A Few Observations

- Global-warming alarmists point to our recent hurricanes as evidence of their religion ... saying that warmer waters makes for more powerful storms. However, there is another factor that seems to be neglected ... the speed of such hurricanes over water. Both hurricanes Irma and Maria were very slow moving and thus could pick up more energy independent of the actual water temperature. Hurricane Nate is fast moving and would seem to be far less dangerous.

- Why was Harvey Weinstein finally outed after decades of his well-known boorish behavior? Malia Obama has been an intern of his for some months and she has been seen recently bundled up in a parka when around Weinstein (a well-known local protection against his groping hands). Perhaps Harvey had earlier made a move on Obama's number one ... and the NYT is in payback mode?

- The Las Vegas shooter, Stephen Paddock, owned several airplanes and was a licensed pilot. He could have loaded up one of his planes with ammonium nitrate and flown it into the same crowd he shot up (it was right near the Las Vegas airport) ... and killed multiples more country-music fans than he did.

- The U.S.stock market is currently extended and overbought. Just about everyone expects at least a 10% correction ... but we don't know when. I believe that all stocks will suffer then ... but the ones which will be most punished will be the high multiple tech stocks typified by the FANG group (Facebook, Amazon, Netflix, and Google). Staying with multinational companies with price-earnings multiples below 15 and dividend yields above 3% should offer a modicum of safety. And don't forget that, after the bloodbath, to be a buyer.

FANG

The stock market is down almost 300 points today ... to continue a stock market slide that started a few months back. So far the Dow Jones Average is down over 9% and it looks like things are not yet done. A correction is -10%+ and a washout is usually around -20%. The stocks that I had previously cautioned you to watch out for are Facebook, Amazon, Netflix and Google (FANG) as precursors of a market correction... see: Timber!! ... are all down big ... about as bad as the overall market. Even though people love these stocks, they are being used as a source of funds for over-extended investors.

When will things turn around? If I knew this I would be a wealthy man (which I am not) ... maybe when the price of oil turns around? However, having sold a lot of my winners a while back to raise a cash reserve, I am starting to nibble on high-yield stocks and some defensive issues like gold and silver miners. Wish me luck ... and the same to you.

Timber!!

One by one the big trees in the stock market are getting axed. First it was Alibaba, then Exxon, then Apple, then Twitter, then Disney, then Tesla, then Fitbit ... many of these high fliers after reporting stellar quarters. The only biggies who seem to have escaped this clear-cutting so far have been Facebook, Amazon, Netflix and Google (the FANG group as christened by Jim Cramer.) What's going on? Yes China is slowing down and may, in fact, be in a recession. And yes, the Federal Reserve Bank is likely going to start raising interest rates next month. But earnings of these mentioned forest-floor timbers have still been improving and future guidance is still positive. So what is wrong?

To me the dramatic price-drops in these mostly high PER (price earnings ratio) stocks are presaging a general market sell-off sometime soon. Generally in stock market down-drafts, it is the high-flying stocks that suffer the most ... and since these stocks have been the investments of last resort as weakness permeated most other market segments (see: Where to Invest), it is now their turn in the barrel. In fact, I suspect that any real weakness in the FANG group will be the final indication that a major stock market correction is upon us.

So keep your powder dry ...