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Dear Investor,
The action here on my personal blog has been hot and heavy over the past couple of weeks — and a fascinating, potentially very profitable theme is emerging …
A couple of weeks ago, I asked you two simple questions:
Question #1: How are YOU deciding whether you’ll invest in (1) domestic and foreign stocks, (2) gold bullion and other precious metals, (3) energy and natural resources, (4) foreign currencies and/or (5) bonds in 2010?
Question #2: How do you know how much of your money to invest in each area?
The answers our readers posted here revealed a serious and potentially dangerous problem: The #1 answer — by far — was that too many of our readers make these critical decisions on little more than a “gut feeling!”
Then, last Wednesday, I asked you a third critical question:
How do you think Wall Street professionals — mutual fund money managers and brokers — make these all-important decisions?
The answers came fast and furiously …
Lincoln R. hit the nail squarely on the head: “While the fund managers and brokers (in theory) have research analysts to pull apart a company’s reported information and gain insight to given industry groups,” he says, “when it comes down to it, they too are acting on ‘gut’ to make their calls.”
Ron R. agreed: “I think the professionals are hearing what others are saying and then using their ‘gut’ to sway their decisions in what they believe is the best direction.”
Dave D. has no illusions either, writing, “They have no more idea than the rest of us. They simply go with the herd. Their funds rise and fall in value along with the underlying assets.”
Joe A. is convinced that the Wall Streeters are clueless: “I don’t think the professionals on Wall Street have a clue,” he writes. “I think they spread their investment capital over several hundred investments so that no one decision will torpedo their portfolio.”
And Jeffrey’s answer got everybody smiling: “Considering the track record of fund managers,” says Jeffrey, “I think there is a lot of shooting from the hip and monkeys throwing darts.”
Any way you look at it, this
is a serious state of affairs!
If your portfolio is NOT intelligently invested in the asset classes (stocks, bonds, natural resources, currencies) that are most likely to rise in the months ahead …
And if it isn’t prudently balanced to give you greater exposure to the most promising investments and less exposure to those with far less profit potential …
Not only are you likely to miss out on the most profitable investments going forward — you’re also likely to get nicked for painful losses!
It’s clear to me that we have unearthed a critical need here. Our readers — your fellow investors desperately need a practical, time-honored strategy for building a balanced portfolio. And it must be based on FACT — not fiction — in order to tell investors WHEN and HOW MUCH to invest in each asset class.
So today, I’m asking you to help us help you once again: Click here and post a comment to give me your answer to this all-important question:
If you were asked to create the ideal strategy for building, diversifying and balancing a growth-oriented portfolio, where would you begin?
What reliable scientific tools would you use to identify the most profitable asset classes moving forward?
How might you decide how much money to invest in each?
And how would you know when it was time to CHANGE your portfolio structure to avoid danger or to harness emerging new profit opportunities?
Over the next few days, I’ll also be on my blog to give you my personal feedback.
Best wishes,
Larry
P.S. Due to overwhelming response here on my blog, I cannot personally respond to each and every one of your comments. However, I’ve recruited two of our best analysts, Amber Dakar and Mandeep Singh Rai, to help me reply to your postings.
Related Posts
- Can Wall Street EVER be trusted? (02/05/10)
- Care to give me a hand? (01/20/10)
- How would YOU build the optimal portfolio? (01/12/10)
- The optimum growth portfolio for 2010 (02/03/10)
- Commodity windfalls ahead … or not? (02/02/10)
{ 144 comments… read them below or add one }
Searching for an ‘optimal’ investment strategy is a fool’s errant. The world is too interconnected and faces too many black swan events in many sectors to make that a realistic proposition. With oceans of cash sloshing around markets, and hundreds of thousands of seriously educated people being involved in investing, the average Joe with a few thousand or even million quid to invest fools himself in the long term if he thinks he can beat ‘the market’ , although he may slipstream some positive market trends for a while.
At present few such trends are clear enough to a non-professional to jump on with some certainty. Commodities require highly specialized inside info to make decisions, Shares have lost all links to reality, and have become a crap shoot, That leaves energy, bonds and currencies. Using my access to banking information and professional journals I look at long-term currency trends, evaluate the macro-economic health of selected countries, and review their ability to produce and export energy. I invest in a mix of medium-term triple A sovereign bonds that satisfy: a likely long-term positive currency appreciation trend compared to a basket of currencies, very strong macro essentials (sustained current account surplus, public budget surplus, modest GNP growth, limited risk of exposure to international black swan events), and a long-term positive energy balance. I have done this over the past 25 years, getting an 8.5% annual net return, with only one slightly negative year.
Larry Edelson Reply:
January 27th, 2010 at 9:40 am
Dear “fish-less”,
I definitely hear you! However, one thing that never changes I human nature. It waxes between greed and fear, and back again. And those movements are measurable. I really like your emphasis on a macro approach involving energy. There’s no question energy has been – and will be – a major force in shaping economic trends. – Best, Larry
My investment decisions are based upon fundamental and technical analysis. Fundamental analysis tells us that central banks are creating liquidity by flooding their economies with cash. You will notice we have been on a bull market in stocks and commodities as these have been above the 50% level of the Relative Strength Index (RSI) since the middle of March of 2009. However on January 21, 2010, the DJI broke out below its upward trend line and the RSI sunk to 42.5%. There is downward velocity as on January 22, 2010 the index broke below the lower bollinger band sinking to 34.41%. As this is in range of an oversold %, the market bounced back up today. MACD sunk below zero the same day. Should the RSI remain below 50% and the MACD remain below 0 for an extended period of time, this is indicative we are moving into another bear market. The U.S. dollar which typically moves inversely to the U.S. stock market has not done this the past week, which is indicative of its weakness. I do not expect a major bull for the U.S. dollar. Gold has not broken beneath its lower trend line or lower bollinger band, which is indicative of its strength. I expect Gold will continue to rise this year. These are most interesting patterns. Will Gold disconnect from the U.S. dollar and the dollar disconnect from its inverse pattern with the DJI? Who knows?
Larry Edelson Reply:
January 27th, 2010 at 9:41 am
Dear Randall,
I see many of the same technical formations you do. So it’s great to see one doing their homework. But as for allocating one’s capital, pure technical analysis has always left me asking the same question: How much money to commit to a sector, or an asset class – based on standard technical indicators? I’ve always found standard technical indicators to come up short answering that question. Instead, I’ve found that big picture macro-economic and market cycles give a better indication of where to the pedal to the metal, so to speak, as where not to. – Best, Larry
Hi Larry!
Yes, I experienced “hidden inflation” recently. I needed a new garbage can and went to my local Walmart where I bought my last one three or four years ago. I was ecstatic because the price was the same. However when I got it home and started comparing it to the old one I was not as happy. The can was much lighter weight material, the wheels were smaller and the top would not stay on. Essentially I got a 32 gal plastic bag instead of a garbage can! :(
Larry Edelson Reply:
January 27th, 2010 at 2:02 pm
Absolutely right George! That’s inflation, hidden inflation! — Larry
My husband and I are both retired. What I find frustrating is the huge jump in
taxes, city, state, sales, personal & national taxes. It seems that our realestate taxes keep going up, even though the housing market is down and
homes in our area are selling for a lot less. City workers still want raises, and our mayor created a couple of new positions in city government and the wage they were paid was high. It is interesting that with the advent of computers, there has been huge lay offs in many businesses as computers can do the work of several people. A lot of manufacturing, etc. have been sent overseas or Mexico. No wonder the crunch. Thanks for letting me vent.
