Market Looks Toppy

I don’t want this to become an investment blog, but the ole Elliot Wave part of me is freaking out. Check out this beautiful set up:


Wave 1 finished around June ’11, Wave 3 ended around June ’15, and Wave 5 just completed a nice 1-3-5.  This is the tricky part.  We are definitely in the final wave 5, but it could extend.

Basically at a minimum be very defensive here.  If you want to play it, don’t get greedy.  Give up on Wave 1 down.  Target would be somewhere around the 2200 level.  Look for the A-B-C rebound then short.  So if this wave 5 extends, no problem.  Just be looking for that Wave 1 sell off for the short set-up.  For reference, check out the beautiful A-B-C rally  around March ’08.

Using the 2008 blood bath as a reference, the initial Wave 1 sell off took 2 months, with the snap back rally (Wave 2) lasting 1 month.  If this is what is setting up, no need to get greedy, you’ll have time.

The Fed is going to raise again in September, so that may be the trigger.

Final note, chart was from a Zero Hedge article.

Link to Article

The Fair Tax

This idea has gone out of style and I haven’t read much about it lately, but it could save our economy.  Very broadly you would eliminate all Federal taxes, including personal income tax, corporate tax, and payroll taxes, and replace them with a national sales tax on retail goods and services.  Import duties, road tax, and mineral extraction taxes would remain.  What differentiates the Fair Tax from a generic sales tax is you also pay a rebate.  This is to protect the poor people.

Here’s a quick example.  You would have a national sales tax of 20%.  Let’s assume a poor family pays $10,000 a year in expenses.  Therefore you would pay out a rebate of $2,000 to everyone over 18 years old.

This tax has many interesting features.  A very important one is that if utopians were in power and wanted to hand out loot, they’d have to raise the tax on EVERYONE, so everyone would feel the pain.  This is a big advantage.

US companies would be the big winners.  They would not pay a penny in tax and would not need anymore tax accountants and tax lawyers.  They would just run their business to produce a profit, and that is all you would worry about.

Imagine the advantage to US businesses over European businesses.  The Euro’s would have to pay all sorts of taxes, and then whatever import duty we have.  This would be a huge advantage for US based businesses, and in fact your would be insane to build a manufacturing plant anywhere but the US.

Foreigners would also pour their money in the US.  The gains on investments would be tax free.  So not only would their be a huge incentive to expand US production, jobs, and wages, there would be plenty of funds looking to invest.

And on a personal level, you would not fill out any tax forms ever again.  You would pretty much break even (the middle class would actually come out ahead), as you would get a 14.7% raise from your payroll taxes, plus any income tax you now pay would go in your pockets.  Of course this would be offset by the new sales tax, but it would be much easier to deal with.

Another big winner will be small businesses.  If you run a small business your mouth is already watering.  Imagine an environment where you no longer have monthly and quarterly IRS forms to fill out, and you don’t have to live in dread of the IRS coming to pick your pocket.

This tax change makes so much sense it doesn’t have a prayer of passing.  Especially because the biggest loser of all would be lobbyists.  Since there would be no income taxes, there would no longer be a need to hire lobbyists to create loopholes for big businesses to cut their taxes.

Still, check it out.  Just google the FAIR tax and maybe talk to your congressman about it.

Wolf of Wallstreet

I used to run a small business and hopefully will again.  I know what it takes to make it work, so I know good advise when I see it.  If you want to open a business, or tune up your existing business, I recommend digging in to some Jordan Belfort on Youtube, otherwise known as the Wolf of Wallstreet.  I haven’t seen the movie, and doubt it has business advice, however his talks are spot on.  Here’s a summary of his main points.

  1.  State Control:  You have to have a pumped-up attitude which he calls your State.  Since you are the leader, perhaps running solo, you have to bring the energy to your company.
  2. Vision:  You have to have a visual picture of what it means to obtain your goals.  It must have detail, it can’t just be a one sentence goal.  So dates and detailed accomplishments, and what it looks like.
  3. Plan:  Turn the vision into a detailed plan.  It must be reasonable and actionable.  It must have steps you can check off, and reasonable dates to accomplish it.
  4. Hard Work:  You must commit and do it.
  5. Learn Sales:  You will sell in some way.  Key points: learn tonality.  Provide value and have a passion to provide value to your customer.  Your sales then become authentic.
  6. Set high stretch goals.  Not pie-in-the-sky, e.g. I’ll own a Caribbean island in 1 month, but if you think you can grow revenue 5%, up it to 10%.