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17 comments:
Steve good luck with your family situation. That is one of the hardest things a person has to desl with so take time and help.
As for the last comments you are a little more bearish than I read before. Sleep may temper your thoughts.
who's Steve and how is his family?
Roger. I second the well-wishes for your father-in-law. A little off topic, but on investing: Some time ago, exploring alternative investments, you mentioned Great Lakes Hydro Income Fund. It is only one of many Canadian income funds. All of these are listed on the Toronto Stock Exchange (TSX), but not on any US exchange. Accordingly, one can purchase shares either via the pink sheets or via the TSX. What are the advantages/disadvantages of making a purchase via the pinks versus going to the TSX? Which is the better deal?
Thanks,
JCarr
Re ICU: Good place to practice pranayama ( likely misspelled). Glad his health issues are resolving positively. Re market: Read the piece on Green Faucet and it reiterated your market strategy. thanks, i appreciate positive reinforcement. I was wondering if you discount financials, are there any sectors r other indicators that serve as leading indicators that a real turn has occurred, instead of a bear rally? At one time, when manufacturing was a major influence on the health of the economy, packaging was a leading indicator, and recycled paper pricing was a good indicator of economic activity. Your thoughts?
I'll keep your family in our prayers,
Sam
It's obvious you're a really nice guy. Best wishes for your F-I-L, hope he gets better about sticking with doctor's orders.
Not sure if you follow Elliott Wave at all, but your prediction is eerily similar to how they anticipate this bear market playing out.
thanks Dave,
my thoughts about a bear market rally is predicated on bearmarkets usually having big moves up that get everyone feeling good about being invested only to then be broken hearted. repeats often.
At this point, I really don't get the timing thing. If you eventually expect things to turn around, why not go ahead and invest now? It seems you avoided a large portion of the fall. Stocks are yielding way more than any safe cash instrument.
if demand for equities is unhealthy then i want to be defensively postured. simple as that--as i spelled it out years before this bear started.
Best wishes to your wife's pop, Roger.
I just read Peter Schiff's latest book, and I've started listening to his weekly podcast. As a result, I'm making some moves that may be rash--I'm moving dollars into Swiss francs, buying gold, and I'm short the USD through the Dollar Bearish ETF (UDN). So far, we're talking about 10% of my net worth into Schiff-inspired positions. I'm just trying to be left with something of value just in case Schiff is right about the pending collapse of the US dollar. I have to keep reminding myself that this isn't crazy--it's just a defensive move against a REALLY bad scenario. What's your take on the mid- to long-term health of the dollar? As China turns its back on US treasuries, and the Fed prints huge sums of money, can the dollar survive without plunging into hyperinflation?
nothing wrong with a little swissi, period. Little is subjective of course, hopefully you realize they are part of the competitive devaluation happening w/some currencies and that it could not bail out either of the BIG banks if it had to.
How many times does hyperinflation happen in the life of a currency? And also how many times in the life of a reserve currency?
If hedging against that is your thing, then why not just go with various commodities?
How many times does hyperinflation happen in the life of a currency?
Once.
IMHO those arguing preparation for hyperinflation and dollar Armageddon can be ignored into the intermediate time horizon: We are currently in a global recessionary and deflationary environment and any attempt to alter global currency dynamics would, in all likelihood, cause a major panic resulting in everyone fleeing to the one currency that is sufficiently liquid to handle the shock; guess which currency that is and, for bonus points, guess what will happen to bets against it.
Frankly the notion that China can switch at will from the primary mechanism and instrument supporting its export-led hypertrophic growth is as risible as the notion that an IMF accounting entity (special drawing rights) could become a world currency: People who believe that sort of thing need to adjust that rakishly rightward tilt to their tinfoil hats; 70% of China’s 2-trillion dollar reserves are USD-denominated and any serious attempt to sell or exchange that would depress the US dollar and give China a major capital loss as well as wreck the Yuan peg so they are going to be very, very careful in how they proceed (politicians as well as business-folk are executed over there remember).
We will probably pay for the extraordinary overproduction of the US dollar just as we have been paying for the overcapacity of our financial sector but the full costs of all that are only now emerging and will probably be born for a long time to come; the fat lady is just warming up her pipes, earplugs will be needed …later. JMO
Thanks for the comments about inflation, folks. RW, regarding China's current dollar holdings...Schiff argues again and again that--while China does have about a trillion dollars locked up with us--the prospect of doubling, tripling, or quadrupling down on that bet is too risky to continue propping up the dollar. On the surface at least, it makes sense. We're saying, "Hey, China, don't let the dollar fall, because you'll lose a chunk of your trillion in reserves." They're likely to say back, "No thanks, we'd rather lose part of our trillion now than bet 4 trillion on the biggest debtor nation in world history."
At least that's Peter Schiff's take. Again, it makes sense to me, but I lost my crystal ball so I'm trying to hedge against that possibility.
Hope your father-in-law recovers fully. GO BULLDOGS!
thanks Bill (one of a few Walkerites to visit the blog).
Eric: I have no brief with Peter Schiff or any other putative authority on the markets (although I have never heard that Schiff is expert in currencies) but the notion that China's attitude vis-a-vis the $USD is of consequence frankly strikes me as a little odd: Whether they buy more dollar denominated assets or like doing so is not really at issue since they actually have little choice while they continue to trade with us; the question is whether they are in a position to sell those assets en masse and the clear answer is, no, they are not and even if IMF agrees to set special drawing rights as an alternative reserve currency that will not significantly alter the consequences of their trading position vis-a-vis the US.
Shorter version: Any country can develop a basket of currencies in reserve entirely on their own and virtually at will so long as they have savings or a favorable trade balance so the notion of an IMF blessed SDR as an alternative world reserve currency is basically a red herring in a jaw boning contest: It could be done but it is a difference that would no real difference make.
So all due consideration to the good Mr. Shiff but a trade on an overbought $USD is one thing -- I'm in that crowd myself and hope to see a downward break after the global $USD short squeeze is over -- but a secular $USD shift over the next few quarters against which someone should be willing to set 10% or more of longer-term portfolio value is another matter entirely and I am telling you as clearly as I am willing to that that is probably something you should probe a bit more deeply than Schiff is apparently capable of based on your rendition of his argument.
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