Why I Just Got Out of the Market Completely

America On the Threshold of a Second Recession

I just moved every single dime of my entire retirement portfolio, including 401k, out of all market-linked mutual funds and into no or low risk bond funds. I believe the stock market is severely over-valued presently, and that a nasty market correction is imminent. Economic growth is weak and stimulus-driven, unemployment is not improving, and I believe we are on the precipice of sliding perilously down the second jagged dip of a double-dip recession. Read on if you need convincing.

All of the rosy economic news we’ve heard over the past couple of months is déjà vu. Yes; we’ve been down this road before. During the Great Depression, things had started to look up around ’37. By then, unemployment had fallen to 14% from its high of 25% in ’33. GNP grew by 14% from 1935 to 1936. The stock market had regained 50% of its losses borne during the crash of 1929, but fell again in 1937, and remained bearish until the beginning of World War II. The mini-collapse of 1937 and the relative sluggishness of the economy thereafter snuffed out the light at the end of the economic tunnel for a nation struggling to regain a solid footing on its financial future.

In many ways, we are at the same point in the course of this so called “Great Recession.” It is important to point out that the present economic situation is in no way near the size, breadth, and scope of the Great Depression. The economic indicators underlying the 2008 recession are worlds away from those that followed in the years post-crash-1929. (Despite the emotional and sensationalized rhetoric and scare tactics that are carelessly thrown around by politicians and pundits, which draw comparisons of the present slowdown to the Great Depression, the 2008 recession is actually a stroll in the park, economically speaking, when compared to the Great Depression.) Despite these differences in scope and size, the two events do share structural similarities. Both are the bust side of boom and bust business cycles, both involved prodigious government spending, both have stubbornly high unemployment, and both appear to be protracted relative to other recessions, such as those of 1981, 1990 and 2001.

Second quarter 2010 GDP data showed that the economy has regained substantial momentum, and has surpassed GDP volume of the quarter just prior to the recession that took hold in the third quarter of 2008. The stock market has regained 80% of its pre-recession losses, and unemployment has finally budged a bit. While many may see all of these signs as tremendously positive, they are frankly frightening to me, and it feels eerily reminiscent of the fiscal environment of 1936.

The recovery we have seen over the past few months has just been too much too fast. The great economist John Maynard Keynes, who died in 1946, has been resurrected by both the Bush and Obama administrations. We don’t really understand how much of the gains in GDP are a function of Keynesian policy and stimulus spending rather than true organic economic activity and private investment: the engines that will take us once again into future prosperity. With 10% of the workforce remaining on unemployment benefits for the foreseeable future, it is difficult to believe that the recent vigor of key leading indicators, the markets in particular, are not swollen and overly inflated. Also, we mustn’t forget that the volumes of recent legislation has created new bureaucracy and added significant costs to doing business, which in turn has spooked private enterprise into freezing its hiring and expansion plans. People often forget that business does not have a mandate to hire and grow, and will simply choose not do so in the face of uncertain employee health care, regulatory, and tax costs. The volatility of the market since April, where swings by as much as 10% have been observed, is yet another sign pointing to the presence of another Wall Street bubble. Such volatility is indicative of investor tension and nervousness as they struggle to decide whether to stay in, or get out. When investors are confident, they get in and stay in, and such erratic fluctuations are seldom observed when confidence pervades.

If you want another reason to support a get-out-now investment strategy, then Google the term “Hindenburg Omen,” which is a set of technical criteria that has reliably predicted market declines 23 out of the past 25 times it has been triggered. The Hindenburg Omen was officially declared to be triggered, and confirmed by the Wall Street Journal on August 20, 2010. Red flags are flying everywhere.

When the bubble bursts—I believe the correction, perhaps even a mini-crash, will occur in late August or early to mid-September of 2011—I don’t want my money to be anywhere near the stock market. My advice is to get out now with some modest gains, and then get back in after the markets bottom out. Once it bottoms out, you can immediately jump right back in once a degree of equilibrium is attained. If you don’t know what to do, then pick up the phone, call your brokerage firm, and ask for the most conservative investment option available. Most good firms allow customers to make unlimited changes to their portfolios, and most will not charge fees for moving money from mutual funds to other types of investments such as bond funds. Make sure that your new accounts do not have any new fees associated with them and that the destination fund is compliant with all IRS guidelines governing employer-sponsored 401k plans.



