longer just to see. If things roll over (as I think we’re over-bought right now) I'll cash out and play some short side using HDGE.

Please be safe out there!

To follow me on twitter and get my daily thoughts – my handle is: “taylorpamm”.

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 10-23-11

This Week in Barons: 10–23-11:

Your Single Best Investment

People forever ask – What’s your single Best Investment? Was it in stocks, bonds, gold, silver, or real estate? My answer has been the same for over 20 years – None of the above! It’s been in Education! The single best investment you can make is in educating yourself and/or the people around you. You are witnessing a global economic implosion that will eclipse the 2008 debacle, and things are just beginning to fray at the seams. People are becoming outspoken. Consider the “Occupy Wall Street” crowd. Right now they are a fairly peaceful group, but just this weekend 139 of them were arrested in Chicago. Consider what’s going on in Greece. On Friday we watched fires being set, petro bombs being tossed, and cars being overturned. Things are becoming desperate, and there's still no real way out. Heck, crime in certain areas of New York City is up 250%. Therefore, instead of arguing whether things are going to disintegrate into some re-enactment of “Mad Max”, let's think about what I consider to be the most important thing you can be doing right this minute. Educate yourself on your ‘options’, because that is going to be a very valuable skill as this economic train wreck continues. Most importantly – Don’t be an ‘easy mark.’

Factually:
- U.S. Underemployment has reached 17+ percent = 26 Million people
- Misery Index (inflation + underemployment) = 5+ and 17+ = OVER 22%
- Bank of America Corp. was hit by a credit downgrade and is moving all of its derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, so that if those derivatives fail (which they will) – the FDIC and we (the U.S. people) will be responsible for keeping them solvent!
- Pete M reminded us of a line from the Carter – Reagan debate: “We have inflation because the American people are living too well," says Jimmy Carter. “We have high inflation and high unemployment because the government is living too well," responded Ronald Reagan.

Wealth creation is a long and arduous process. Understand that it’s a discipline as much as it is a vision. In many cases it’s like ‘watching paint dry’ – but if you understand and listen to what is going on around you – you can then avoid the areas that are the most volatile. The world is upside down, and the economic unrest is making things worse.

The Market:
I said last Sunday that this past week would be one of the most important weeks of the entire year, and thus far that's proven to be true. The market was battling within a trading range of between 1125 and 1225 on the S&P. As we would approach the highs of the range, we would regularly bounce off of them and plunged down to the 1125 support level. For 3 days in a row, the market attacked that 1225 high and got repelled. Then on Friday it pushed up and broke over and out of that range, closing at 1238. There was much joy on the set of CNBC, and everyone was giddy with excitement. Is the market now set to run to the next S&P level of resistance at 1260? Is it finally time to pile in and ride the big wave?

I'd love to tell you YES, but I can’t. Why - because you need to consider the reason the market moved up in the first place. The market isn't moving on earnings or fundamentals. The market is moving on the hope that Europe has a plan to ‘carpet bomb’ it's members with Trillions of Euro's in order to bail out the banks and sovereign funds that are bankrupt. Unfortunately there us no such plan. We are going to hear about that plan on Wednesday of this coming week. Now, do I think that upcoming plan will encompasses several Trillion dollars, and solve all the immediate problems? Sorry, I don’t believe that we will. They've been “kicking the can” down the road now for months – making plans to make plans; therefore I am just not convinced that they are going to pull this off.

Do you know why Timothy Geithner has been travelling around Europe, begging and pleading for them to "get er done?" Because Timothy knows that some "very bad" things have been happening. In the past couple of months, U.S. money market funds have pulled approximately $400 Billion out of Europe. And with that much money leaving the European Banks and Investment Houses, it creates more debt problems for the Euro Zone. But because JPM, Citibank, Goldman Sachs, and many others have CDS’s (credit default swaps) written against these banks and sovereigns; when they go – we go because our financial houses do not have that kind of guaranteed money either! Timothy also knows that he can not get more bail out money out of Congress; therefore he’s seeing his friendly banks going ‘kaput’ – and hence his heavy travel schedule!

Will the International Monetary Fund (the IMF) come to Europe’s rescue? Will the German people allow their economy to be wrecked, so they can bail out the Greeks that still want to retire at age 50 with 100% pay? Is France strong enough to truly prop-up Spain? Are there really enough printing presses in the world to paper over the nightmare that Europe has become?

We rallied up and over a very important breakout level, and momentum could push this higher Monday and Tuesday. But will Wednesday’s Plan truly be enough? Currently I have my doubts.

We are "leaning long" into this rally, but I'm not ashamed to say that it's got me a bit scared. There is absolutely NO volume on these up days. On Friday when the S&P market got "up and over" that 1230 level we only traded 3 Billion, 765 Million shares. When the market was crashing on October 3rd – we traded over 5 Billion shares. When it was crashing back on August 8th – we traded 7 Billion, 491 million shares. I’m not inspired when there is huge volume on the big ‘roll-over’ days – and mediocre volume when we push over resistance level that was attacked 4 times.

