Friday, April 29, 2011

How to “Play” a Parabolic Move in Silver

Why Silver is Not in a Bubble Yet

In order to successfully identify bubbles and profit from them, one needs to know the tipping point at which a bubble [in this case a silver bubble] is unsustainable and begins to breakdown…This article focuses on just one of a myriad of factors that determine when a bubble may pop – momentum – and addresses what trading strategies may be suited to the situation. [Let me go on.] Words: 1475

So says in an article* which Lorimer Wilson, editor of, has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. The article goes on to say:

A casual glance at the chart below could leave an impression that history is going to repeat itself andsilver prices are about to crash.

Silver Price Since 1968

The Momentum Factor

In finance, momentum is the empirically observed tendency for rising asset prices to continue to rise. We are attempting to gauge when silver may run out of momentum and when this bull market will turn into a bubble and ultimately pop. Whilst some may consider it crude to study momentum as opposed to fundamentals such as supply and demand, we feel that it is vitally important from both a psychological and technical standpoint.
  • Psychologically: If investors are used to silver prices increasing 30% per year and then silver prices only increase at a rate of, say, 15% for one year, psychologically this return looks poor on a relative basis, even though it is still positive and normally would leave many investors satisfied. Therefore, there is a greater incentive to sell silver since it is not performing as well as it was in the past.
  • Technically: Once a bubble is fully underway prices begin to rise in a parabolic or exponential fashion. If the price ceases to rise in an exponential fashion, selling will commence, even if the price is still rising, since investors will have extrapolated the exponential rise and so anything short of parabolic will not meet their expectations.

The most recent example of momentum was in the housing bubble. Prices didn’t actually have to fall at all to trigger a crash, all they had to do was plateau or rise sluggishly and this would spark selling by people who had bet on prices continuing to rise. Without continually rising prices real estate investors could not refinance and borrow more against their properties to buy additional properties or other assets, so the buying stopped and the selling began. This was when the bubble popped; this was the tipping point before the actual crash that many investors strive to identify.

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How does the above relate to silver? Although we believe that silver does indeed have strong fundamentals, we do think it is likely that the metal will become drastically overvalued in the future as a result of speculative buying by the masses. In an attempt to measure the momentum behind silver and when this momentum will run out, we have analyzed the rate of silver prices increases over the last 50 years or so, since 1968. The chart below shows the rolling 100 day percentage change in the silver price. This is not a perfect measure of momentum, but it’s a start.

100 day pct change in silver prices since 1968

Why Silver is Not in a Bubble

As you can see, during the blow off in 1980, silver prices were increasing at a rate of roughly 400% per 100 trading days. This compares with a current rate of increase of approximately 73% per 100 trading days. So if you think silver’s current rally is going at a nose bleed pace, in the 1980 blow off silver prices were increasing 5.47 times faster than they are at the moment.

So far it appears that the rate of increase in silver prices at present is still below the relative rate of increase in 1980, therefore implying there is further upside. However this analysis doesn’t take into account that the Bunker-Hunt brothers were attempting to corner the market for physical silver in the late 70s, a buying force which is not present today. Therefore one should err on the side of caution when using this barometer for trading purposes as it may not reach 1980 levels. At present the barometer isn’t even close, so we do not think silver is in bubble at the moment.

The chart below best shows how silver is far from in a bubble yet. We have smoothed the 100 day percentage change and overlaid the nominal silver price.

silver prices and rate of increase since 1968

As shown by the blue line still being relatively low in contrast with 1980, there is still a great deal of upside potential for not only the silver price itself, but the rate at which silver prices are increasing. When both the blue and red lines are parabolic, then a bubble argument can be made.

Some Suggestions on How to Invest in a Silver Bubble

As always the most important part of any discussion of the financial markets is how one should deploy one’s capital. Whilst a silver bubble is not yet upon us [one should consider one of the following approaches if, and when, such were to occur]:

  • Take a short position: In our opinion this is not a particularly attractive trade. Whilst, of course, the investor will make money if silver prices fall, the investor is also open to unlimited liability on the upside and should silver prices continue to rise substantial losses could be incurred. Taking an outright short position via futures or short selling silver stocks implies that one believes that one’s timing is spot on. In reality nobody can ever have perfect timing so it makes sense to allow for some error in your judgement when placing the trade. This is important when placing any trade, but it is particularly crucial where bubbles are concerned since the market is moving in extreme ways. In the 1980 blow-off silver was increasing at a rate of over 100% per 30 days, anyone who was short would have got wiped out, just for being 30 days too early.
  • Utilize options: Taking a position that would benefit from an imploding silver bubble offers much better risk-reward dynamics than being outright short.