JC in Omaha, Nebraska
Larry Edelson Reply:
January 27th, 2010 at 2:03 pm
And guess what Janet, Washington doesn’t consider taxes of any kind to be part of their inflation measures! — Larry
Yes Larry, I live in the South of Spain and as you know, unemployement here is close to 35%!!!!
Still I see prices rising in supermarkets and restaurants.
I am very worried about inflation.I have bought some gold but really do not know where else to go with my money for the long term.
Larry Edelson Reply:
January 27th, 2010 at 2:08 pm
Thanks for input from Spain! — Larry
Larry, you are right about regular inflation being here now. A sneaky type of inflation is the downsizing of product packages (boxes, jars, bottles, etc.) while the prices remain the same. The buyer gets less for the same price, effectively being the victim of inflation. And, to be sure, the prices on so many items have indeed gone up over the past few years.
As commercial real estate mortgages continue in rising defaults, and more stores board up, slowly, but surely, we will all notice the very real changes in American life that are taking place, which, so far, have been masked by the majority still appearing to carry on with their normal habits. As the face of Main Street changes with a third of the storefronts closed, as restaurants, in desperation continue to offer more and more “deals,” and as we notice the roads becoming less crowded it will finally dawn on everyone that this is no mirage we are experiencing, but a very real downgrading of middle class American life.
Someone recently said that in the end, our lifestyles here will be more like those of a developing nation–that the world’s resources will no longer rest primarily in the hands of the United States. That can still be averted, IF our people wake up and make the critical changes necessary to restore our position. Congress wrangles over politics while Rome burns. When will they realize that the time for emergency action is NOW?
Larry, if our U.S. Dollar will go through a big devaluation, how do we benefit by collecting, through our investment strategies, even more American dollars? Will not those more and more dollars become more and more worthless, in effect, defeating our purpose in accumulating them? Should we not instead use our still valuable dollars to purchase hard assets like houses or supplies that will still be worth something, as you say “assets” will increase in value? Or will our paper assets also increase in value. I have a gut feeling all paper assets will become worthless one day, and stocks and bonds will be useful only in restrooms.
Abe
Larry Edelson Reply:
January 27th, 2010 at 2:09 pm
Agreed Abe. Most paper assets will lose value. But select investments, even if on paper, will thrive. Mostly those tied to tangible assets and natural resources. — Larry
Here in the Florida USA panhandle inflation is not laughed at by the middle or lower income folks.Groceries? Tomatoes $3.50-$5.00lb. apples $2,50lb milk $3to$5.00gal. etc. Gasoline $2.75 plus for regular. Property taxes -robbery, home ins.out of sight,home rental 50%or more than proper and wage/salary levels sometimes insultingly low. How right you are. Inflation is very alive and getting continually fatter seemingly almost by the day or week.
Larry Edelson Reply:
January 27th, 2010 at 2:10 pm
And that’s in Florida, one of the states hit the hardest by the real estate collapse! — Larry
Larry: In many ways price increases are evident to me in most areas. Does anyone track core inflation with honesty that we can access???
Larry Edelson Reply:
January 27th, 2010 at 2:11 pm
John Williams at Shadow Government Statistics does. Check him out on the web at http://www.shadowstats.com. — Larry
Larry, how does assest inflation work? Does it mean that the things that I own will increase in value? For example prime realestate will it rebound in assest inflation world, will it increase in value although the number of buys may decrease? How about things like cars, trucks, and farm tractors, will they be going up in value or fall like a rock? For the average person 9 to 5 will what they own , house, cars, rise as assets prices rise or lose more and more of ther value?
How do you make money or gain wealth in a assest inflation economey?
Larry Edelson Reply:
January 27th, 2010 at 2:12 pm
Nominally, prices will go back up, re-inflate. The question is — which will regain their real purchasing power, and even increase in value above the rates of both hidden inflation and visible inflation. Gold will for sure. Real estate will rise again, but it will not outpace the hidden and building inflation that’s in the system. — Larry
Inflation is alive and growing. Government manipulates CPI figures so that inflation appears to be in check. Producers manipulate these figures as well. Have you noticed how the size of a chocolate bar has shrunk, coffee is now sold in much smaller packages, bathroom tissue has fewer sheets - most items are now packaged smaller at an increase in price. Imagine if government told the truth and everything was priced by the gram - inflation figures would be much higher. I like to use the movie index (just made this up). Go to a movie with your significant other and purchase two tickets, two pop, two popcorn and some smarties (this will help you taffy the tab…hee, hee). Surprise!
Larry Edelson Reply:
January 27th, 2010 at 2:13 pm
Exactly. Hidden inflation! — Larry
Some food products are up in price, paper goods have definitely gone up just in the last month, but electronics…. no. Those prices are down and compared to 30 yrs ago, clothing is way down! When you can buy a pair of jeans for $8 - that’s deflation! Shoes are cheaper now too, furniture, even some cars ….. and any junk that comes out of China…. people don’t seem to realize they are shopping themselves out of a job.
Larry Edelson Reply:
January 27th, 2010 at 2:14 pm
Not so sure about that Ric. Brand name jeans can run $50 or more a pair! — Larry
Here in Toronto, Canada, the price of almost everything has been going up for the past two years at an accelerated pace. Food items are up, and the quantity of items in tins and bags are getting smaller but we pay higher prices. Public transportation is up, parking ticket, movie ticket, haircut, auto gasoline, auto insurance, and rental accommodations. Essentially everything except, computers, computer related accessories and automobiles. However, salaries are stagnant. I and my family have no choice but to tighten our belt further and save like hell.
Larry Edelson Reply:
January 27th, 2010 at 2:16 pm
Save, but with investments that protect the purchasing power of your money. Fortunately, you’re in the Canadian dollar, which has been rising against the US dollar. That’s good. But isn’t it interesting that even with a strong currency such as the Canadian dollar, you’re still experiencing inflation?! — Larry
Larry, You’ve been predicting asset price inflation to come in your post from 1/25/10: http://www.uncommonwisdomdaily.com/important-early-2010-qa-8249
And, at this point, the continued declining valuation of my single biggest asset, my home, is my greatest concern, way beyond the measly $150K I hold in retirement savings. So, am I to expect that along with asset price inflation that the price of my home will also go back up, giving me an escape route from my current inability to refinance or sell at a reasonable price? How will asset price inflation affect the price of U.S. homes and to what extent? I live in Northern CA.
Larry Edelson Reply:
January 27th, 2010 at 2:17 pm
Yes, I expect property prices to reflate. But I doubt, in real inflation-adjusted terms, that they will get back to the previous highs in our lifetime. — Larry
I got cut off in mid-sentence. I said I agreed that food costs were going up in the last few months by large amounts.
Your analysis on Uncommon Wisdom and in my Real Wealth reports make a lot of sense to me.
Lately you mention China’s growth in so many areas but don’t go so far as to recommend
stocks that we could profit by with this growth. Why not? It would be another area different from gold and other commodities.
Thanks for your good work!
Cecile
Larry Edelson Reply:
January 27th, 2010 at 2:18 pm
We do have quite a few recos for China, and expect to issue more in Real Wealth Report. Thanks Cecile. — Larry
dear Larry
as a Saudi citizin, most assest prices getting higher, i think we are in an inflation time.
i usually flow your recommendations. however, we need to recommand some opprotuinties in gulf countries in 2010.
best regards
Larry Edelson Reply:
January 27th, 2010 at 2:19 pm
Always scanning the region for opportunities Khaled. Thank you. — Larry
One tiny household item not higher than two years ago is Housing! Either rental nor prices to buy … A quagmire there, not nearly “solved”.. And this price affects many other items in the “buy” basket.,
Larry Edelson Reply:
January 27th, 2010 at 2:19 pm
Temporarily, yes. — Larry
I’ve noticed that a gallon milk has increased from $1.79 to $2.23 this past month. Also, a link of sauage has increased fron $3.25 to $4.36.