DISCLAIMER: I am not a financial advisor, but just a regular Joe who is trying to hang on to his hard-earned money. So, please consult a professional before making any financial decisions. I could be wrong, and I don’t want any of you blaming me if by chance the market continues to rally.

The Liberating Effect of Forgiveness

The Remarkable Story of Corrie ten Boom

In a Church in Munich, Germany in 1947, a fat balding man in a gray overcoat clutched a brown felt hat as he walked down the aisle to the front of the sanctuary where an unassuming Dutch woman stood. He stretched out his hand toward her. She froze, caught off guard and stunned by the flood of emotions that momentarily drowned her sense of piety, as a wave of silent suspense swept over the room. Her heart was cold, iced over with a hatred few had ever known. Her eyes were glassy, and reflected rays of anger and resentment that pierced his soul as he stood exposed and vulnerable in an unenviable act of contrition. He had borne witness to fear many times before: the image of a mother’s eyes as she watched her infant daughter flail in pain while goons brutally took her life; of a husband’s face as he watched his wife and child herded to their deaths in the gas chambers; and the decrescendo of a girl’s cry as she succumbed to the soldiers’ animalistic acts of violation. But this time it was he who was gripped tenaciously with an all consuming fear, and he reasoned that he would rather be suffocating in a death chamber than looking into this woman’s eyes. As he stood there, he mustered the strength to push aside a wall of emotions and follow through with his purpose for being there. “Will you forgive me?” he asked as a tear welled up in his eye.

When Dr. Craig E Johnson wrote, “The terrorist attacks of September 11, 2001 reintroduced the word evil back into the national vocabulary.” he captured a social phenomenon that I have often pondered through the years since 9/11 (Johnson, pg. 105). Children of the seventies, like me, had never before experienced a generation defining tragedy. That is, an event so spectacularly heinous that it doesn’t just merely darken the moods of a few individuals, but rather provocatively arouses within the national consciousness an irrefutable, astounding and penetrating awareness that evil is real, ubiquitous, and intrinsic to the existence of humanity. It is an event with psychological and emotional effects that persist throughout the lives of those who witnessed it. It is a collective turning-point, and a milestone used to chronicle one’s life events by categorizing them before it and after it. For the children of the seventies, certainly 9/11 was one such event. Others had the assassination of President Kennedy, and still others before that had the bombing of Pearl Harbor. We don’t just stand from afar and bear witness to a catastrophe, as with the Challenger disaster or the Asian tsunami. Certainly, the generation defining tragedy is different because we transcend mere acts of observation to place ourselves in their shoes and vicariously live a moment of incomprehensible horror through them. Though our death is not physical, our Romantic views of mankind’s nature, that humanity is innately good, die a terribly painful death. In that respect, we all jumped to our deaths from the burning buildings on 9/11; all lay unconscious in the backseat of a Lincoln convertible speeding through Dallas; and all felt the piercing pain of shrapnel from hundreds of Japanese bombs.

From this context, we can clearly see how prejudices, grudges and hatred easily grow, replicate, and consume generations. Consider these examples: the Americans who hate the Japanese for Pearl Harbor; the Japanese who hate the Americans for Nagasaki and Hiroshima; the Jews who hate the Germans for the holocaust; the Christians who hate the Jews for the death of Jesus; the Americans who hate the Arabs for 9/11; the Arabs who hate the Americans for defending the State of Israel. A quick glance at the current condition of diplomatic relations around the world proves that hatred is cyclical (Johnson, pg. 111). In fact, we could all find one reason or another to hate someone if we looked hard enough, but the consequences of harboring hatred are beyond most people’s ability to comprehend. The only possible product or outcome of deeply held feelings of hatred and prejudice is more hatred and prejudice. Breaking the cycle of hatred is crucial for long-term peace and happiness, and forgiveness is the only path to complete restoration.