I don't think we get a grand plan out of Europe, and I don't think they can pull it off if we get it. But, how our market deals with that has yet to be seen. With the lack of break out volume, I won't even be surprised if we sink back on Monday. However, pure momentum should keep us up, but I also tend to think that ammunition is running scarce about now. Mutual Funds are still losing money via redemptions. The bottom line is that if Europe doesn't come up with something substantial, I can easily make the case that we're going to plunge and plunge hard by the end of the week. It's something we have to all be aware of and be prepared for.

Tips:
In the short-term holdings account I’m carrying:
- SPY at 108.54 – now at 124.20,
- NTES at 42.43 – now at 45.60,
- GLD at 157.49 – now at 159.90,
- SLV at 28.00 – now at 30.46.

I did take some profits last week – but there’s still some more there to be taken. I’ll hold them for a bit longer just to see. If on the other hand things roll over, I'll cash out and play some short side using HDGE.

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 10-15-11

This Week in Barons: 10–15-11:

This Seat is ‘OCCUPY-d’

Remember the 70’s – when "Enough was Enough!" I’m sensing the same energy in the Occupy Wall Street movement. What's it about? Is it really a Socialist movement inspired by the Unions? Is it some radical movement started by an underground network of revolutionists? Or is it as Jim Rickards suggests: “In America, we generally go about our private business and rely on elected officials and appointed bureaucrats to take care of the government. When protest arises, it's a sign that government is not doing its job, or not doing it in a way that serves the people. Elections are fine for gradual change, but sometimes immediate change is called for when government fails the people utterly and repeatedly in important ways. Such is the case with the Occupy Wall Street movement and its "Occupy" variations in cities around the world. Governments have failed to stop the concentration of wealth, the concentration of financial power, the proliferation of derivatives and the metastasizing of systemic risk facilitated by unethical, self-absorbed and shortsighted bankers. So the people respond.”

Now you can laugh at or disparage the demonstrators all you want. You can single out the fringe and think it's un-representative of the whole. But that won't change the fact that this demonstration has touched a nerve. A rag-tag group is standing up where the government, regulators, media and business elites have rolled-over and played dead. Thus far, this has been a peaceful uprising. But history shows us that there is a very good chance of escalation. Armed clashes are NOT out of the realm of possibility. Martial law in various cities is NOT out of the question. But perception is tricky stuff. No one knows where this all goes. My hope is that some of the younger freshmen politicians listen to the gripes, and start to make the changes that we know need to be made. Most “Occupy” protestors would be happy to go home if they could see some true government leadership. We are witness to an uprising that's not bound by territory or border. We're seeing a global spread of voices that are tired of being the ox that shoulders the burden for the elite.

The Market:
In terms of the market, we are at the biggest moment of the year. From the lows just 9 trading days ago, we've run from 10,404 on Oct 4 to 11,644 on Friday's close. Couple that ‘inflection point’ with Bill Pimco’s apology this week: “The simple fact is that our portfolio at midyear was positioned for what we call a “New Normal” developed world economy – 2% real growth and 2% inflation. We have now revised our internal growth forecast for developed economies to be 0% over the coming several quarters and our new portfolio more accurately reflects this posture.” WOW – 0% growth ahead! A recession is two quarters of negative growth – and negative growth is just one click away from zero – yes?

Followed by Pimco’s CEO Mohamed El-Erian – when ask about the global economy responded: “I’m between concerned and scared. We are watching three distinct, yet inter-related forces: poor economic growth, excessive contractual liabilities, and disappointing policy responses. The result is that western economies are getting trapped by the lethal combination of an unemployment crisis, a debt crisis, and mounting fragilities in the banking sector. The longer this persists, the greater the risk that even the healthiest parts of the global economy will get dragged into a prolonged period of economic and financial stagnation.”

I said last week that we would probably move up to challenge the resistances on the S&P at between 1220 - 1230. Well, Friday we ended the day at 1224. The question is: Do we blast through it, or does the air come out? On October 4 people were in a panic. We had every chance at really witnessing a crash that took us down to DOW 9K. I think that The Ben Bernanke called his Euro buddies and got the rumor started that changed the whole scene. The rumor of course was that the European Leaders had a plan to make a plan. The market reversed course in the last trading hour of that day, going from being down over 100 to being up over 200. From that day onward it simply marched straight up. However, the volume has consistently fallen each day as we've gone up. Mutual funds continue to show Billion dollar outflows – again! The economic news has been mediocre at best. So, I can indeed say that on one hand this has been a manufactured head fake rally, with the goal being to create "headroom" – just in case we received declining earnings and/or got more nasty European news.