Larry Edelson Reply:
January 27th, 2010 at 2:20 pm
Big jumps, no doubt! — Larry
When I go to the restaurants, I continually see prices going down.
Larry Edelson Reply:
January 27th, 2010 at 2:20 pm
Hmm. I haven’t had that experience. Either in the States or in Asia. — Larry
I don’t think it is possible for anyone to determine the exact inflation rate.I know that both FedEx and UPS just did their yearly rate increase and both were 6%.John Williams of the Shadow Stats website is also showing about 8% inflation.The govt changed methods of calculating inflation after the massive inflation of the late 1970’s.By giving out low inflation figures it allows govt to reduce payments to Social Security recipients and others and also allows the Fed to keep interest rates artificially low.It’s really amazing to me just how poorly educated typical Americans are about finances.They actually have been selling real assets and investing in bonds.That means,after losing money in the tech crash and housing crash they are about to get hit again in bonds.
Larry Edelson Reply:
January 27th, 2010 at 2:21 pm
Right on the money JJ. — Larry
I’m not sure how much more deflation my (illiquid) assets can take (real estate)! I hope we’re finished with all that.
Larry Edelson Reply:
January 27th, 2010 at 2:22 pm
Agreed on real estate! — Larry
The government has to make up low inflation numbers or it will have to give all Social Security recipients significant increases. And since the goverrnment is making up numbers, why not adjust unemployment numbers to give a rosier picture? What numbers can we trust anymore?
If too much easy credit caused the bubble, how can easier money and more money solve the problem? Maybe the next “crisis” will come when the Treasury holds an auction and nobody comes.
Inflation - - sure! It’s coming. The question is when? Maybe after an interesting election this fall.
Larry Edelson Reply:
January 27th, 2010 at 2:22 pm
Agreed Norman. — Larry
Larry,
We have not seen any of the “traditional” inflation here in Colorado. Food, light, heat, etc. are about the same…in fact food seems a bit less expensive. I know there are lots of dollars being injected into our economy…but, without demand for goods and services and low capacity utilization, how can one really expect inflation of the traditional kind?
Frankly, I am leaning more toward deflation, but I am trying to keep my portfolio balanced and ready for either event…inflation or deflation to occur at some point this year.
At the moment I am 12% Natural resources/gold,silver,copper, 12% cash, 3% Foreign stocks(China mostly), 26% U.S. stocks, 48% bonds(short term mostly, no long bonds,) So, my allocations show 3 of the asset classes are deflation protection and 3 are inflation protection…on the fence I guess.
Thanks much for your continuing help,
Bob
Larry Edelson Reply:
January 27th, 2010 at 2:23 pm
Good balance Bob. — Larry
Larry, you are the only one I’ve noticed that is pointing out that many things about this depression are the exact opposite of the great depression, which was deflationary. I appreciate your insight. Would you be willing to comment on the wisdom (or lack thereof) of buying treas.inflation protected securities (TIPS) at this point, despite the fact that they’re selling at a premium right now? I’m thinking 1) they do pay some interest, plus 2) they are a hedge against inflation, 3) they have a limited downside, not being “adjusted” for deflation (I mean the principal can’t be adjusted below par by the gov’t.). One hesitation I have is the fact that the CPI, which is the basis for adjustments, is manipulated lower than reality by the gov’t., so in case of runaway inflation, I’d want to get out of TIPs. What do you think about this?
Larry Edelson Reply:
January 27th, 2010 at 2:23 pm
I don’t like TIPS, because they are tied into the government’s inflation figures, which are BOGUS. — Larry
Dear Larry,
I used to think you were a goldbug with outlandish predictions. Now, after reading your columns for some time, I realize you have a very balanced perspective that comes from intelligence, hard work, and experience. So thank you.
With respect to inflation, I send my daughters to a prive school and their tuition increased by 25% in one year. Their tuition just surpassed my first mortgage!
Sincerely,
Trent
Larry Edelson Reply:
January 27th, 2010 at 2:24 pm
Thanks for the compliments Trent. And agreed on inflation. I’m seeing the same types of increases in my son’s tuition. — Larry
It is true that certain assets, such as homes and other real estate, have fallen but the cost of living continues to rise in spite of an official unemployment rate of 11 plus% in my county. The electric utility just got a 25% rate increase. Food items have escalated across the board and all form of energy are going up.The working and middle class are being painfully squeezed. I see a return to Jimmy Carter era stagflation. The government manipulates the cost of living by ignoring “volatile” food and energy and applying “hedonic” fictions to other items.
Larry Edelson Reply:
January 27th, 2010 at 2:25 pm
Agreed Jim. — Larry
I am a 70 year old senior who never trusted the markets and was extremely cautious when investing. Unfortunately, my timing was always wrong. I was discouraged because I felt the markets were always maniputlated, and the only ones who made money were the financial advisers and brokers, primarily because their jobs were dependent upon their commissions and many were and are greedy.
When you talk about inflation, all of us, who are trying to survive, see it in ever-increasing prices for food and shelter, and everything else we need to purchase, but we do not see increases in wages or social security or income from retirement funds. How the feds could issue a statement that seniors would not receive colas in 2010 because of lack of inflation is not only outrageous but unconscionable to those of us who have paid our dues for years!
Additionally, regarding your question of investing and how one would invest funds, nobody really knows the answer, whether it be by gut or scientific methods. If all the investors, brokers, bankers, Bernanke, and Greenspan knew what they were doing, we wouldn’t be in this position. Unfortunately, we will eventually be a third-rate power and all the countries we helped over the years, and continue to aid, will be laughing and will be glad that we failed and they will refuse to help us when we need it. When we were the largest creditor, didn’t many countries restructure their debt so they wouldn’t go bankrupt and didn’t we forgive many loans to other countries. We are on a crash-course and the Boston Tea Party is late in coming!
Larry Edelson Reply:
January 27th, 2010 at 2:26 pm
Agreed all the way around Harlene! - Larry
I recently ate lunch at Wendy’s- a popular fast food joint. Last year they had a large ” $.99 ” menu. That has been replaced by a ” $ 1.29″ menu. There is no longer anything on their menu for $ .99. Just yesterday I ate at restaurant in the New Orleans airport. Beer was $ 7.95 per glass- it was $ 5.95 when I was there three years ago.. My dry cleaning is up about 50 % from two years ago to the point I am seriously considering throwing some things away rather than having them dry cleaned. Inflation is beginning to be obvious now in just about everything I regularly buy.
Larry Edelson Reply:
January 27th, 2010 at 2:26 pm
Exactly. So why are so many talking about deflation? I don’t get it. We’re already seeing some major inflation. — Larry
Larry,
I’m looking at relocating to the Phoenix area. The real estate market has been one of the hardest hit in the country, but I personally don’t believe it’s totally bottomed out yet. However, with inflation on the rise, do for see home prices in Phoenix starying the same, rising, or declining with the inflation factor in the mix?
Scott.
Larry Edelson Reply:
January 27th, 2010 at 2:27 pm
My guess is that they are probably bottoming now. — Larry
Re inflation: It may seem a little thing, yet multiply it across the food spectrum. I buy cheap, meant for people, tuna instead of adulterated cat food for my cat. It has jumped from 52 cents a can, a year ago, to 78 to 82 cents now. So I am paying 5O% or so more for my cat’s daily meal. I’m in Colorado.
