News of the Day: Get Your Crash Helmets Ready


Chris’ Take: Experts have been warning us to be prepared for a rocky September since early Summer. The stock market is overvalued, many emerging economies are either tipping into recession or already in full recession, nations like Greece are a giant suck hole of debt pulling everything into its troubles, oil is trending towards historic lows, and the US economy is fighting off deflation. Add to the trouble is the reality the Fed has already deployed its counter-measures. The global economy is a giant set of dominos, and once they start to fall, it’s difficult to stop.

Below is a summary of the story behind the story from Business Insider:

  • One simple reason stocks get slaughtered in September is taxes. Money managers look at their portfolios and scrap the losers to write those losses off to offset the taxes they’d pay on other gains.
  • The sharper crashes typically fall between July and October. Sometimes a larger crash will extend into the end of the year. 1929’s chaotic meltdown extended into November. 1930’s didn’t stop until December. Bigger bubbles need longer to let the air out!
  • This crash looks imminent. Now more than ever, I believe we saw a top on May 20. Since then we’ve seen a “rounding top” much like we saw into August of 2008 before that crash got nasty. How fitting. The only reason this bubble exists is because we fought off that last one with free money. I guess Mother Nature has a sense of humor.