…from a statistical standpoint, and using the 80/20 numbers given by the Professor, and I am certain his numbers are well thought out, and he did his homework, then this market is a relatively safe bet from a Risk standpoint. I see no issues shorting, and have shorted because my work suggests (to me) very little upside, and a millisecond (dramatic) move to the downside (HFT). Followed with carefully placed stops. I am comfortable with my bet, and DO NOT offer this as advise, just my point of view is all.
Secondary to my strategy and very important to me is too ready myself for quite the ride in volatility, and using the moves in the market that are still clear and fresh in my mind from the 2008/09 period. It will be a wild ride are my anticipations.
I have begun my research in saved materials from this period. I love RISK, and frankly have stated before and here again, I have waited for these market conditions to arrive for a few years now. I believe the Professor to be 100% correct in his call here.
Seems to me all you have to think about is the trillion dollar derivative and debt strategy.Most cannot pay debts back . Could be because Robots have taken over.Robots do not eat or sleep or produce kids. But they do use energy to build and to maintain and chips to run.Idol humans who are out of a job use more energy out of frustration in searching for either jobs or entertainment.(Not good) Trillions of dollars created to pay off loans defaulted on either by malicious entent(fewer than majority) or businesses that don't work or are to competitive or the extreme are monopolized. Regulations which hamper encentive to invest in businesses.Extreme pensions promises at the wrong demographic era. Mis guided political hacks lying to the public for superior gains. All of this points to one solution. JUst the opposite of what elected officialdom is doing and proposeing. Fear is rampant and ignored as long as you check arrives in the mail and your grocery store is fully stocked.The price of energy used to create excess energy is what this is about.Infrustructure is what this is about. Possible chaotic rebellion is what this is about. Neither side has any leaders or at least any leaders that have any solutions.So we seem to be on the border of another hyperinflation to squeeze the money out of the high math graduates.Because there is no other way that is politically acceptable. In this country right now ,we are lucky to have access to truth of the past.
I come here first and formost to study you and learn as a student does.
On Feb.19th in an essay posted by Gregor (another hero) that my charts, and my gut suggested a move was imminent by the curl to the downside I seen in Oil (-$7), Copper (-$21), Gold (-$30) and Silver (.$1.25). These numbers could be plus or minus in the cents. Are these significant numbers? Well, we do see a correction as our future, and it is generally accepted that these commodities are tells to a market correction. First in, first out. China today has announced actions to control an over heated heated housing market, and this doesn't bode well for copper. The world economies are not responding well to the high price of crude, and adding all of this up with the issues in China, Europe, Japan, and the US economy then…
It is why I support your latest call for a correction. Alasdair add to my concerns with his eye opening (with respect to his astute statistical conclusions, especially concerning Italy) Podcast of Europe, McGregor's Robots essay still has me focused on that issue, and Charles just makes sense for me.
This is why I am here Chris because you leave nothing unturned in gathering your analysis, and I trust you. That's it. Plus, I like that my focus is such that I can remain disciplined to see possible changes as they happen, and not well after the fact. So thank you, I feel you have taught me well, and I like victories for time spent following everyone, and everything.
The Fed is going to fight so hard to keep all the balls in the air but they will fail are my hopes.
It's almost five years now that I've been reading about and anticipating some undefined crumbling of the "system." Of course the stock market is not the real economy but it is the psychological proxy. Today the stock market opened at all time highs and just one peek at the CNBC website will give you an idea of the celebration. Folks, Happy Days are Here Again!
When it did indeed look as if we had reached a shtf point in 2009, the PTB pulled out some real magic! That magic loosely based on Keynsian economics, tweaked to fit the circumstances has worked…for a long time now. My rudimentary understanding of the Austrian School of Economics and my sense of logic and intuition has guided me, leaving me to believe that the magic can't go on forever. Maybe it's not "magic" … maybe I just don't get it!
I have pretty much missed all the fun and my modest financial portfolio feels it. I am starting to get angry with myself for falling for the alternative to the mainstream narrative. Magic? Nah, it's just power so awesome, even "god-like," that it defies the laws of nature. The PTB's know what they are doing! Too late for me to throw in the towel but I,(so far anyway) have been dead wrong.
[quote=anexaminedlife]It's almost five years now that I've been reading about and anticipating some undefined crumbling of the "system." Of course the stock market is not the real economy but it is the psychological proxy. Today the stock market opened at all time highs and just one peek at the CNBC website will give you an idea of the celebration. Folks, Happy Days are Here Again!