There are two basic trades that we think would be attractive under an options scenario:

  1. Allocate small amounts of capital to near term ‘out of the money’ puts: By purchasing puts that are, say, three months or less from expiration and at least 25% out of the money the investor is effectively buying insurance against a crash in silver prices. If silver prices plummet then the value of the puts will explode, but if prices keep soaring the downside is strictly limited to the premium paid for the put. If this trade is placed prematurely, it can be placed again in another few months, and again and again so long as the trader holds the view that silver prices are going to crash. If the view is correct then the eventual payoff will more than cover the cost of being too early in buying the initial puts.
  2. Sell at the money call vertical spreads which are more than a year from expiration: This is a trade that expresses the view that prices are not sustainable in the longer term and therefore by the time the call options expire they will likely be worthless due the fall in silver prices. Additionally, if prices were spiking higher it is likely that call options would be being bought heavily by speculators, thereby inflating their premiums. By selling these call spreads one would benefit from a fall in silver prices and a reduction in call buying/increase in call selling by speculators over a longer term time period, without taking on unlimited risk.

We do not think either of the above trades are attractive at present. We are merely pointing out that they may be in the future if a bubble scenario does unfold.


During the blow off in 1980 silver was increasing at a rate of roughly 400% per 100 trading days compared with a current rate of increase of approximately 73% per 100 trading days, i.e. 5.47 times faster than presently. [Therefore,] even if silver were to rise only half as fast as that of 1980, it could still rise twice as fast as it currently is before blowing off – so silver is far from in a bubble at the present time. [That being the case] we think it is the best, for now, to let silver run.

Gerald Celente on Ben Bernanke and the Fed from RT - 27 Apr 2011

Weiss Ratings Initiates US Debt Just Above ‘Junk’

Weiss Ratings, an arm of Jupiter, Fla., research firm Weiss Research, has initiated coverage of sovereign nation debt by ranking U.S. debt at “C,” a level it calls “two notches above junk” status.

Weiss Ratings puts U.S. debt at 33rd of 47 nations it rates, below China and other Asian exporters but above debt-plagued European nations such as Ireland, Greece and Portugal.

“If you own medium- or long-term government notes and bonds, dump them immediately,” said Martin Weiss, chairman of The Weiss Group, in a release.

“If you have your cash in short-term U.S. Treasury bills, be sure to surround them with investments that go up when the U.S. dollar falls,” he said. “And if you wish to profit from this crisis, consider adding still further to those contra-dollar investments.”

The dollar continues to fall.
(Getty Photo)
Weiss said that the ratings decision was made to protect investors from triple-A ratings given to U.S. debt by the three largest ratings agencies — Standard & Poor's, Moody's, and Fitch Ratings — which he called “fundamentally unfair” to investors.

“It fails to warn you of real dangers. And it helps keep your yield far too low to compensate for the risks you're taking. Investors urgently need a more honest rating,” Weiss said.

The false security of such high ratings means that politicians are likely to feel that they can continue to debate U.S. spending at a time when action is necessary, Weiss said. “If they had only issued a fair rating years ago, it could have played a pivotal role in helping lawmakers and policymakers take earlier remedial steps,” he said.

He went on to predict, absent of a serious spending reforms, a “further deterioration in the nation's finances” likely to trigger “a series of events beyond their control,” including:

• The dollar losing its status as a reserve currency.

• Global investors, already dumping the U.S. dollar, dumping U.S. bonds in a panic.

• Investors demanding draconian cutbacks in U.S. government spending.

• In turn, a vicious cycle of economic declines, larger deficits, and further investor demands for even greater cutbacks.

In the Weiss ratings scale, ranging from “A” (excellent) to “E” (very weak), only sovereign countries with stellar scores in four major areas — debt burdens, international stability, economic health and market acceptance — merit a grade of “A-minus” or better.

Meanwhile, on the low end of the scale, only countries that demonstrate severe or consistent weaknesses in the four areas receive a grade of “D-plus” or lower, according to Weiss Ratings.

Unemployment Claims Jump 25,000

The Unemployment Insurance Weekly Claims Report was released this morning for last week. Claims rose 25,000 from an upward revision of the previous week to 429,000. The 4-week moving average increased by 2.3%. Here is the official statement from the Department of Labor:

In the week ending April 23, the advance figure for seasonally adjusted initial claims was 429,000, an increase of 25,000 from the previous week's revised figure of 404,000. The 4-week moving average was 408,500, an increase of 9,250 from the previous week's revised average of 399,250.

