Grand Rapids, MI -- (ReleaseWire) -- 06/12/2013 -- Financial advisor Dennis Tubbergen is also an author and CEO of PLP Advisors, LLC. Tubbergen hosts the weekly Everything Financial Radio Show, which features guest experts from around the nation and the world.
His next guest is A. Gary Shilling, president of A. Gary Shilling & Co., a firm founded in 1978. Dr. Shilling is also the author of four finance-related books. His latest book, published in 2010, is titled The Age of Deleveraging: Investment strategies for a decade of slow growth and deflation.
According to Dr. Shilling's website, his company's approach to analyzing and forecasting economic and financial developments in the U.S. and abroad and applying the results to clients' activities and portfolios are based on Dr. Shilling's two long-standing principles, one of which is shown below:
Human nature changes very slowly over time, if at all. Therefore, history is relevant because human beings will react to similar circumstances in similar ways. The trick, however, is to find the relevant piece of history on which to draw parallels. In this sense, forecasting is an art, not a science.
Whether people enjoy Dennis Tubbergen's weekly newsletter at www.moving-markets.com or his blog at www.dennistubbergen.com, Tubbergen also enjoys looking at historical precedence when it comes to the economy.
On June 6, 2013 Tubbergen's blog was titled James Chief Investment Strategist: This Hasn't Happened in 50 Years.
"King World News interviewed a gentleman named James Saut who happens to be the Chief Investment Strategist for Raymond James, a $360 billion brokerage company," began Tubbergen.
Below he quotes from the May 28, 2013 article.
We are currently involved in the longest buying stampede chronicled in my notes, and my notes run a little over 50 years. I first discovered 'buying stampedes' and coined that phrase back in the 1970s. They typically run 17 to 25 sessions, with only 1 to 3 session pauses or pullbacks before they keep going.
This one has lasted 102 sessions as of today . . . .
"There have been some that have lasted 25 to 30 sessions, but it is rare, I repeat rare, to have one go for more than 30 sessions.
There was a 38 session buying stampede into the 1987 peak in August, which proceeded the Dow Theory sell signal of October 15th of 1987. We all know what happened on October 19th, we got the stock market crash. Then, in 2010 you had a 53 session buying stampede.
But the one we are in right now is the biggest one I've ever seen in my career. As I said, today marks the 102nd trading session of this buying stampede. That's 102 sessions of a buying stampede, and remarkably we still haven't had 3 consecutive days down in the Dow since this buying stampede started.
I think this rally is going to continue into the end of the quarter because portfolio managers are still underinvested and underperforming. They not only have performance risk, but they also now have bonus risk, and ultimately job risk. So I think we are to remain strong into the end of the quarter and then my timing work shows that sometime in July or August we are vulnerable to the first potential for a serious (double-digit percentage) pullback."
"Mr. Saut makes an interesting point," explains Tubbergen. ""The last time the Dow Jones Industrial Average finished with 5 consecutive down days was in December of 2012, ending on December 28, 2012. Since that time, the Dow has only seen two consecutive down days; unprecedented, as Mr. Saut states."
So how could this be interpreted?
"In my view, it is nothing more than an after effect of the Federal Reserve's money printing policies," states Tubbergen. "As money is printed and a currency is devalued, inflation occurs and prices rise. That includes the price of stocks."
Tubbergen believes this is far from a new paradigm for equities. According to Tubbergen, it is simply a result of a monetary policy that is unsustainable.
"I'm fond of using a quote from the late economist Herbert Stein to explain such policies," notes Tubbergen. "Mr. Stein stated, 'if something cannot go on forever, it will stop.'"
Tubbergen's bottom line here?
"This monetary policy, largely responsible for the 'buying stampede' in stocks will stop, and when it does I believe a significant correction in stocks will follow," concludes Tubbergen. "The old market adage, 'sell in May and go away' comes to mind."
To read the blog in its entirety go to http://www.dennistubbergen.com and select his June 6, 2013 entry.
Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.
About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at http://www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to http://www.moving-markets.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.