"I Suggest You Panic"

The title quote was voiced by Hugh Hendry, an entertaining investment gurus and certainly one of my favorites.  Faced with my growing uneasiness about the equity markets in particular,  I have begun a "controlled panic", an oxymoron if ever there was one.  Here's some charts that helped set off the alarm bells:

The price-earnings ratio of the S&P 500 is at historically high levels.

The dividend payout of the S&P 500 is at historically low levels.

Thanks to multpl.com  for the above charts.  The lack of volume supporting the non-stop advance since June 2010 is evident in this chart of monthly SPY prices.



Bond prices are falling putting the housing rebound in jeopardy.  Putting bank balance sheets in jeopardy as well.  Investors will eventually chose bonds over equities if this trend continues.  Can the Federal Reserve make everything OK with quantitative easing?  I'm a Nay vote.  Here's the weekly chart of TLT, the 20 year treasury bond ETF.

  

 

The economic and political space feels like a dangerous minefield just waiting for someone to make the wrong move.  I'm not sufficiently expert to cover this territory, but websites like Zerohedge, Market Ticker, and Chris Martenson give you facts and analyses not often heard from popular pundits and not so popular politicians.  What I can say is that as the reality of our financial plight affects an increasing number of Americans, the bloom will come off the rose.           

Today's objective was to raise cash and lighten up on other asset classes, especially equities.  I'd like to be at or below the lower asset class limits for equities and at least consider reducing our exposure in all other asset classes except precious metals.   There are active stops in place for several several holdings.  Here's a snapshot of progress so far:

* sold IDX @ $26.31.  loss of less than .1%
* sold DGS @ $51.38  gain of 12%  
* sold EWS @ $13.31  gain of 3%

Just after making these trades and calling it quits for the day, I went downstairs and turned on the TV.  Lo and behold, there was the well-respected Kyle Bass giving his thoughts on several topics.  Hats off to CNBC for this must watch interview.  I'm more confident shedding equities knowing he's of like mind.