Wednesday, June 30, 2010

M2, Money Supply a Sobering View (Graph) -- A Look Beyond the Obvious

Tow different views of money supply, two different stories. This is one reason why the market is so jittery.
ometimes you have to look beyond the obvious.
Sometimes you have to look beyond the obvious.
The following chart of M2, Money Supply, is "Percent Change from a Year Ago".
As you can see growth is dropping sharply and approaching zero. This helps explain the current jitters in the market and the increasing talk about recession or depression.
The chart below is the more traditional view of M2. Looking at this chart would lead one to believe that money supply is growing robustly.
It is certainly a time to be risk averse in the stock market.

I look at it this way. I would rather be short or out right here. I believe the stock market is going lower.

However, I think we are approaching one of the best long term buying opportunities you will ever see. I wouldn't be in a hurry to LOAD UP.

Time to be patient.
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