When it did indeed look as if we had reached a shtf point in 2009, the PTB pulled out some real magic! That magic loosely based on Keynsian economics, tweaked to fit the circumstances has worked…for a long time now. My rudimentary understanding of the Austrian School of Economics and my sense of logic and intuition has guided me, leaving me to believe that the magic can't go on forever. Maybe it's not "magic" … maybe I just don't get it!
I have pretty much missed all the fun and my modest financial portfolio feels it. I am starting to get angry with myself for falling for the alternative to the mainstream narrative. Magic? Nah, it's just power so awesome, even "god-like," that it defies the laws of nature. The PTB's know what they are doing! Too late for me to throw in the towel but I,(so far anyway) have been dead wrong.
[/quote]
anexaminedlife,
Ever look back at choices you made and wish you had done something different? Unless it helps you make better choices in the future, it appears (to me) as just wallowing in self pity. Sorry, but that won't do anything other than waste time and leave you depressed.
Where do you go from here? The Dow is breaking out to all time (nominal) highs as I write. Looking at the (muted) Fed inflation calculator, the Dow would need to be over 16,000 to equal the purchasing power that it had when it last reached these nose-bleed peaks. Why don't any of the mainstream finance types ever talk about that? If they did, these new highs wouldn't be so impressive and they wouldn't be able to coax moms and pops into "investing" in the new trend. The big money has been made and the rotation to the bag holders is gaining steam.
In my opinion, there are only 2 things driving today's market - boatloads of liquidity and a dearth of other investment options. I don't know where things are going in the short term. I've never been able to pick the opportune time to enter or exit. I'm left with making educated guesses about the fundamentals, investing accordingly, and then waiting for the chips to fall. Sometimes, the chips fall out of the buffalo.
Depending on your investment horizon, you should focus on the fundamentals. Why? Eventually, fundamentals will trump liquidity. So what are the fundamentals that are important? You've been around here long enough to figure that out for yourself.
Grover
Wow , that was a leap; maybe I didn't express myself appropriately. My point was not self-pity at all! My point is maybe I am wrong in my assessments, e.g…, fundamentals don't trump liquidity. There are some very good arguments and analyses out there that argue against a lot of what is touted here and on other "alternative" venues. I am simply not a true believer and I am open to considering that I have been wrong.
Yes, it seems irresponsibility has been rewarded in these situations where people stopped paying and then were able to modify their loan. For those of us that have lived within our means it is unfair. I can only square this in my mind by acknowledging that they have learned nothing from their behavior. They think they have gotten away with something and maybe they have for now. I choose to believe that what goes around comes around and that one day they will get comeuppance.
Life has a funny way of working out sometimes.
Lynne
It has crumbled. Record unemployment (real not manipulated), record food stamp use, inflation (I see runing about 8% on real goods), gold doubled since 2008, infrastructure crumbling, record deficits, wealth gap increasing.
If you took your wealth and stuck it in gold back in 2008, you would be much better off than in the stock market.
And if you did not put your funds into precious metals, but rather into energy efficiency, food and water resiliencey?
Here's how that can work, for ROI (return in investment).
Investment: Airtight wooburning stove instead of electric (standard in the South) heat? Initial outlay, $6,000 minus tax credit $1500 = $4500 investment. ROI? Money saved per year $1,000. We made 45% the first year, and will for the life of the stove - 30/yr minimum. The payback period s 4 years. Everything after that is gravy. And if things collapse, we have heat
Investment: To increase cooling efficiency a solar attic fan ($750), eco-foil ($200), and insulated window shades $200) . Initial investment total = $1350. ROI, money saved per year $300. We made 22% the first year, with a five year payback. After that, the savings just keep piling up.
Investment: Food resiliency. This is a little more complicated. Initial outlay over a three year period, $500 for raised beds, $60 for two truckloads of community-based compost, $300 for seeds (seeds cost us $200 the first tyear, $100 the second, and should remain at $50 this year and future years), $200 one-time cost for fruit and nut trees & bushes, $260 one-time cost for a waterbath canner, a pressure canner, canning book, canning jars. The first year we saved $100 on produce and canned good, the next we saved $400 and this past year we saved $800. We've leveled out at saving at least $750 a year for now until our fruit and nut trees mature. Initial investment $1,620. Payyback time 26 months. We have an ongoing net return of at least $750/yr. And it will get better when start to use the pressure canner.
anexaminedlife,I'm sorry. I reread your post and come to the same conclusion. Especially based on this:
My wife accuses me of being an insensitive bastard at times. This must be one of those times.
