Recently, reader Robert submitted a video clip analyzing the history of money printing and its recent acceleration. Take a look at it, and then we’ll discuss some of these issues:

http://www.youtube.com/get_player

Sure, long-term, there will be an inflationary effect, and I’ll comment more on that tomorrow. But what about the dollar? Will it be sharply devalued as the effects of reckless printing will filter down into the economy over the next few years?

I am not so sure. From my non-economist view, I think the video is too one sided, because it overlooks one critical aspect, which was never applicable to any degree in the past.

The bursting of this current credit bubble has affected all industrialized countries in all parts of the world. It may have started in the U.S., but it spread like a wildfire exempting no one along its destructive path. Over the past few months, the daily headlines have read like a “who’s who” by listing country after country implementing their own version of bailout and stimulus packages.

To me, here’s where it gets sticky. If all industrialized nations follow the same path of printing money to prop up their respective economies, will that not weaken their currencies as well?

Is it not true that, if only one country engages in the reckless printing of money, its currency will lose value only when compared to those countries with a more responsible monetary policy?

This is where I believe we have entered unchartered territory. All nations are doing the same thing, which does not make it right, but I am wondering if we, as a world community, will really be suffering from a bout of currency devaluation? Somehow I can’t see how, given these circumstances, we will all be devaluing when there is no longer a standard currency to peg to.

Let’s assume that magically a major country emerges that does not participate in these money creation efforts, was not effected by the global crisis and has otherwise proven to be fiscally responsible, then our dollar would slide against that super currency. However, in relation to all others, the effect should be minimal and vary only to a small degree.

I have not heard anyone addressing this issue with the global view in mind. If you have more information on this important topic, please post your comments.

My latest No Load Fund/ETF Tracker has been posted at:

http://www.successful-investment.com/newsletter-archive.php

The bulls came out charging after the S&P; 500 made a 12-year low on Monday, and pulled the major indexes out of the doldrums.

Our Trend Tracking Index (TTI) for domestic funds/ETFs remains below its trend line (red) by -9.47% thereby confirming the current bear market trend.



The international index now remains -17.28% below its own trend line, keeping us on the sidelines.

To me, it’s simply amazing that masses of investors tune into financial news shows, like CNBC, and actually take the offered information as credible advice.

It’s pretty sad that serious money matters are being marketed purely based on entertainment value and not on the basis of what might really make sense in the current market environment.

The bias in these shows towards “there has to be something we can buy right now” is obvious despite that fact that a wise investment position in the midst of the worst bear market in history would be in money market on the sidelines.

Funnyman Jon Stewart took a shot at CNBC in the following video clip, which is very funny but also spot on. Enjoy it.

It was bound to happen sooner or later. No matter how deeply we are entrenched in a bear market, there will be rallies based on short covering and hope that economic improvement lurks around the corner.

That appeared to be the case yesterday, and we’ll have to wait and see if this will be a substantial rebound or just another one day event. It could have very well been a bounce of the 680 support level, since these price points are not exactly chiseled in stone.

On the other side of the spectrum, as I posted in “Looking for support,” overhead resistance lurks at the 741 level for the S&P; 500. Watch that point, if the rally should carry us that high.

Keep in mind that bear market rallies can be deceiving by their power and duration. From the November 20th closing low, we witnessed a 20% rally over 6 weeks, which many mistook for a new bull market. As we marched into 2009, the rally reversed and we’re down again, as measured by the S&P; 500, having lost 20.31% year-to-date.

One of the drivers for today’s rally was Citigroup’s disclosure that they are enjoying their best quarterly performance since 2007. Duh! Since they’ve received some $150 billion in assistance, shouldn’t they be showing some improvement?

I was scanning the news to see if Citi made a more appropriate statement to go along with their above announcement, maybe along the lines of “we’re glad we’re improving and hope that this is just the beginning so that we can start paying back the assistance you tax payers have given us.”

Anything showing a little humility and gratitude would have gone a long way to improve the negative PR; but no, I found nothing and realized that we will never hear those words, as long as the “me-me-me” corporate attitude prevails.

As almost has become a habit at the beginning of a new week, the market took another hit to the downside yesterday.

While the damage was only around 1% for the major averages, many technicians will be now slobbering over the closing numbers as the support level of 680 on the S&P; 500 was taken out.

I reported in “Looking for support,” that once the 680 level is broken to the downside, the next support will be at 600, which translates to another 11% drop from yesterday’s close. Ouch; that’s really going to hurt, for those who are still desperately holding on to bullish investments.

Economist Nouriel Roubini had this to say in a recent interview:

Reader Sig had this comment after reading my new e-book “The Simple Hedge Strategy:”

First let me thank you for your continued effort to educate and inform us neophytes. I really appreciate your efforts on our behalf.

My question is this: I have found there is a 90 day holding period on most mutual funds. Am I correct, and if so, how does that work with this hedging information?

Yes, that is correct. Most brokerage firms have a 90-day holding period. That does not mean you can’t make adjustments to your mutual funds, but you will be charged for it. With most brokerage firms that should not have other dire consequences, such as you being considered a frequent trader.

All investment advisors usually rebalance once a quarter. However, the brokerage firm will charge them (and you) an early redemption fee if executed within 90 days. In the case of my custodian (Schwab), that would be $50 per mutual fund adjustment. If you run into problems with rebalancing by using the buy-and-hold superpowers (Vanguard and Fidelity), I suggest you move your account elsewhere.

There are 2 ways to get around the early redemption problem altogether when using my hedge strategy:

1. Make your rebalance adjustment with the short position (SH), and you will only pay the ETF trading fee, which in most cases is around $12.95.

2. Use only ETFs, if that is your mode of operation, and you won’t have to deal with that issue at all.

I think these ideas will help you work around those common mutual fund limitations.