Larry Edelson Reply:
January 27th, 2010 at 2:29 pm
Yes, it’s already hitting. Expect more of the same, acoss the board. — Larry
Larry: Several years ago I took X amount of dollars each week for day to day living. Now it takes almost two and a half times that much for the same thing. At 84 years (I’m a WWII Vet) at best I can expect to be around for anaother decade. Have you any suggestions as to where and how to invest some cash; for a decent return on the invest ment?+
Floyd
Larry Edelson Reply:
January 27th, 2010 at 2:30 pm
Follow the recommendations in Real Wealth Report, Floyd. Unfortunately, I cannot give individualized advice since I am a publisher. — Larry
Dear Larry,
If we went into a depression in the 30’s because we were the largest creditor nation; isn’t China in the exact same place now as the largest creditor nation?
Renee
Larry Edelson Reply:
January 27th, 2010 at 2:30 pm
Good question Renee. And that may yet happen to China. But if it does, it’s decades away, in my opinion, due largely to the fact that there are still hundreds of millions of Chinese driving the economy forward there. China is like the U.S. at the end of the 19th century. — Larry
If you are not seeing inflation you are not paying attention. My favorite bourbon went from $16 three years ago to $30 today.Our democratic system won’t work without a little inflation.
Larry Edelson Reply:
January 27th, 2010 at 2:31 pm
Correct Louis. Cheers! — Larry
You bet! We are seeing plenty of inflation in the cost of daily living.
Larry Edelson Reply:
January 27th, 2010 at 2:31 pm
Yes, indeed, yet not many are talking about it. — Larry
Hi Larry, I just wanted to state that prices are rising every day, whether the government acknowledges it or not. OK, so, despite the fact that no one can live without food or energy, they are discounted in the government statistics, but, wonder if anyone at the government ever goes to the hardware store or lumber yard or auto parts store? It hurts to check out from any of those places more and more each and every time. And then there’s the doc’s office visit, or his sidekick the pharmacy. And worst of all is that there is absolutely no non-rose colored glasses thinking by any of those directing policy formation for the future. It’s discouraging. John
Larry Edelson Reply:
January 27th, 2010 at 2:32 pm
Agreed! — Larry
I can only agree with you in every aspect.Inflation is already there and gold is the perfect hedge.
Larry Edelson Reply:
January 27th, 2010 at 2:32 pm
Agreed. Gold is also a hedge against the mismanagement of the state by the powers-that-be, and we sure have plenty of that too! — Larry
The niggle with gold is - when everyone is bust from the inflation that is a fact of life if not revealed by cleverly crafted government statistics - we can’t eat gold but who on earth will have the money to buy it? Sure India and China are buying gold when its cheap but later on … ?
Larry Edelson Reply:
January 27th, 2010 at 2:43 pm
Interesting thoughts Margaret. — Larry
Larry, your articles are among those I value most. May be I am biased but I believe your understandable explanations are logical and free of opinion though we know the latter is difficult to achieve.
Yesterday I bought milk in a low price grocery (Aldi) and they had a sign on the fridge saying that because higher cost they have to charge 20 cents more per gallon. I see that a clear sign of price inflation whereas my asset (my house) is still losing value. I have not had a raise in three years and I have little chance to increase my income (other than the county does by raising taxes). So I must cut down on consumption which in turn is counterproductive.
I also feel another form of inflation: The credit card companies raised their interest rates to a level that would be illegal in Germany where it would be considered “loan sharking”. That again leaves less money in my pocket. So the available credit for the credit cards is cut down (though I always pay on time and more than minimum) which in turn prevents me from refinancing my mortgage. I feel the banks are holding me and everyone else hostage.
The best thing from this is my resolve to pay off my credit cards and discard them as soon as possible.
Larry Edelson Reply:
January 27th, 2010 at 2:44 pm
Agree all the way around Joachim. And thanks for the compliment. — Larry
I live in Taiwan and restore older, domestically produced motorcycles as a hobby. A project I just finished came in at a 25% cost increase (for parts and materials) over a similar project I completed two years ago– and I do all the work myself.
Larry Edelson Reply:
January 27th, 2010 at 2:45 pm
Thanks for the input from Taiwan, Cameron. — Larry
I have a question maybe somewhat different but it has huge import to me. I (and my wife) own a large tract of lakeshore (1300 ft) in Minnesota that some say may be worth up to $1000 per ft. (in good economic times) We also own an 80 acre piece of productive farm land there that currently is valued at $4-5000.00 an acre. We hope these holding may be a large part of our retirement some day (5-10) years. My question is how do you believe what you feel is impending inflation may affect the prices of these land holdings?
Larry Edelson Reply:
January 27th, 2010 at 2:46 pm
Long-term, I think they will do just fine. — Larry
Great coverage in your article today, Larry. You answered all of my questions, and I am sure patience will pay off by following your recos. And….yes…..we have noticed that most purchases have become more expensive over the last two -plus years. In addition for several years we have noticed we get less of a product, e.g., foods, in addition to a price increase. Less for more has been the “in” thing along with packaging that leads one to think we are getting the same volume of a product.
Larry Edelson Reply:
January 27th, 2010 at 2:48 pm
Agreed. — Larry
Great article Mr. Edelson! I do have a question for ya regarding the Chinese linking their currency to our dollar. Certainly the Chinese can’t let their currency float at this time - it would gaurantee losses on their 2 trillion dollar of US debt (T bill or whatever form they are holding) by whatever the difference is between the current peg and what the market determined. However, I wonder if I could think of the Chinese as backing our dollar with their Yuan? After all how much cheaper could the Yuan go? The Chinese are already eating everyone’s lunch in the market place - check out Walmart! Everytime the dollar goes down, Chinese products become cheaper on the world market. Are the Chinese spoiling the Feds inflation party?
Larry Edelson Reply:
January 27th, 2010 at 2:49 pm
Interesting thoughts Greg. I don’t believe the Chinese though are exporting lower prices. That’s only temporary. Chinese demand for natural resources is pushing up the prices of just about all basic commodities, which will end up causing more inflation down the road. — Larry
Oh Larry it is beyond fantastic please may you continue giving us those guidelines You know agood teacher always benefits the world please keep it up
Larry
How would the levying of a Value Added Tax affect your overall investment strategy??
Larry, I fear it is happening again. This time with my ‘core gold,nand silver” holdings. With equities I usually buy after I am convenced that the trend is well established and I have a long term growth opportunity. Almost immediately the stock turns south and goes down so far that I need herculean markets to get back to my point of purchase. When and if it ever occurs I get out hoping to break even and get into another long term growth stock. My reluctance to place 8% or better stops - which automatically loses that much if I have guessed wrong keeps me from doing what I should do. Consequently, I have several two year old or older stocks which are down 40% to 92% and no real hope of recovery or growth.
What ever happened to the “buy a good company and hold on for long-term growth and profits?” Should individuals using that logig even be in the equities market. It is no longer about investing but about crap shoots.
Bob Privette
You previously mentioned that your cycle research shows a major collapse around 2011-2012.Is this still your position and can you give us an exit time . Looking forward to your reply. Steve
Hello Larry,
I think you are right on the ball!
It is sad that there are so many that want to believe that America can’t possibly get into such bad circumstances, but like you said we are already there. Then to make it worst things aren’t going to get better for quite sometime.
We first have to admit that we are in bad, then try to figure out how to get out of it. But the way we are going we don’t want to believe that it is bad or that it will get worst. So unfortunately for us Americans until it hits us hard, and it will, we don’t want to change anything…and that is scary!