I'm curious. So you aren't swimming in self-pity. Rhetorically, what can you do about the past? More importantly, what are you going to do in the future? Can you provide an example of mainstream analyses that you consider "very good"?
Grover
PS - I agree that fundamentals don't trump liquidity in the short term. Eventually, liquidity burns itself out. I can't say when that will occur so I invest/speculate according to fundamentals.
anexaminedlife
Maybe, but mostly I've read about a crash or a collapse of the system when a crumble is what is occurring … and it's discontinuous in nature.
Don't get weak kneed now. Remember, the Titanic was highest out of the water just before it went down. Be patient for a few more years and you'll be glad you did. But many will be suckered back in (the dumb money draw) and they'll regret it. I've never gone with the crowd and I've never regretted it but I'm also guided by the Joe Lewis (RIP) adage, "Don't be first and don't be last."
[quote=anexaminedlife]It's almost five years now that I've been reading about and anticipating some undefined crumbling of the "system." Too late for me to throw in the towel but I,(so far anyway) have been dead wrong.
[/quote]
You are probably right …not "dead wrong", but the real question is, can you hold your position and wait it out.
In this complicated and manipulated financial game " being right" may not make you a winner today or tomorrow or even in your lifetime.
My strategy therefore is to pick my side. (Inflationary outcome) and place 60% of my bets in that direction. But 40% goes against my belief in case I am wrong. I am not trying to hit a home run, just survive.
I probably didn't make myself clear.
As for what can I do about the past - nothing and it is not and never was my concern. What can I do about the future is a better question. : - ) Econtalk.org has quite a few podcasts where Russ Roberts (an Austrian School economist) has some great conversations with Keynesian economists. It's a great place to learn because Dr. Roberts does not push any agenda.
Eventually anything can happen. If nothing else, Keynes got it right when he famously said:
The long run is a misleading guide to current affairs. In the long run we are all dead.
Thanks for the tip on econtalk.org and Russ Roberts. I'll listen to a podcast tomorrow.
When I first heard of the circumstances behind this quote, I thought it was a flippant answer to a serious question. Keynes died on 21 April 1946 - the personal fulfillment of his profound statement. His theories live on and have been misused by any politician who could. This has allowed the government and financial systems to get so out of whack today. When will reality make a comeback? I don't know, but eventually it will. When it does, it won't be kind to those betting heavily that it won't return. http://en.wikipedia.org/wiki/John_Maynard_Keynes
Grover
You are probably right ...not "dead wrong", but the real question is, can you hold your position and wait it out.
In this complicated and manipulated financial game " being right" may not make you a winner today or tomorrow or even in your lifetime.
However, if it is not in my lifetime then I was dead wrong.
Money is a game. Pretty much anything can be done as we've been seeing lately. However money does not exist separate from the real world and we can't escape the laws of physics.
I could talk about the implications of the 2nd law of thermodynamics and how societal complexity is dependent on maintaining the flow of energy. But maybe that's unnecessarily technical. I can't put it more simply than Chris has in the Crash Course. We have an Economy that must grow, connected to Energy supplies that can't grow indefinitely and and Environmental resources also finite in nature. Simple as that.
I have to admit that like some on the site I am under water with some of my PM investments, silver in particular. However I have no doubt that my investment is safe and very well positioned for the future. As Adam said in his article last week Hold Fast
Wendy, I agree completely that investment into things that add resiliency offer the best returns. However, if you aren't ready or able to take those steps, you can at least protect some of your wealth for later use.
Even simply buying and storing long term durable goods (Toilet Paper, Paper towels, etc) you would be better off than the Dow. Looking through some of my past records, assuming they didn't drop the size of the product between 2008 and 2010, it looks like Paper Towels have increased by 45% between 2008 and today. So instead of buying paper financial assets you could buy a much more absorbent and useful package of paper towels in 2008 and be better off.
3/5/2008
3/5/2013
Change
10 Year T-note
3.62
1.89
-48%
DOW
12,204
14253
+16%
S&P
1304.34
1539.79
+18%
Gasoline
$3.21/gal
$3.83/gal
+19%
NASDAQ
2272.81
3224.13
+42%
Paper Towels @ Costco
$0.0175/sq. ft
$0.0254/sq. ft
+45%
Silver
$19.48
$28.74
+48%
Gold
$966
$1575
+63%
The gain on Paper Towels is actually even greater since you don't pay taxes on that gain!