The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending April 16, a decrease of 0.1 percentage point from the prior week's revised rate of 3.0 percent.

The advance number for seasonally adjusted insured unemployment during the week ending April 16 was 3,641,000, a decrease of 68,000 from the preceding week's revised level of 3,709,000. The 4-week moving average was 3,697,750, a decrease of 22,750 from the preceding week's revised average of 3,720,500.

Today's number was 10% above the consensus estimate of 390,000 claims.

As we can see, there's a good bit of volatility in this indicator, which is why the 4-week moving average (shown in the callouts) is a more useful number than the weekly data.

Occasionally I see articles critical of seasonal adjustment, especially when the non-adjusted number better suits the author's bias. But a comparison of these two charts clearly shows extreme volatility of the non-adjusted data, and the 4-week MA gives an indication of the recurring pattern of seasonal change in the second chart (note, for example, those regular January spikes).

Because of the extreme volatility of the non-adjusted weekly data, a 52-week moving average gives a better sense of the long-term trends.

The Bureau of Labor Statistics provides an overview on seasonal adjustment here (scroll down about half way down). For more specific insight into the adjustment method, check out the BLSSeasonal Adjustment Files and Documentation.

For a broader view of unemployment, see the latest update in my monthly seriesUnemployment and the Market Since 1948.

Downside Targets for Silver

Silver is in a structural bull market and will see significantly higher prices in the coming years. However, now is not the time to be buying. The market has spiked and a retracement is coming.’s public opinion as of last week was over 90% bulls. The daily sentiment index as of last week was 96% bulls. A correction is coming. We have two charts to help decipher a potential bottom. Here is our first chart: On top we plot Silver’s distance from its 200-day MA. Note that following previous spikes, the market always tested its 200-day MA and it didn’t take long for it to happen. We also compare the current spike to the spikes in 2004 and 2006. Those spikes retraced a little bit more than 62%. The 62% retracement of this spike is nearly $30. Here is the second chart: We see two areas of strong support. The first is $34-$37 and the second is $30-$31. We also sketch the potential path of the 300-day MA. We think it hits $30 in July. The 200-day MA is likely to hit $32 before the end of July. Last year we noted $32-$33 as a potential strong upside target based on the price action in 1980-1981 and various Fibonacci targets. The 38% retracement of the 2008 low to this top is roughly $34. To conclude, our support points range from $30 to $37 with the strongest confluence at $33-$34. Throughout 2010 we wrote about the key resistance in Silver at $20-$25. We noted that the breakout would be very big and eventually take Silver to $50. We didn’t expect it to happen immediately. Gold reached its now former all time high in 2008. Three years later, Gold is nearly 80% higher (than $850). The point is, a market that makes a new all time high for the first time in decades is a market that moves even faster in the future. If Silver follows the same path as Gold then we could be looking at $90 Silver in 2014. Yet, wouldn’t you rather increase your positions in the $30s rather than at $45 or $50?

The 9 places where inflation is crushing us

Inflation is far from under control and it’s time that Americans demand our government officials do something about it.

The Federal Reserve would have you believe that everything is fine, focusing on core inflation rates and ignoring broader measures of inflation as they affect food and energy. These commodity-driven prices, as our central banking overlords would have you believe, are naturally more volatile and shouldn’t be overstated.

High gas prices could hurt Obama

Neil King looks at whether soaring gas prices will hurt President Obama's chances for re-election in 2012 and how Republicans in Congress are trying to put the blame on Obama for consumers' pain at the pump.

You would think after Fed bureaucrat William Dudley was castigated for talking up the affordability of iPads while ignoring real family expenses, our Federal Reserve officials would have woken up to reality. But after the publicity stunt by Chairman Ben Bernanke on Wednesday, it’s clear that the Fed — and perhaps many Americans as a result — is in denial when it comes to the inflationary trends crippling U.S. households. Read about how the Fed’s reckless policy has created a catastrophic bubble on

While it’s all well and good for investors to focus on surging precious metals and the profit opportunities there, let’s not overlook the dark side of inflation that is eating away at family budgets. Here are nine crushing costs of inflation that are breaking many American households:

1. Beef

In a revised forecast Monday, the U.S. Department of Agriculture said consumers will see higher price tags on ground beef and steak, projecting 6% to 7% increases year over year. That’s up from a previous forecast of just 4.5% to 5.5% inflation for beef prices. Beef prices have surged in the last several months as supplies shrink, exports boom and grain costs soar.