Regards,
Troy K. Kepo’o
Larry,
I would like to as a very serious financial question with regards to the current state of world financial affairs. I recently watched a documentary on google called -Wake Up Call remastered edition- regarding the new world order. The essence is that a small group of international bankers really control a lot of the politics in the free world and are behind certain events to control public sentiment in order to consolidate their power for their own benefit. Have you seen this documentary? Can you comment on its validity ? In the video they spoke of the new Amero currency being developed to replace the US dollar as the world benchmark currency and the formation of the North American Union which unites Canada, U.S., and Mexico. With this in mind, it seems your financial strategy in line to take advantage of what may be happening going forward?
I would really appreciate your comment. I am a Real Wealth Subscriber and respect you and your work very much.
All the Best,
JJ
Larry
The last week saw all of the gains from March 2009 disappear.
Who or what group of investors are responsible for this. Us small investors could not do this.
I always felt there was a force manipulating the market for their own gain.What do you think?
I have read your advisories regarding precious metals, but unfortunately, I do not have a mere $100,000 floating around to buy gold or platinum. And if China and the US make a deal to de-value the dollar, and develop a new currency, what will anything be worth and how will we, as a nation of individuals, with our own poverty problems, be able to deal with the problems and survive.
The Feds have been keeping interest rates low for a long time which is great for both stocks and gold and bad for the dollar. This is seen as good for the economy and helicopter Ben refuses to raise the interest rates for now. However, the Feds have been known to act irrationally and may decide to rasie the interest rates. Some people say that is bad for gold and may make gold prices go down. What is your take on this situation on gold, the Dow, the dollar and the economy if they do decide to prematurely raise interest rates?
If you were asked to create the ideal strategy for building, diversifying and balancing a growth-oriented portfolio, where would you begin?
ETF’s - Oil, Metals, Water and Agriculture
Inverse ETF’s - DOW, S&P
What reliable scientific tools would you use to identify the most profitable asset classes moving forward?
Charts, Decennial and 4-year cycles, Demographics
How might you decide how much money to invest in each? 70% ETF’s and 30% Inverse ETF’s
And how would you know when it was time to CHANGE your portfolio structure to avoid danger or to harness emerging new profit opportunities? Being a contrarian when +85% is in one camp, begin moving in the other direction.
I have placed 15% of my funds in silver stocks and firms that are dependent on commodities.
25% of my funds are in large cap stocks that have strong dividend histories.
30% of my finds are in international stocks that have strong histories of dividend payments
The remaining 30% is placed in inflation protected bond funds.
with obama’s recent attaks on the banks,i.e. proposals to tax the 35-50 top banks-and new rules and regulations on what the banks can and cannot do, therefore stifling their ability to reinvest and do hedge-funding and equity-funding as they have in the past,do you anticipate a major drop in the dow(maybe1015%)-as was witnessed this past week when the dow dropped 500 points just with obama’s comments? this scares me,because when the dow and nasdaq drop, the commodities and natural resource stocks plung with everything else-and that’s what i’m invested in, along with tech stocks like google,rimm,bidu. what’s your advice? are you still expecting a pullback, and to what extent, or do you still see the dow going to 10,800-11,600 as you have recently indicated. please reply-thankyou
Dear Larry,
I am 69 years old and my wife is 65 years old. We have struggled for 45 years of marriage to save $500,000. Our combined social security is $2500 per month. We own our home and have no outstanding debts. We have everything in mutural funds and stocks spread out both domestically and international. I’m very concerned about the US dollar, hiperinflation, and moral decline of our nation. I am also invested about $100,00 in Dr Weiss’s Contrarian but it is down about 6% to date.
My questions are:
1. Where do I go from here. We have very little opportunity to generate much income at our age?
2. We have $140,000 with AIG in a variable annunity of mutual funds that averaged only 6% per year for the past six years -should we get out, only $38,000 is taxable?
3.I have about $100,000 in energy funds, $12,000 in gold, $7000 is silver and precious metals, and $6000 in natural resources. Should I allocate more into these funds and what percent?
I have the take on wind, solar and battery. What about cellulosic ethanol?
I found your latest comments of great interest and straight forward, without sounding like Chicken Little. Your recommendations preceeded by your overview of okur financial situation makes for a tgreat read. Hope you continue these informative advisories coming!!
I’m guided by the oxford Club asset allocation plan, adjusted for age.
Also for individual stocks I try to keep the 4% rule at the point of purchase with
a stoploss set at 25% from the high.
In my deferred compensation program I am balanced between cash and stocks 50-50. When the market was tanking, every three months cash was moved automatically to stocks to rebalance, and during the subsequent runup cash has been replaced from stock sales. Contributions are also balanced 50-50. It automatically buys low and sells high– as time goes on I have been building up for retirement.
The technical and fundament traders are on the edge as the U.S. political remifications from the Massachusetts voters and its effect into the coming elections including the Fed Chairman’s confimation creates much uncertainty. Many people seem to forget that we still have large debt problems in the US banking and economic sector. Fiat currencies are highly unstable but seem to support the mechanics of everyday trading “forex” to support profit requirements.
The dollar is fundementally flawed in its current trend support. Call it what you may but intervention/manipulation, anything to keep it up and create more false perceptions. It feels like the penny that your child throws into the huge cone at Walmart. You watch it go round and round until it finally goes into the hole. In some sense the US dollar is rounding its days and years but eventually it will go into the hole with all other fiat currencies.
Gold and Silver: The CFTC is coming under pressure to look at the large unbalanced contracts of a handfull of banks. I agree that if the the CFTC doesn’t act, you will see the gold and silver contracts trade else where, i.e. another country. No one seems to mention GATA here but I will with their law suit against the Fed and their gold swaps.
EOS
http://www.youtube.com/watch?v=0h7V3Twb-Qk&feature=player_embedded
The empty Chinese city built with stimulus funds? From one of the guys who is a bear on China - Jim Chanos.
Mutual funds are my investment vehicles. I rely on who I feel are the best & wisest fund managers who also have their own money along side of mine. I also carefully consider ideas of “experts” that I respect & trust such as yourself.
Personally, I’ve no scientific tools to identify the direction my investments should take; nor do I have any specific method to determine the % to invest in each area or when it is time to make a strategic change - I can only hope that the fund mangers will analyse to know to make the right changes at the proper time.
I build my investment portfolio using the following tools/methods, in the order listed:
1. analytics
2. expert opinion (such as yours, Larry)
3. equity fundamentals
4. gut feel
Larry, Please comment on the probability thatGold could be confiscated by the Feds.
Hi Larry! I never blog but you have pressed my button with these questions. I agree with your prior responders about the gut method. There is so many openions on the tv about the market and its direction that are poles apart from pundents that are “professionals”, who do you listen to. “Do due dillagents.” thats a joke also. Go to the research sites and find the same shallow openions you hear on tv and find a lot of blank spaces in the tech work sheets leaving you feeling as unformed as before you started. Read the charts? Thats about all thats left. I’m a home gamer so I’m not so confortable with that. What do you do? You find a guy like Larry and hope he knows what he is talking about. Keep up the good work, Larry, what you do is much appriciated. Rod
Well Larry, big questions. Let’s look at Maslow hiarchy of needs, except put them into the context of stocks(which are really commodities and subject to supply and demand). We all want to be safe right? In order to do that we need water……we all need heat(check out the wind chills in the upper Midwest)…..we need gas for our cars….thus of those needs, which ones are out of favor….and which ones are going to we need for a long time…….so my idea to build a diversified portfolio would begin with no more than 20 stocks…too many to follow otherwise…….I would use technical analysis to form my stock screener…..looking for a combination of lower RSI, lower green ADX, red CMF and then comparing 50, 200 and 365 day averages, observe a chart on a 21 month timeline to get the big picture or longer if you can’t determine from the facts, the trend line. Then using the 20 stock as a maximum…lets start with $100,000 and divide by 20…..$5,000 in each stock, but buy only half to observe if you have read the technical analysis correctly and if it goes down, use the other half to dollar cost average when another buy signal appears…..not a but feeling, but a bell ringer when the signals line up….likewise on the selling side….when the signals say sell, sell…….you don’t have to wait for the very bottom nor wait for the very top…….pigs get fat, hogs get slaughtered. Generally look at the sector that got slaughtered….lots of technical bargins right now like the financials!
