The Scent of Panic Is in the Air

Written By: Tom Hankes  |  Posted: Friday, August 28th, 2015

            For many months I've been writing in this paper about the dangers in the markets. Judging by the number of calls I get from readers, my warnings have been greeted with a collective yawn as the S&P 500 index stubbornly continued its upward march - until May anyway. I suspect not many readers follow the activity in foreign markets where trouble can forecast future problems of deterioration in domestic markets, the only ones you hear about on TV: the Dow Jones Industrial average and the S&P 500. It's natural to focus on U.S. domestic markets because they have done well thanks to the ongoing manipulation by the Federal Reserve Bank for at least the last seven years. There is a reason why U.S. markets have performed better than foreign markets, and that reason is ongoing behind-the-scenes support of these markets by politicians and the Federal Reserve to keep to the folks happy. 

   In the final analysis, though, the markets are far more powerful than central banks, and central bank efforts will fail, meaning intense selling will be the activity du jour. Note that China's markets continue to fall in spite of the government criminalizing legitimate selling. The third week in August is an early warning of what is to come. Many of the most successful and unbiased money managers on Wall Street have been warning publicly for a long time that is was time to get out and lay low, perhaps for a long time. The list included luminaries such as Ray Dallio of Bridgewater Associates, the world's largest hedge fund, Jim Chanos, possibly the world's most famous short seller, Seth Klarman, famous hedge fund manager and a guy you've probably heard of: Warren Buffett of Berkshire Hathaway. 

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