2. Pork

Don’t think you can just switch from cow to pig to avoid this trend — pork could see retail price increases of as much as 7.5% over 2010 levels according to the USDA.

3. Grains

Even going vegetarian is more expensive than it was a year ago. Corn prices have doubled, from $3.49 a bushel in July to well over $7.70 currently. Wheat prices have rolled back a bit in recent weeks, but topped 2008 highs in February to set a new record and remain very high currently.

4. Gasoline

The average U.S. price of a gallon of gasoline has jumped about 12 cents over the last two weeks to $3.88, with the highest average price for gas tallying $4.27 in Chicago. This is with oil at $112 a barrel — if crude prices reach 2008 peak levels of $145, four bucks for gas may seem cheap.

5. Copper

The price of copper at the end of 2008 was just $1.30 per pound. Currently, copper is trading around $4.30 after setting a record of $4.60 in February. Unlike gold and silver, which are largely used in luxury goods or as investments, copper is used in a wide range of household items — from electrical wiring to air conditioners to water pipes. Read about how gold could hit $5,000 soon on

6. Diapers

Consumer-products company Procter & Gamble (NYSE:PG) said this week that list prices for Pampers are up 7% on average over last year, with even Pampers wipes up 3%. To be clear, that’s not a retail price hike, just a cost increase to stores. Retailers will decide how much of those price increases to pass along to shoppers. Kimberly-Clark (NYSE:KMB) , maker of Huggies, said Monday it plans to raise prices for similar reasons — rising costs for the petroleum products and paper pulp that go into the diapers. It will be the third such announcement for Kimberly-Clark since the middle of March.

7. Paper towels and toilet paper

If you don’t have infants, you’re not off the hook. P&G also said that Charmin toilet paper and Bounty paper towels are both listing for 5% more now with retailers and distributors than they were a year ago. KMB’s diaper price update will also be accompanied by a boost for its flagship Kleenex tissues.

8. Shipping surcharges

Freight shipper United Parcel Service (NYSE:UPS) will be hiking its fuel surcharges from 7.5% to 8.5% as of May 2 for ground freight and from 13% to 15% for air freight. That really hurts small businesses. If you are a storekeeper simply trying to keep your shelves stocked, you have no choice but to pay more and endure smaller margins — or hike prices yourself and add to this inflationary mess.

9. Wages

Perhaps the most insidious factor of our current inflationary spiral is the fact that while all these other items are costing more, household purchasing power is shrinking because wages and salaries aren’t keeping up. While the consumer price index rose 2.7% in March to clock the fastest 12-month pace since December 2009, a staggering 18% of personal income is now made up government transfer payments while wages account for just 50.5%. That’s the lowest since the government started keeping records in 1929. Read about how inflation has helped doomed Obama to just one term on

Superinvestor Mark Mobius: Buy emerging markets... Global bull market to continue

The global equities bull market will weather any halt in bond purchases by the Federal Reserve amid rising U.S. consumption and investment in emerging markets, according to Templeton Asset Management's Mark Mobius.

U.S. stocks rose, sending benchmark indexes to almost three-year highs, after the central bank yesterday renewed its pledge to keep interest rates near zero to stimulate the economy. The Federal Open Market Committee agreed to finish $600 billion of Treasury purchases in June. Another round of buying isn't needed to sustain the rally and there won't be an economic slump in the second half, Mobius said in a phone interview from Bucharest yesterday before the Fed statement.

"We are in a bull market and it will continue," said Mobius, 74, who oversees more than $50 billion as the Singapore-based executive chairman of Templeton's emerging markets group. "There will be corrections along the way but these will be very temporary. The consumer in Europe and America is back. They're not spending like crazy but they are spending."

InterContinentalExchange's Dollar Index sank 0.5 percent to the lowest since 2008 as of 2:05 p.m. in Tokyo. The MSCI Asia Pacific Index jumped 1.1 percent to an eight-week high after the central bank statement. Silver, copper and oil surged and gold rose to a record.

"Things are humming along at the moment," Mobius said. The MSCI Emerging Markets Index has more than doubled since Mobius said in a Bloomberg Television interview on March 23, 2009, that a "bull-market" rally had begun and that there were bargains in every developing-nation market following the slump triggered by the global financial crisis.