The generation defining tragedy that is perhaps the most egregious act of evil in the history of humanity is the genocide of Jewish peoples in Western Europe during Nazi rule. Dr. Johnson points out that the National Socialist (Nazi) Party, which was responsible for the Holocaust, is an example “Evil as a Bureaucracy,” as described by Drs. Adams and Balfour (Johnson, pg. 107). Prior to the twentieth century, genocide on the scale of that committed by Hitler would have been an onerous task to say the least, and the emergence and rapid evolution of technology made everything, including the act of mass murder, much faster, easier, and more efficient (Johnson, pg. 107). Government acquired technology for good and rational purposes, such as national defense, transportation, and law enforcement, until those with perverted views commandeered honorable governments and redirected the state’s technological resources from legitimate to base, wicked and self-serving purposes (Johnson, pg. 107). The evil bureaucracy that had burgeoned under the fascist and despotic rule of Adolph Hitler would go on to mercilessly and brutally murder eleven million human beings. The atrocities committed by Hitler and his henchmen are so large, abominable and ghastly that they defy our ability to comprehend the human capacity to act with malevolence. There is evil, and then there is the Nazi of the 1940’s whose depravity far supersedes any preexisting notion of evil that man might have possessed. Who can blame the Jew, the Pole, the disabled, the gay man, or any other target of Hitler’s near supernatural deviance, for hating a German? If a holocaust survivor, who watched a beloved family member die in a Nazi gulag, were to express hatred toward their former captors, would we not find such hatred perfectly justifiable—a normal response to an unfathomable and barbaric crime?

On May 10, 1940, the Nazis invaded the Netherlands and the Dutch army surrendered just five days later. Over the next 7 years, thousands of Jews, Jehovah’s Witnesses, Poles, disabled people and homosexuals were sent to die in the concentration camps that dotted the landscape of Germanic Europe during the Nazi occupation (tlogical.net, 2010). In the heart of Haarlem, Amsterdam’s Jewish ghetto, a well-loved watch repairman by the name Casper ten Boom owned a row house from which he operated his jewelry store and watch repair shop on the street level (tlogical.net, 2010). Several members of Ten Boom’s immediate and extended family lived in the upper levels of the row house at Barteljorisstraat 19, including his daughters Corrie, and Betsie and son Wilhelm (tlogical.net, 2010). Even though the ten Booms were devout Christians, they had grown to love the Jewish people, and often prepared kosher meals for and even studied the Old Testament with their beloved Jewish neighbors and friends (tlogical.net, 2010). During the Nazi occupation, the ten Booms sheltered countless Jews who were attempting to avoid detection by the Gestapo, and Corrie became a major ringleader of the underground system of safe houses that existed throughout Holland. At any given time, as many as seven Jews were sheltered inside the Boom’s home (tlogical.net, 2010). To aid in their hiding, the ten Booms built a safe room in Corrie’s bedroom by erecting a false wall with the only opening into the secret space cleverly concealed in a small cupboard. The room became known as simply the “hiding place (tlogical.net, 2010)..”

In February of 1944, a Gestapo agent disguised as a member of the Jewish advocacy and underground approached Corrie ten Boom in the family’s jewelry store with a contrived request for Corrie’s assistance in aiding some Jews who had avoided apprehension in the underground (tlogical.net, 2010). Corrie readily agreed to help the man, and in doing so exposed the family’s top secret operation in the rooms above the jewelry shop (tlogical.net, 2010). The ten Boom’s home was subsequently raided, and Corrie, her sister Betsie, and her father Casper were all arrested and imprisoned in Nazi concentration camps (tlogical.net, 2010). Casper, who was 84 at the time of his imprisonment, died ten days after his arrest (tlogical.net, 2010). Corrie and Betsie were eventually transferred to the infamous Ravensbruck concentration camp just outside of Berlin (tlogical.net, 2010). The guards of Ravensbruck were notoriously brutal, and one guard stood out as particularly opprobrious and barbarous, earning himself a reputation among the prisoners as a guard that should be avoided at all costs if one was to escape broken bones, bruises, and possibly even a slow and painful death—he was the most brutal guard in Ravensbruck (tlogical.net, 2010). Corrie often talked about the resentment she had toward the guards and the man who reported her family to the Gestapo, and how she struggled to overcome feelings of intense hatred while imprisoned in barrack 28 (tlogical.net, 2010). Corrie and her sister Betsie shared their experiences with their fellow prisoners, and their emotional and spiritual journey to absolution of the informant’s iniquitous actions. The women began to quietly hold spiritual meetings in the prison barracks and frequently read quietly from a forbidden Bible that Corrie had miraculously smuggled into the prison (tlogical.net, 2010). Their work among the prisoners helped many to find hope and encouragement in their pitiful circumstances, and inspired many to release their hate and anger toward their barbaric captors.