And on the other hand, J. Q. Public is still scared. He's been pulling money out of his 401K to survive. The market’s ‘Talking Heads’ have repeatedly told everyone that we're range-bound and that when we get to the top of the range (where we are) you should sell out, as we'll sink back down. So, what happens if we push up and over 1230? Pushing over 1230 will ignite a frenzy of algorithms that will fire off a lot of orders, and will have J. Q. Public screaming to their fund managers to "buy-buy-buy!" So, we could see an enormous move higher that compounds on itself, and runs us up to the 1275 level in no time.

But don’t forget that this is all ‘supposedly’ because Sarkozy and Merkle have devised a plan to make a plan. The Plan is supposed to be released on or before Nov 4th. What if the plan is not good enough? What if it's not big enough? What if they find $4 Trillion? My point is, you can make the case that we roll over, you can make the case that manipulation wins out and we push over and soar for another two weeks. But no matter what happens, we have another big situation coming when they announce the "Plan".

Currently I’m thinking that no one expects the market to make it past this resistance, so it probably will, and we will spurt higher for a bit. If we get past 1230, all the shorts are going to cover in a panic, and we would see a fast pop to the upside. It could then build on itself and continue to roar as more and more figure the train is leaving the station. But be careful because it could be the last "hurrah", and it could roll over violently just after achieving new recent highs, crushing those that covered their shorts.

Tips:
I’m currently carrying a lot of short term long positions:
- SPY at 108.54 – now at 122.57,
- NTES at 42.43 – now at 45.46,
- RVBD at 22.17 – now 23.41,
- RHT at 46.03 – now at 47.44,
- RMBS at 16.04 – now at 16.61,
- GDXJ at 29.01 – now at 31.04,
- GLD at 157.49 – now at 163.40,
- SLV at 28.00 – now at 31.34.

There's a lot of profit sitting there for the taking, but we could see the market head fake everyone and push even higher, so I'll hold them for a bit longer just to see. If on the other hand things roll over, I'll cash out and play some short side using HDGE.

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 10-9-11

This Week in Barons: 10–9-11:

“As for Steve Jobs in Heaven – the ‘Pearly Gates’ are probably more of a ‘Brushed Aluminum’ and let’s NOT call them ‘Gates’”! … Paula Poundstone

Steve Jobs passed this week and I read a marvelous piece by Firas Raouf of Openview Partners on his passing and I’d like to quote one line: “Thank you for making it possible for my 80-year-old mom to start interacting with the world online. Until we bought her an iPad last year, my mom had never used a computer, had never texted, emailed or IM’ed. Had never read anything online, and only had the phone as her way of interacting with her children and globally dispersed friends and family. Because of your vision of building tech products with intuitive and delightful user experiences, my mom was able to make the leap online with pretty much no training or pain. Thank you!” I certainly share Firas’ thoughts, and my wishes and prayers go out to Mrs. Jobs and family. He certainly made a difference, and will be missed!

Shifting gears – BET founder Robert Johnson on the "FOX News Sunday" program said: "I didn't go into business to create a public policy success for either party, Republican or Democrat. I went in business to create jobs, to create opportunity, and to create value for myself and my investors. And that's what the President should be praising, not demagoguing us simply because Warren Buffet says he pays taxes more than his secretary. Mr. Buffet should pay his secretary more and then she will pay more."

I was always taught, if you're playing poker and you haven't figured out by the third hand who the ‘stooge’ is – it’s YOU! That's sort of how I feel about how we’re being played about now. We all see "Occupy Wall St" folks protesting, and many of them don't have a clue what or why they're protesting. As a society we were ‘sold’ on an idea that:
- We could be a consumption society;
- We could consume ourselves to wealth;
- We could be a "service" society instead of a manufacturing society;
- Debts don't matter;
- We don't need a currency pegged to gold;
- Letting ‘banksters’ run free was a good idea;
- Giving houses to people with no way to pay for them was a good thing;
- The rich were evil;
- And competition might hurt ‘Little Johnny's’ self esteem!

The other day President Obama was interviewed and he said: "No! People are not better off than they were 3 years ago"! That's probably the only honest thing I've heard come out of his mouth in 3 years.

Factually:
- The Bank of Italy Deputy Governor sees a genuine risk of global recession, and calls for global monetary standards to safeguard savings.
- The U.S. Bank exposure to the Euro crisis may total = $640B!
- Wells Fargo may face a $8.79B cost for soured 2nd liens.
- Spain's credit rating was cut 2 levels on the spread of debt crisis.
- The housing bust is the worst since the great depression!
- Italy's credit rating was cut to A+ and Spain's to AA-, describing the outlook for both as negative.
- U.S. needs to generate 261,200 jobs per month to return to pre-depression employment by end of Obama’s second term.
- Consumer credit has contracted the most since May 1998.
- Portugal's credit ratings may soon be cut to junk!

