Two Lessons from History

Larry Pesavento: ‘Bernard Baruch, the famous speculator from the 1920’s had several investment rules that he relied on throughout his career that are now famous quotes and basic tenets for thousands of investors today. These three charts exemplify some of the most noted of these rules. The first chart shows the Greek Markit manufacturing index in a very steep downtrend.

Since rates on Treasuries have reached essentially zero, it is unlikely this divergence can continue and either Treasuries or equities (and quite possibly both) could be headed for a potential collapse. Either way, this illustrates another rule: do not be concerned on the return ON your money, be concerned with the return OF your money.

This week, the stock market has reached the three-year anniversary of the major low dating back from March of 2009. Incredibly, nothing in the underlying economy has really changed since. More importantly, all of the AB=CD patterns that I have been looking at on a worldwide basis still remain intact. While I know this may sound like a broken record each week, the record is still playing and has not changed its tune. My bearishness remains intact, and I am awaiting a suitable entrance into the expected reversal.’