Thanks,
Larry, I am a sub to your Real Wealth Report. I have read so many times recently by different financial advisors that “Shorting Treasuries will be the best trade for the next ten years.” This has been said by Jim Rogers the famous resource trader, Bill Bonner of Agora press, and Porter Stansberry. Most say that Gold will still do well, but that being on the short side of treasuries is the best investment for the next 10 years. How do feel on this? Is RYJUX mutual fund the best way to play this for the long haul?
Larry, your comments today concerning the continued decline of the dollar are directly opposite the comments of Bryan Rich’s comments of two days ago (1-23-10) wherein he makes the case for the dollar having bottomed now, basically because there is no better game in town. Since you are both affiliated with the Weiss group this makes for a confusing dilema for those of us who follow all of the Weiss publications. Why aren’t you all on the same page?
Thank you. Bob Rozen
Larry, I have watched you and your arguments for long enough to see that you stand behind sound financial realities. Try to ignore gravity, it can be done, briefly… I have grown seriously fond of your analysis and when you speak, I listen. Thankyou and I wish I had the honor of your friendship. Bruce in Montana. P.S. Stand firm in your convictions!!
Our fundamental problem is a central bank with the ability to create credit based on debt in unlimited quantities with impunity. This is John Laws solution to excessive government spending in excess of revenues. What is required is the Swiss system. The people can walk into any bank on the Banhofstrassa and buy gold with swiss franks. This acts as a deterrent to the central bank to debase the currency. Gold represents the power of the people to control the central bankers, and it is freely available at all banks. This is why the Swiss have a successful currency. Diamond Dick
Hi everyone, I am in the UK, we are also up to our gills in debt with political parties with bugger all between there ears, sound familiar ? I like what Larry and the other 2 guy’s say. I can only buy into
what my gut is telling me. I get that from these guys, thank you. I also buy opinions from Money Morning
in the US and Fat Prophets here in UK and Australia, all seem to be saying as I feel , We have never
been in this position in our lives before, like your Jim Rogers say’s this will run for years.
The genie is out of the lamp, and he ain’t going back anytime soon, we need to hang to our nerves
and buy these dips. Follow the real money, Hard Assets.
Good luck everyone !
Hang on Buy The Dips, if is was easy to do the charts would be off the scale and we would be looking to get out.
My answer to these three questions is the same as my answer to the first ones. I have advisors who have years of experience, and boots on the ground. I pay you guys to tell me what and when.
I think your comments are “right-on” Larry, but you haven’t touched on Energy. What are your thoughts about oil, natural gas and alternative’s?
That’s fine as above.
Cecile
Larry what do you think would happen to the price of gold if Paul Volcker would become the Fed Chief?
Begin first by knowing yourself: How much risk is ok for me, how much time will I spend on investments, how much info - and from whom - do I need before I take action, how have my “gut” decisions turned out in the past, am I comfortable with investments I may have to check on/worry about every day or week ?
Scientific tools: best one so far is knowing cycles, trends; but you never know when a tsunami is going to hit. I really don’t think there is much “science” involved.
Deciding how much is always difficult and often slows down decision-making
Only way to guess (not know) when to change is by keeping as informed as possible on a daily/weekly basis and reading all those Weiss-related emails and other news and commentaries.
I’d hire a consultant who could demonstrate a VERIFIABLE, minimum five-year track record.
Face facts. Diversification, or as it is better known “deworsification”, is a losing strategy.
Larry: I have been attempting to make money in the stock market for 35 years. Mostly unsuccessfully. After the rebound from the last crash, with the DJIA at 9500, I made major moves to simplify. I also came upon Martin Weiss and Larry Edelson and the Uncomon Wisdom Team (UWT). Since subscribing, I have made two major investments. Of a $150K portfolio (what is not committed to paying the mortgage, kids’ education, IRA, 401K, and so forth), I put $50K into gold bullion at about $1000 per ounce. I then followed your advice with the other $100K and bought alot of the RWR stocks and some of Tony Sagami’s and Sean Broderick’s recommended stocks. Unfortunately, only MO is paying off so far. I am down with the other 19 or 20 stocks. Still, because it is gold, resource, commodity intensive (with EDU and a few others thrown in), I am holding on, looking for the change in direction. In short, I have followed the UWT for the most part with all $150K (though I am overinvested in gold when compared with, say, the RWR portfolio). The Federalist 45.
ideal strategy: pray
none scientific tool: read a lot and pray
how much? pray
when to change? pray
Larry, what I don’t understand, gold & silver are up today yet gold & silver stocks are down is someone manipulating here? or does the market know something we don’t know ?
Larry,
Most important investments for me on an international scale would be in China.
Gold is the most important followed by Silver.
Second would be South America mainly Peru and some other countries for example Argentina Gold (Exeter) however I concerned about the politics there.
Natural Resources all types of minerals and oil.
I enjoy reading your comments and I think you are right on track concerning the eventual crisis with the US Dollar.
Best,
Jay
I am looking into it.
I am planning to add gold to my portfolio.
I am also interested in minerals, metals, processing, etc.
I am trying to use the Vectorvest service. Periodically I use The Motley Fool too. My problem is I don’t believe in the old buy and hold approach and I don’t see the value in bonds. This flies in the face of what most advisors tell retirees my age but I don’t think they are operating in the 21st century.
January 25, 2010 Dear Larry
The source of all wealth is created by hard working men and women in factories, on farms, and in the gathering of raw materials to produce useful products. There is no other source of wealth.
Asset manipulation, as to value, does not create wealth, it is just an illusion.
Kean
I live in New Mexico where Charter Bank just failed (I wasn’t a customer), but what is the internet site where I can check the quality of banks? Your answer will help me sleep at night.
Larry, how will your January 2010 forcasts and recommendations be affected by the recent announcement that the China government has taken steps to curb bank loans? Thank you.
John 1/25/10
Dear Larry;
I have been following you for a while and I really like your insights and the way you ’see’ the markets. I am a currency trader and I see a lot of potential for huge gains in a longer terms just by selling the dollar and buying gold. Of course we all have to be cautious about it.
But there is one thing that I am doing right now. I keep buying gold every opportunity I can. Some of my friends think I am crazy and I respond: this is for my daughter. She is 6 years old and she will be able to have a good quality of life if I, cautiously, keep buying gold for her.
Thanks for sharing your knowledge with all of us.
Ariel Gelman
Elliott Wave Theory. Dollar, oil, precious metals ratio.
foreign markets out of Europe.
Foreigns affairs
I use Morningstar to define a portfolio, with component parts based on my risk tolerance and objectives. I see a light at the end of this tunnel - your questions - anxious to see what you are going to propose.
