SUMMARY:
Diving Into Markets: It appears that we have increase of probability in a high in or around the week of August 28th in the Dow Jones and many other markets. This turn down could last into end of September or out to October.
Policies of Politicians: Markets may be reacting to policies of Kamala Harris before the elections as well as Europe panic. As her polls rise the market gets more fearful… but why? Well, mostly due to “captial gains & unrealized profits tax” which will cause big money to sell before every 12 months before having to pay taxes — even home owners would have this concern.
Housing & Interest Rates: Will also discuss interest rates and how it will pertain to new buyers of homes. As the market is betting on lower rates for a higher market — which thru history has shown to bring the market down… not us.
Note: This information I am sharing is from much smarter folks than me…. I only try to digest it to learn and in hopes other learn as well. Apprenticeship is the best form of learning 😉
Diving Into the Markets:
I have shared a chart and arrays with friends and family to show the expected moves and timing. But in summary Aug 28th week is giving up big turning point with a many
Looking At The Arrays Below for Dow Jones Industrials:
- (Big Blue Top Aggregate Bar) 28th of Aug with Double Direction Change
- Then 4 pink aggregates trending into 23rd of Sept
- Sept 23rd of Sept has Panic and Direction Change
- We will look at monthly after the close of month to confirm move
What this means…
Scenario 1: If we have a high into Aug 28th… then can head lower into Sept 23
Note: We can pass the high intra-week, then come down as well
Scenario 2: If we have a high into 28th… but market continues to close higher next week… then upward into Sept 23 possible (this is called cycle inversion)
Scenario 3: It is completely wrong lol!!! but must always look at probabilities
The arrays are to give a probability of situation and trade it accordingly with lowest risk possible. I will be hedging into and already for Aug 28th high. Then waiting for end of Sept or early Oct for a move to buy.
Policies of Politicians:
I wish to be political neutral and share just data and how history has reacted so we may learn logically without bias. With that said…
Politicians are now seriously proposing “Capital Gains & Unrealized Profits Tax”… this will be catastrophic for everyone as I will explain shortly.
If we are to have a brain surgeon work on our brain, we would want the most qualified and even research their past history and mindset. This is logical… so with politicians we may benefit to investigate the track record, how they raise their family (if they have families), did they run a business (if your a business owner), are they connected to the people (if you do not work for the govt), etc.. .etc
Kamala Harris father was a fairly radical communist. This is great if you want communism… but no so great if you want the American Dream.
The problem with socialism.. no matter how many times it’s been attempted it failed. WHY??
Well it is against human nature and oppresses those who work… so it can reward those who do not.
Socialism believes everyone should be equal in material wealth… not rights. If this is for you… go for it, but thru history it has never worked out well for the plebs of socialism.
It Appears Politicians Don’t Always Tell The Truth….
So we must think critically on our own…
Issue with Capital Gains & Unrealized Profits Tax
Since the parties are so divided, when Trump states the U.S. would suffer a “1929 style depression” under a Harris presidency. The other party must be so polarizing opposite and doubles down moving forward with “Doubling Capital Gains Tax” and imposing taxes on “Unrealized Gains”!
Understanding “Capital Gains Tax” and “Unrealized Gains”
Most billionaires like Bezos and even Gates have their wealth from shares of companies… NOT CASH! Taxing unrealized gains means they have to sell 25% of their stock the first year to pay the tax! This would biggest crash in stock market history.
Why would these billionaires sell?? Because they would be taxed on the gains they never sold stock on… just unrealized gains.
How common Americans Get Affected:
- Home Owners: If you bought your home 100K… then it went up 100% the next year. Guess what, with a 30% tax rate you would owe 30K in taxes. Where would you get that capital from…? This could also cause a crash in the housing market!
- Farming Industry: When the father dies, the govt wants 40% of the land. They have been forced to sell to people like Bill Gates
Do you see the dangers of this?
Issue with Price Controls
Another Harris policy (As New Times reports) to be implemented is price controls on food and blames corporations.
Keep in ming govt always blames the people and business for the problem — as they say… there is no mirrors in Washington.
Shortages began due to pandemic and lockdowns where farmers had to kill 30,000 chickens because they could not get feed or send them to market due to not allowing trucks to operate. This started the inflation we are experiencing today!
So human nature causes us to bulk buy the shortage to avoid higher prices. Shortages occur…. you cannot suppress human nature although communism blames the private sector and the people.
Using History As A Guide:
In order to see if price controls worked, simply look at history.
Every time govt attempts to impose wage or price controls… it has failed.The cost of labor and production rises in times of shorteges and the final price then gets controlled by govt.
This causes starvation, riots, and revolution!
Diocletian (284 – 305AD)
- Minted silver argentius (293/294 AD) – was not pure silver (93%)
- It was 96 to the Roman pound — compared to weight Denarius from Nero (54 – 68AD) before him
- So Diocletian decrease the value of the currency (after Nero)
- Guess what… Romans began to horde the currency (and exporters)
- The argenti vanished from circulation…
- Within 15yrs — Diocletian debases (decrease value) of silver content to less than 50%
- Then Civil War begain and rise of Constantine (307 – 337 AD)
- This caused monetary reform and returned to silver
Look at Venezuala:
- Chavez implements price controls to combat inflation
- Backfires causing nation to experience highest inflation in the world
- Govt sets price without looking at demand or supply, and cost of private sector
- Busines were no longer profitable – mom/pop stores gone!
- People panicked and hoarded what they could
- Black market emerged… people forced to barter and smuggle goods
- People stopped using Venezuela currency (Became worthless currency)
- Peoples life savings wiped out!
Housing & Interest Rates
Lastly, with the War getting closer… this has always increased interest rates. Now the rates have lowered a bit or stayed the same. It is likely if War occurs you can expect an increase in rates.
So home buyers may have opportunity to lock in lower rate before the missiles go off and rates increase causing a higher mortgage payment — but lowering the price/value of the home in currency terms (double edge sword)
In Summary:
- Market turning point Aug 28th week… if high can turn down into end of Sept/Oct
- Policies may affect markets (Price Controls = Food Shortages/Unrest/Revolution)
- Rates likely increase during times of War…. I would try to lock in low rate mortgage before War (but as rate rise… value of home in currency decreases)