Fed Chairman Ben S. Bernanke yesterday said the central bank would initially hold its balance sheet steady after completing the current program of bond purchases, the second phase of so-called quantitative easing since the global financial crisis.

Dollar, QE3

More bond purchases by the U.S. central bank would cause instability for the U.S. dollar that would "weigh" on markets, causing "a great deal of uncertainty globally," Mobius said.

Confidence among U.S. consumers increased more than forecast in April, signaling the improving labor market is helping Americans weather rising fuel costs, an index compiled by the New York-based Conference Board showed April 26. Six straight months of job growth are helping sustain consumer purchases, which account for about 70 percent of the economy.

Balance Sheets

"A lot" of the funds from previous Fed bond purchases are still held by banks that will, with repaired balance sheets, increase lending amid the economic recovery, Mobius said. New drivers of growth also are emerging from Africa to Russia, with Eastern Europe likely to add impetus within one to two years, Mobius said.

"If you consider Russia alone and the African continent, these areas have hardly been exploited for mineral wealth," he said. "There's an incredible amount of infrastructure that has to be put in for these countries not only to get at the mines but also to serve the growing population. It's endless."

Standard & Poor's April 18 decision to cut its outlook for the U.S.'s top AAA credit rating to "negative" from "stable" and risks of fiscal crises in some developed economies has changed investor behavior, benefitting emerging markets, Mobius said.

Emerging Markets

The MSCI Emerging Markets Index has advanced 20 percent in the past 12 months, compared with a 16 percent climb by the MSCI World Index of developed nations. Companies in the developing nations' index trade for 11.7 times estimated earnings, less than developed countries' 13.1 times.

The dollar index has dropped even after the Japanese earthquake and turmoil in the Middle East, whereas investors retreated to the safe haven of the dollar and Treasurys during the global financial crisis, Mobius said.

"That means investors are diversifying out of U.S. Treasurys and going into global markets," he said. "That's been a big change, which has been beneficial for emerging markets generally."

Global markets are gradually adjusting to the day when the dollar will not be the main currency, Mobius said. "More instability caused by a big QE3 event will not be good."

The best places to capitalize on the global bull market are Brazil, Russia, India and China, while in "frontier" markets including Africa, Vietnam, Bangladesh and Pakistan "there are lots of opportunities," Mobius said.

Wal Mart CEO: "Shoppers Are Running Out Of Money"; There Is "No Sign Of A Recovery"

Ask Wal Mart shoppers about the real truth of the economy. One day Wal Mart will go under just like every other business in the country, except banks. Just watch. With gold at an all time high of $1,539 and silver at $49.49 it might be time to do something to get out of the worthless dollar and into some real money while some coins are still available.

By Tyler Durden - Zero Hedge

Created 04/28/2011 - 11:12

When a month ago [1]the CEO of Wal Mart Americas told the world to "prepare for serious inflation[1]", the Chairman laughed in his face, saying it was nothing a 15 minutes Treasury Call sell order can't fix (granted net of a few billions in commissions for JPM). 4 weeks later the Chairman is no longer laughing, having been forced to hike up his inflation expectations while trimming (not for the last time) his economic outlook. "U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday talking to USA Today[2]. And if Wal-Mart which is at the very bottom of commoditized consumer retail, and at the very peak of avoiding reexporting of US inflation by way of China is concerned, it may be time to panic, or at least cancel those plane tickets to Zimbabwe, which is soon coming to us." In light of that perhaps today's words of caution from Wal Mart CEO Mike Duke will be taken a tad more seriously (yes, even with the $50 billion in "squatters rent" that the deadbeats spend on iPads instead of paying their mortgage: that money is rapidly ending). Warning is as follows: "Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried. "We're seeing core consumers under a lot of pressure," Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact." Tell that to Printocchio please.

From Money[3]:

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in.

Lately, they're "running out of money" at a faster clip, he said.

"Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern.

Also remember that long-running joke from the NBER short bus that the recession ended in late 2009? Turns out they were just kidding, as well as blatantly lying.

Wal-Mart which averages 140 million shoppers weekly to its stores in the United States, is considered a barometer of the health of the consumer and the economy.

To that end, Duke said he's not seeing signs of a recovery yet.

With food prices rising, Duke said Wal-Mart is charging customers more for some fresh groceries while reducing prices on other merchandise such as electronics.

Wal-Mart has struggled with seven straight quarters of sales declines in its stores.