My fear is that the U.S. cannot return to the glory it once had, when the things that made us great are now against the law.

The Market...

So, just how bad was the 3rd quarter? It was ugly! Hedge funds (in equities) lost on average 9.5%. Mutual funds saw massive outflows again. People are scared and rightfully so. For many years it was very fashionable to be a "contrarian" investor. You know the old adage: “Buy when there's blood in the streets. Sell when everyone else is clamoring to get in.” Thus you can make the point that this should be the greatest time to buy stocks we've seen in 80 years. People are scared, pulling out, the VIX (volatility index) is high, the economy's a mess, and the politicians are at each other’s throats. Could it get any better for the contrarian?
- Since the April highs we’ve seen the DOW fall from 12,800 to 10,400.
- We've seen unprecedented volatility.
- We've seen Europe continue to erode, now to the point where we're about to see our first outright defaults.

The problem with "Buying when there's blood in the street" is that they never tell you how deep the ‘blood’ is supposed to be before you buy. Is it deep enough when Greece defaults? How about when Spain rolls over? What about when the U.S. banks (that may have $640 Billion worth of exposure to Europe) take hits? It’s been several years since:
- TARP,
- The roll-outs of the stimulus plans,
- "Cash for Clunkers" and the 1st Time Housing Program,
- The reworked re-financing program,
- QE1, and then QE2,
- 9.1% unemployment (which is actually 16.4%),
- Falling housing, Higher national debts, No savings, and More senseless regulations!

Although the market is NOT the economy, and often goes in the opposite direction for prolonged periods, it usually does square up at some point. Supposedly the world is so smart that the market will start to rise 9 months ahead of an economic pickup. Then as the market runs and runs, the economy usually starts moving higher and higher, and then slowly the market will roll over and drop (while the economy still seems strong) and then finally the economy follows the market lower again. Over and over this has been the cycle.

So, for the market to start moving significantly higher from here, the worldly wizards would have to be thinking that 9 months out there's going to be a nice pick up in activity. If so – just where is the economy going to get the "oomph" from to fix itself in 9 months? It's been my premise that until The Ben Bernanke comes out with a true monetary stimulus plan, the market will be soft. And to that end, since June 1st the DOW has continuously made lower highs! That is not a pattern of strength. This week kicks off earnings season and CNBC is going to be foaming at the mouth as company after company announces they beat estimates by a penny. Yet how are they going to do it – layoffs! Layoffs have risen 117% percent this summer. So companies are making earnings (yet again) by cutting jobs, accounting tricks, and currency swaps.

Technically speaking – if the DOW can't get up and over 11,239 (which is the 50 day moving average) and put in a few solid closes, we have to imagine that we’re moving lower! I still think we go nowhere but sideways and down until The Ben Bernanke caves in and puts a $ Trillion more in the bankers hands. If the DOW were to hold up over the 50-day average, they could use the "great earnings" to try and power us up to the 11,600 level, where the next real fight will take place.

The economy has no reason to improve in 6 to 9 months; thus except for wide range ‘mood’ swings the equity market has no reason to improve and start a bull run. The risk is defined to the downside for now. But if The Ben Bernanke releases a huge stimulus, then we will indeed roar higher, kicking the can further down the road – but until then we're in danger, and short-term trades are the only game in town.

For Monday the action will be dictated by which rumor comes out of Europe over the weekend. Then (on Tuesday) earnings start with Alcoa. From there on out, sectors will be cheered or jeered depending on what the companies say, which will cause our insane market fluctuations to continue. Some have written in asking if my prediction of DOW 6,000 is still inline. Absolutely. I can't say when, but we could be on our way there right now. However, we do know The Ben Bernanke will come up with a spare $ Trillion to try and abort that. And we also know that the stimulus will wear off and we'll sink again, and the cycle will continue. This could go on until 2013 – but at some point we will sink back to those 2008 lows.

Am I still in love with gold and silver? Yes on both counts. I don't care how either of them behaves in the short term. I'm looking at them for the 2013 time slot. As Europe defaults, as currencies get kicked around, as economies slow – I don’t think people are going to be fast to "rush back" to fiat currencies. Some will want the metals and I’m in that camp.

Tips:
This week I sold my DIA put options for over $6, and since we purchased them for $2.80 we are very happy about that!

In my short-term holds I have DOG, and SH (that are inverse ETF’s focused on the market going lower). I also have GLD and SLV. As I looked out across earnings season - this week I purchased some miners: FCX at 34.53 and some GDXJ at 29.01.

As this market continues it’s sideways and down movement – look at HDGE – a very nice ETF you can use to play the downside. It has moved from $20 in May to being closer to $30 right now!

This market is NOT for the weak of heart.

Please be safe out there!

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