This catharsis that swept through barrack 28 is a remarkable story of forgiveness in progress. Conventional wisdom tells us that there are four stages of forgiveness: uncovering, decision, work, and deepening (Johnson, pg. 116). In the uncovering stage, the victim grapples with the nature of the offense, assigns blame, and then cultivates anger and resentment over the unfairness of the situation. In the decision stage, one realizes that he is suffering emotionally and psychologically as a result of harboring such intense anger, and commits to forgiveness. In the work stage, the victim takes the perpetrator’s social, familial, and personal contexts into consideration, may even feel pity for them, and chooses suffering over retaliation and perpetuation of the cycle of evil. In the deepening stage, the victim finds purpose and meaning in their suffering and may even find new goals and objectives in life as a result of the offense, the suffering, and the resolution achieved through the act of forgiveness. Without question, the concentration camps were pressure cookers of hate toward the German occupiers who were perpetrating unfathomable crimes. Certainly many of the prisoners who were emaciated, frail, and a bread crumb away from death were not just dying a physical death, but also an emotional and psychological death fueled by the anger they concealed in their hearts. Corrie and her sister were able to help the other prisoners triumph over the self-consuming resentment because they had already traveled the road to forgiveness and knew the milestones along the way (tlogical.net, 2010). It is fascinating to consider that Corrie and Betsie’s work was a part of the deepening stage, and that through their efforts to help others overcome hate, they were consummating their own healings (tlogical.net, 2010).

On December 16, 1944, after Corrie had watched her little sister grow gradually weaker day by day, Betsie passed away (tlogical.net, 2010). Among her dying words were, “we must tell them what we have learned here (tlogical.net, 2010). We must tell them that there is no pit so deep that He is not deeper still (tlogical.net, 2010). They will listen to us, Corrie, because we have been here (tlogical.net, 2010)." Corrie often thought of her sister’s final wishes, and dreamed of honoring her by carrying their remarkable story to the world, just as her sister had asked. But she knew that, apart from a miracle of divine intervention, she would likely never again walk freely among liberated a people, as her own death was imminent, if not from starvation or illness, then certainly from the gas chamber. Not long after Betsie’s death, just as she had decided her life could produce no circumstances of greater fortuitousness, Divine Providence in fact intervened, and Corrie was unexpectedly and mysteriously released from Ravensbruck on New Year’s Eve of 1944 (tlogical.net, 2010). She would later learn that a clerical error had been made, and that her emancipation was completely inadvertent (tlogical.net, 2010).

Corrie returned to Amsterdam and attempted to reestablish a career in the watch and jewelry repair business, but Betsie’s dying words haunted her day and night (tlogical.net, 2010). With time, Corrie abandoned her career and began traveling, telling anyone who would listen what she had learned in the Ravensbruck concentration camp (tlogical.net, 2010). Corrie’s message resonated with the masses, and she began to receive invitations for speaking engagements from organizations all over the world (tlogical.net, 2010). For the last 30 years of her life, Corrie traveled the globe, wrote many books, and helped untold thousands to realize the power of forgiveness (tlogical.net, 2010).

To the world, and even to herself, it seemed as though she had beat her personal demons, that she had overcome resentment, and that she was prepared to stand as a shining example of the redeeming power of forgiveness. That is, until the day she faced her former captor in a church in Munich, after she had concluded a public speaking engagement on the merits of forgiveness. The fat balding man in the gray trench coat that stood before her, with his hand outstretched and shivering with fear, was the same notoriously brutal Ravensbruck guard that had tormented hundreds of starving human beings without mercy, even as they stood on the threshold of death’s door (tlogical.net, 2010).

“But forgiveness is not an emotion,” she reasoned to herself (tlogical.net, 2010). “Forgiveness is an act of the will, and the will can function regardless of the temperature of the heart,” she thought to herself as she closed her eyes, stretched out her hand, and forgave the most brutal guard at Ravensbruck (tlogical.net, 2010).

References

Johnson, C.E. (2009). Meeting the ethical challenges of leadership (third edition). Thousand Oaks, CA: SAGE Publications Inc.

tlogical.net. (August 1, 2009). Biography of Corrie ten Boom. Retrieved from http://www.tlogical.net/bioboom.htm