Here's an idea: how about we let someone with actual business experience, who runs the one company employing more people than even the Federal Reserve, Mike Duke, control US monetary policy for a few months and see what happens? Surely it can't get worse than what that other insane sociopath is doing, as with each passing day we are now moving closer and closer to a hyperstaglfationary conclusion, and even the collective cheerleading crew of Cottonelle bearing monkeys, half of whom were reading "Monetary Policy for TV Reporters" (just two steps down below idiots), from yesterday's FOMC conference are finally starting to realize this.

Student Loan Debt Hell: 21 Statistics That Will Make You Think Twice About Going To College

Is going to college a worthwhile investment? Is the education that our young people are receiving at our colleges and universities really worth all of the time, money and effort that is required? Decades ago, a college education was quite inexpensive and it was almost an automatic ticket to the middle class. But today all of that has changed. At this point, college education is a big business. There are currently more than 18 million students enrolled at the nearly 5,000 colleges and universities currently in operation throughout the United States. There are quite a few "institutions of higher learning" that now charge $40,000 or even $50,000 a year for tuition. That does not even count room and board and other living expenses. Meanwhile, as you will see from the statistics posted below, the quality of education at our colleges and universities has deteriorated badly. When graduation finally arrives, many of our college students have actually learned very little, they find themselves unable to get good jobs and yet they end up trapped in student loan debt hell for essentially the rest of their lives.

Across America today, "guidance counselors" are pushing millions of high school students to go to the very best colleges that they can get into, but they rarely warn them about how much it is going to cost or about the sad reality that they could end up being burdened by massive debt loads for decades to come.

Yes, college is a ton of fun and it is a really unique experience. If you can get someone else to pay for it then you should definitely consider going.

There are also many careers which absolutely require a college degree. Depending on your career goals, you may not have much of a choice of whether to go to college or not.

But that doesn't mean that you have to go to student loan debt hell.

You don't have to go to the most expensive school that you can get into.

You don't have to take out huge student loans.

There is no shame in picking a school based on affordability.

The truth is that pretty much wherever you go to school the quality of the education is going to be rather pathetic. A highly trained cat could pass most college courses in the United States today.

Personally, I have had the chance to spend quite a number of years on college campuses. I enjoyed my time and I have some pretty pieces of parchment to put up on the wall. I have seen with my own eyes what goes on at our institutions of higher learning. In a previous article, I described what life is like for most "average students" enrolled in our colleges and universities today....

The vast majority of college students in America spend two to four hours a day in the classroom and maybe an hour or two outside the classroom studying. The remainder of the time these "students" are out drinking beer, partying, chasing after sex partners, going to sporting events, playing video games, hanging out with friends, chatting on Facebook or getting into trouble. When they say that college is the most fun that most people will ever have in their lives they mean it. It is basically one huge party.

If you are a parent and you are shelling out tens of thousands of dollars every year to pay for college you need to know the truth.

You are being ripped off.

Sadly, a college education just is not that good of an investment anymore. Tuition costs have absolutely skyrocketed even as the quality of education has plummeted.

A college education is not worth getting locked into crippling student loan payments for the next 30 years.

Even many university professors are now acknowledging that student loan debt has become a horrific societal problem. Just check out what one professor was quoted as saying in a recent article in The Huffington Post....

“Thirty years ago, college was a wise, modest investment,” says Fabio Rojas, a professor of sociology at Indiana University. He studies the politics of higher education. “Now, it’s a lifetime lock-in, an albatross you can’t escape.”

Anyone that is thinking of going to college needs to do a cost/benefit analysis.

Is it really going to be worth it?

For some people the answer will be "yes" and for some people the answer will be "no".

But sadly, hardly anyone that goes to college these days gets a "good" education.

To get an idea of just how "dumbed down" we have become as a nation, just check outthis Harvard entrance exam from 1869.

I wouldn't have a prayer of passing that exam.

What about you?

We really do need to rethink our approach to higher education in this country.

Posted below are 21 statistics about college tuition, student loan debt and the quality of college education in the United States....

#1 Since 1978, the cost of college tuition in the United States has gone up by over 900 percent.

#2 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day.

#3 Approximately two-thirds of all college students graduate with student loans.

#4 Americans have accumulated well over $900 billion in student loan debt. That figure is higher than the total amount of credit card debt in the United States.

#5 The typical U.S. college student spends less than 30 hours a week on academics.

#6 According to very extensive research detailed in a new book entitled "Academically Adrift: Limited Learning on College Campuses", 45 percent of U.S. college students exhibit"no significant gains in learning" after two years in college.