Other than my own research and reading various newsletters, s there a reliable/proven way to forecaste what sectors or asset classes will be most profitable? Also, what about interest rates?
I like to read charts for actual sentiment and public response of the assets. Whatever I decide to do, I feel better if I consult charts to assess the timing
cramer just said buy gold now !!!! only person with 3 one hour tv shows daily im sure he just bought it todaywho cares time for a huge upbeat in gold and silver thank you obama making decisions like bush all of the sudden !! mmmm bob
moderately thanks bob
Ifeel strong about the TIP stocks knowing inflation is coming. Whats you”re opinion? thanks.
The one thing I don’t see in you projections is the certainty of the oil reserves of the world declining. This will happen in the next decade, if it is not already happening. The world production of oil has probably peaked for all time and has been flat since 2004. Increasing populations and the need for resources, also in decline worldwide, will eliminate any idea of growth in the next 20 years. Growth needs a fuel source and the world’s is about to be disrupted forever. The claims of coal and natural gas along with renewables will never replace the miracle that petroleum has been for the world for the past 100 years. That is where your source of energy for all the growth of the 20th century came from. It is about to reverse on a grand scale.
Hi Larry, In answer to today’s question, I would first want to be sure that the correction I have been expecting did not begin last Wednesday. With a precise 50% retracement of the S&P from last March 9th, with housing starts going further down, with unemployment going further up, with credit getting even tighter, with foreclosures and short sells increading in the commercial real estate and higher priced housing sectors, and with my “gut” feeling [that you don't like your investors to admit to], I am still not convinced that the bottom has been reached. So, I am waiting for clarification before I commit more capital to equities of any sort. Just let me know when Martin Weiss turns bullish! Bruce
I don’t agree that easy money policies will help to jump start the economy. Instead it causes consumers, investors, and business owners to make flawed financial decisions based on the false signals from the easy money which creates asset bubbles that have to be corrected. Resources are allocated to projects that will have to be liquidated when the necessary correction takes place. Easy money is like a drug addiction and it’s effects are similar. It never leads to a good outcome.
Read in Jan. RWR that our positions in natural resources are soaring. Last week has reversed most of these positions for zeroing out if not additional losses below orig. investments. Would appreciate some current feedback on this situation, especially since Martin put out FLASH ALERT last week to reduce positions to a minimum right now, while you are recommending more positions. Also noticed that when I went in to place NEW STOPS, on your Jan. positions, that most of those positions are already BELOW the STOP PRICES you have just recommended. Would really appreciate some feedback from you about these two issues.
Thank you.
Adele Trebil
Larry, I have lived in many countries - most notably in the late 70s. What we did then - was only buy Turkish money the very day we needed it - and we kept around a bunch of good tradables, like cigarettes, whisky and jeans. The Turkish wives wore thin bracelets of gold all the way up their arm - they were carrying the family wealth! I see this as a lesson of how we have to act - as a matter of fact, I have been looking for the thin bracelets - like 10 to a buillion - it has to be that small - you cannot walk onto the streets with thousands in your pockets, you’d never make it home!!! You have to have gold sellable in the hundreds - something with a reliable weight - so they know - 10 makes a boullion. What you do not mention - that is VERY IMPORTANT - is that you should not hold any gold that has US stamped on it. In the very real possiblity that the US goes bankrupt - it can - by constitutional order - call in all the gold - AGAIN - like it did last time - but it cannot take jewelry or foreign currency. So Larry, lets make some bracelets - 10 to a buillion (i’ll never figure the spelling).
Thanks,
Anne-Marie:)
Larry, What should I do with 403B TSA’s, is it better to buy the annuity or move to IRAs
John
Hello Larry,
You are doing a grate job! One question for you;Few months ago you had a diagram, showing a major low down for Gold in May/June.2010, is that still comming ?
Thank you,
Atanas
You did not ask a question you asked four. My comment, valueless probably begins and ends with ****S
If you were asked to create the ideal strategy for building, diversifying and balancing a growth-oriented portfolio, where would you begin? ****With things of intrinsic value, and not expect to make a killing off of something I knew nothing about. ****
What reliable scientific tools would you use to identify the most profitable asset classes moving forward? **** Is this product/ thing of true worth to me and others. Will it maintain its value and/or improve others well being? *****
How might you decide how much money to invest in each? ****On the above thoughts. ****
And how would you know when it was time to CHANGE your portfolio structure to avoid danger or to harness emerging new profit opportunities?****When I found something that better full filled the above criteria. *****
Thanks for all your help Larry! I hope your Dad is better! Take care.
Larry, How come you don’t provide updates to your Real Wealth portfolio in between monthly issues ?
Alot of economist dont seem to have a clue about this current market. Do you think we will test the lows of March 2009, and if so why and approx when will this occur ?
All the prominent econmist such as Harry S Dent, Marc Faber, robert Prechter etc seem to think at some point we will revisit the March 2009 low and in some cases even lower. What are your thoughts ?
Larry:
I look forward to your your monthly publications, as well as to your frequent emails. I value your advice and recomendations above all others. In short, you are my favorite investment guru.
Under the circumstances, I am surprised that you have never mentioned rare earth elements as a hedge against inflation. Recently, on advice received from another investment publication, I purchased share of Lithium Corporation (LTUM).
Can you recommend stocks of other rare earth type companies which I should be investing in?
Jack
That most economists are not millionaires and endlessly contradict one another, confirms that no one is sure about what will happen. Most get rich quick types are crap shooters. You just don’t hear about the ones that go on their faces. Even the ones who make it hit the dirt more than once along the way. Most of the wealthy, of course, plod endlessly toward their goals.
I’m 75 and have done better than most - win some, lose some. If I could go back and start over, I’d become a chronic student of economics, mathematics and history. I’d make my decisions on hunches - collective influence of subliminal signals. It’s what’s going to happen that you need to know - which side of change to be on, and to get there first. History will tell you that better than mathematics or economic theory.
I agree with your version of where we are headed better than most. You use enough math. to map out the unavoidable, enough economic theory to sort out the probable and probably, like most, get there first by summarizing subliminal signals (gut feeling). If it was science (v. art), the game would be over before it started.
I live in Australia, so we are relatively privaleged with less impact from GFC, now mild eco growth and higher interest rates. I’m in my 60’s, so my strategy is to own our house and cars outright. I own 70k ounces of Ag in event of armaggedon. I’m holding cash which we get 4.5%at call ( yes, USA migration to Aus is increasing ). I’ve been holding/trading resourses stocks heavily into Au, Ag, platinum, oil and I believe the Chinese are after uranium for their 2 new nuclear reactors each year.
I follow UW amoungst others and we have a small syndicate to share info only. My view is that 2010 will be the most unstable year in financial history with likely bankrupcy of Greece, reog of Euro countries ( PIGS out ), this gives a stronger Euro, which will become dominant currency until your world currency is consummated, whenever. But, Mexico is tottering into chaos, the UK credit rating is due for downgrade, the Au & Au shorts might get clobbered on the Commsec and I don’t want US$ cash settlement on a long position. So my investment position is that of a “pragmatist.
PS. I think the USA is in far worse shape than you are painting eg press hobbled, so real positions on ARM’s loans and Commercial property loans are covered up. The domestic housing market has not bottomed, nor has unemployment. US$ debt is at the point of no return, as you have stated. I ran into a Wall Street banker whilst on hols last year. He said 10,000 people in the USA have all the money and the rest live month to month or on welfare. He is probably close to the mark.