#7 Today, college students spend approximately 50% less time studying than U.S. college students did just a few decades ago.

#8 35% of U.S. college students spend 5 hours or less studying per week.

#9 50% of U.S. college students have never taken a class where they had to write more than 20 pages.

#10 32% of U.S. college students have never taken a class where they had to read more than 40 pages in a week.

#11 U.S. college students spend 24% of their time sleeping, 51% of their time socializing and 7% of their time studying.

#12 Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor's degree within four years.

#13 Nearly half of all the graduate science students enrolled at colleges and universities in the United States are foreigners.

#14 According to the Economic Policy Institute, the unemployment rate for college graduates younger than 25 years old was 9.3 percent in 2010.

#15 One-third of all college graduates end up taking jobs that don't even require college degrees.

#16 In the United States today, over 18,000 parking lot attendants have college degrees.

#17 In the United States today, 317,000 waiters and waitresses have college degrees.

#18 In the United States today, approximately 365,000 cashiers have college degrees.

#19 In the United States today, 24.5 percent of all retail salespersons have a college degree.

#20 Once they get out into the "real world", 70% of college graduates wish that they had spent more time preparing for the "real world" while they were still in school.

#21 Approximately 14 percent of all students that graduate with student loan debt end up defaulting within 3 years of making their first student loan payment.

There are millions of young college graduates running around out there that are wondering where all of the "good jobs" are. All of their lives they were promised that if they worked really hard and got good grades that the system would reward them.

Sometimes when you do everything right you still can't get a job. A while back The Huffington Post featured the story of Kyle Daley - a highly qualified UCLA graduate who had been unemployed for 19 months at the time....

I spent my time at UCLA preparing for the outside world. I had internships in congressional offices, political action committees, non-profits and even as a personal intern to a successful venture capitalist. These weren't the run-of-the-mill office internships; I worked in marketing, press relations, research and analysis. Additionally, the mayor and city council of my hometown appointed me to serve on two citywide governing bodies, the planning commission and the open government commission. I used to think that given my experience, finding work after graduation would be easy.

At this point, however, looking for a job is my job. I recently counted the number of job applications I have sent out over the past year -- it amounts to several hundred. I have tried to find part-time work at local stores or restaurants, only to be turned away. Apparently, having a college degree implies that I might bail out quickly when a better opportunity comes along.

The sad truth is that a college degree is not an automatic ticket to the middle class any longer.

But for millions of young Americans a college degree is an automatic ticket to student loan debt hell.

Student loan debt is one of the most insidious forms of debt. You can't get away from student loan debt no matter what you do. Federal bankruptcy law makes it nearly impossible to discharge student loan debts, and many recent grads end up with loan payments that absolutely devastate them financially at a time when they are struggling to get on their feet and make something of themselves.

So are you still sure that you want to go to college?

Another open secret is that most of our colleges and universities are little more than indoctrination centers. Most people would be absolutely shocked at how much unfiltered propaganda is being pounded into the heads of our young people.

At most colleges and universities, when it comes to the "big questions" there is a "right answer" and there is virtually no discussion of any other alternatives.

In most fields there is an "orthodoxy" that you had better adhere to if you want to get good grades.

Let's just say that "independent thought" and "critical thinking" are not really encouraged at most of our institutions of higher learning.

Am I bitter because I didn't do well? No, I actually did extremely well in school. I have seen the system from the inside. I know how it works.

It is a giant fraud.

If you want to go to college because you want to have a good time or because it will help you get your career started then by all means go for it.

Just realize what you are signing up for.

10 Highest Dividend Stocks of the S&P

The S&P 500 is one of the most followed stock market index in the world. Mutual fund managers benchmark their returns against it, yet somehow studies show that the vast majority underperforms the index in any any given year. There are many ways to invest in the S&P 500, including mutual funds like the Vanguard 500 Index Investor (MUTF: VFINX), exchange traded funds like theSPDR S&P 500 ETF (NYSE: SPY) or even stock index futures.

I benchmark my dividend income against the S&P 500. Many of the best dividend stocks in the world have a substantial weight in this important stock market barometer. With its average yield of 1.70% however, many dividend investors choose to ignore the index, and instead focus on its components.

It is interesting to note that 386 companies included in the index pay dividends. The average yield on those is 2.30%. Below I have highlighted the ten highest yielding dividend stocks of the S&P 500:

Altria Group (NYSE: MO) engages in the manufacture and sale of cigarettes, wine, and other tobacco products in the United States and internationally. This dividend champion has raised distributions for 43 years in a row. The company has a forward dividend payout ratio of 76%. Yield: 6.10% (analysis)
AT&T Inc. (NYSE: T) , together with its subsidiaries, provides telecommunication services to consumers, businesses, and other service providers worldwide. This dividend champion has raised distributions for 27 consecutive years. The high dividend payout ratio, and the fact that the company is in a highly competitive industry cast a shadow on the sustainability of the distribution payment. Right now the dividend payout ratio is 72% based off forward 2011 EPS. If the acquisition of T-Mobile goes through, the payment of $25 billion dollars in cash could potentially jeopardize the current dividend. (analysis)
Frontier Communications Corporation (NYSE: FTR) a communications company, provides regulated and unregulated voice, data, and video services to residential, business, and wholesale customers in the United States. Between 2004 and 2010 the company paid a quarterly dividend of 25 cents/share. Last year however it cut the distribution rate by 25% to 18.75 cents/share. The company has been unable to cover its dividend out of earnings since 2006. More than two-thirds of its distributions are non-taxable as they are essentially a return of capital. Yield: 9.40%
Windstream Corporation (NASDAQ: WIN), together with its subsidiaries, provides various telecommunications services primarily in rural areas in the United States. Since 2006 the company has paid 25 cents/share every quarter. Windstream has been unable to cover its dividends from earnings in every year since 2008. One the bright side cash flow from operations has been relatively stable, although the company has ramped up capex spending in recent years. Yield: 7.90%
CenturyLink, Inc. (NYSE: CTL), provides a range of communications services, including local and long distance voice, wholesale network access, high-speed Internet access, other data services, and video services in the continental United States. The company is a member of the elite dividend aristocrats index, and has raised dividends for 37 consecutive years. In comparison to the previous two telecom players, CenturyLink has been able to cover its distributions from EPS, although its payout ratio is a scary 92.70%. Yield: 7.20%
Reynolds American Inc. (NYSE: RAI), through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. The company has raised dividends for 7 years in a row. The company has managed to double EPS over the past decade, and raise dividends by 9% per year as well. The forward dividend payout ratio is 79.70%. Yield: 6.20%
FirstEnergy Corp (NYSE: FE) is involved in the generation, transmission, and distribution of electricity, as well as energy management and other energy-related services. The company has maintained its dividend payment since 2008. It’s dividend payout ratio however is at 69.40%, which is sustainable for a utility company. Yield: 5.90%
Pitney Bowes Inc. (NYSE: PBI) provides mail processing equipment and integrated mail solutions in the United States and internationally. The company is a member of the dividend aristocrats index and has raised distributions for 29 years in a row. Yield: 5.90%
Pepco Holdings, Inc. (NYSE: POM) operates as a diversified energy company. It operates in two divisions, Power Delivery and Competitive Energy. The company cut dividends by 40% in 2001 to 25 cents/share, and has since raised them by 8& to 27 cents/share. Based off forward 2011 EPS, the payout ratio is over 85%. Yield: 5.80%
Lorillard, Inc (NYSE: LO), through its subsidiaries, engages in the manufacture and sale of cigarettes in the United States. The company has paid a rising dividend since becoming a separately traded company in 2008. It yields 5.40% and has a high dividend payout ratio as well.
It is evident that the highest yielding stocks in the S&P 500 include sectors such as telecom, tobacco and utilities. All of the top ten companies have very high dividend payout ratios. This increases the risk of adividend cut, as any decline in earnings would make it impossible to maintain the high distributions. Of particular concern are the telecom companies, since the cash cow businesses of telephones is a dying one. The cell phone industry is highly competitive and is becoming a basic commodity, since customers could expect similar levels of service, and similar prices as well. The only differentiator could be phones offered, but this is a short-lasting advantage, as new phones are introduced and it is impossible to tell which ones would be embraced by consumers.
The tobacco business is also in decline, as more people are starting to realize the health effects of smoking on their well-being. In contrast with telecoms however, tobacco companies have strong pricing power and a loyal customer base, which is addicted to its products. While taxes are raised each year on cigarettes, the levels of price increases that cigarette makers generate more than offsets the decline in consumption by customers. In addition, while there might be speculation that unfavorable court rulings could potentially make all tobacco companies bankrupt, this is highly unlikely. The taxes that tobacco products generate fill in government coffers with billions of dollars worldwide, and tax increases are favored by the electorate. It would be difficult to replace the tax revenues from tobacco products if they were banned.