You claim that the US dollar is in worse shape then the Euro and other currencies but Claus and the person who writes about currencies for Weiss Research are claiming the the Euro the Pound and other Eastern European currencies are headed for even worse problems. Can you comment on this discrepancy.
Thanks,
Larry,
As a subscriber to your Real Wealth Report, I have done well with your recommendations in China. Since I am long, my concern is protecting them during a sell-off, as they are traded on U.S. exchanges. Those investors who are not as savvy as we “uncommonwisdomers” will sell everything and anything, even though these Asian equities should be held. Are there any protective measures that one can take to protect these investments, such as buy on the dips?
Thanks.
Tom
Pardon me please .My Internet provider leaves some important things to be desired.My comment is just above your Leave a Comment above my name. Dont have time to re do.Often they zap me back to home page when Im doing this sort of typing. GRRRRRRRR Thank you for your excllent high professionalism. J A
Larry,
What is your response to the claim that CHina’s government is simply pumping up the economy but there is no real growth from the common people. For example, i hear of China building “ghost cities” with all these materials but no one truly buying or occupying them. Also that the gov is actually buying and storing the cars.
It’s hard to sift throw so many opinions and i know seeing is believing so are the Chinese people truly consumers or is it a government consumer?
thank you
I wish i had known of your company 10 years ago. I retired, took a lump sum + benefits, and watched “so called money mangers loose 30 1/2 years of work in 3+ years and had no idea as to how to stop them however my wife and I are blessed with our benefits. (will they be taxed ?)
However, i feel that if Washington would encourage (?), demand (?) for every legal and illegal man or woman, working or not working go to any bank they chose and open a “Christmas club” style account for at least $5.00 and encourage monthly deposits. The government could use existing guide lines for “Christmas clubs” however with a much higher return. The money would remain in the bank for 12-24 months regardless of happenings and at the end of that time the person could reup or withdraw. Either way it would; (1) give a instant boost to stability with banks having millions to loan that the government did not print. ie. War bonds in WWII. Saving certificates of Korean War. The (2) thing that would give a tremendous boost would be to freeze fuel prices, gasoline, diesel, electrical that is made from water, wind, solar or any other natural means again for 1 year.
These I feel will create more jobs than all that Washington has done in the last 10 years. No I cannot even spell the word economist but after 66 years of ups and downs I know that as Washington and the world has slowly killed the “Goose that laid the golden eggs for the world”. The American middle class that once bought new cars every 2-4 years. Increased the size of average homes 2 1/2 to 3 1/2 percent. Brought education to an all time high, approximately 10 years ago.
I look forward to updates from Uncommon Wisdom vie e-mails. Thank you for allowing me to share a few thoughts. I do not know of your faith, however, the very middle verse of the KJV Bible is:
Psalms 118:8 “It is better to trust in the Lord than to put confidence in man.” God Bless you and keep up the good work of spreading Uncommon Wisdom.
You guys really want more. Thought I would have laughed you right out of your chairs by now.
Currently:
40% Real Estate (Looking at selling 10% and carrying paper here 3x-4x mark up at 10% interest) Once sold, will purchase another 10% same sales mark up and 10% carry back.
40% Gold Coin (China keeping value lower here until dollar falls) Many futures contracts here at about the $1500 level will default in 3rd and 4th quarters. Brokers will catch profits on that one.
20% Cash (Stocks, food futures, more R.E.)
Looking at moving @ 10% cash this week into: fxp, sef, and sh to short market upon Martins recommendation. I’m agreeable on many charts. Sorry Martin but not all ETF’s. Will set a trailing stop at 8%. As the market drops, investors will move into the dollar causing the dollar to further rise.
When I think the market has hit a double bottom. Or, current dollar value breaks below the moving average, will move some or all into something like UDN to catch the dollar fall. And maybe an energy play like: pbt, sto, ptr, yzc
Also at bottom, look at ETF’s like: brf, ech, epu, pin, epi.
If the US gets close to default look at cyb.
Notes:
1.Charts have a lot to do with volatility. Stay away from messy charts.
2. Maybe I’m stupid or something, but when the US defaults 2 Trillion to China, do you really think China is just going to say: “Well I just don’t think I’m going to lend you anymore money?”.” And really, we have had at least a 6 to 1 advantage anyway.” Heck No! They will grab everything US on the table, and in the accounts. Look at how much they steal, copy, and bribe already. Plus, they don’t let half as much come in as goes out. Get Real Folks. These Guys will grab it. And, another consideration is: “Their market always will fall with ours until our last default, or they float their currency”.
Special Note to Mr. Larry: Hey I love man, but China will always do what’s in their countries best interest. I’ve been there several times myself; the people are happier, and the government in many ways is more profitably structured. However, they are the most ruthless negotiators, and cunning business experts on earth. Plus, they have no God.
No one has given me an investment that is 100% safe from captial loss that will equal or exceed the rate of inflation and taxes on gains! TIPs tries to do this but fails.
I like to sell puts on gold etf gld. Have the cash to cover the put if it drops and cash to sell another put up to a 50 % drop in gold from $1200 to $600. Even then I have money left. In the mean time I collect put premium. This can be done with several other gold etfs and slv.
What is your solution with no risk-some risk and a loss risk 30%.
Best regards
Bob
There are no safe guards against crooked accounting.like book value on real estate loans.
I’ll be looking forward to comments on what to invest in. I got a Weiss report on banks, and most of the banks in my State are in the C,D, and E category.I laddered CDs as so many suggested, and find that this year quite a few are coming due into an atmosphere of very low interest rates, and poor outlook for banks. I have investments in CD’s, Energy funds,the Wellesley Fund (Vanguard), a Balanced fund, a Canada fund, a Latin America fund, a Pacific Basin Fund, a Retirement 2015 fund.
I’m investing in a deferred annuity. However, with the inflation I see in our stores, I’m getting scared.
I’m not sure how to allocate my money. In the past year I’ve lost the life insurance that I’d planned on if something happened to my husband, lost my spousal health insurance (company went bankrupt), had a major surgery and can not work.
We have a different situation from most people, that I’d like comments on. My husband has been retired for 10 years, and his pension isn’t stretching as far. I’m 14 years younger and have always saved for “part B” of retirement (when I’m 65 - in this case, 5 years). Are there any ideas about retirement saving for a couple like us? What have others done. My savings/investments have hit roadblock after roadblock with the Stock market meltdown, the bank meltdown, and the interest rate meltdown. Comments?
I sold all my silver, when it was close to 18 an oz!! It will crash big time, suddenly, after a more gradual decline, at first!! So “look out below”! It could be a close to 30 % decline!! It will be wide spread News and today’s decline is part of that process!! Are there limits on a decline, now?? If not there should be, because this is going to go the limit, and then some, if there will be a limit at the time of the great, big, sudden silver crash!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Bjarne
Whoo ois looking at myportfolio? Brodick or edelson? I have 40% cash, and 60% in gold and silver stoacks and mutiual funds. Per recent adivce from Weiss. Where does one go from here?
I have invested with RW Baird for the past twelve years. Obviously I was upset a year or so ago when my investments were de-valued by 50%. Why was my expert at Baird so unaware of what was coming? I am inclined now to follow to trust your advise - Peter Schiff seems perhaps too extreme. It’s hard to know where to turn. Currently, I use MorningStar for advise and lean toward a number of diverse funds that stress comodities, China etc. One conclusion that I have come to: No longer can I buy and hold for years ahead. With the volatile state of the world economy and fragile political climate, anything can happen. A more constant scruntiny is required - and there may again a time in the future when bailing out becomes necessary.
Larry,
Upon your advise, I’ve invested heavily In SLV January 2012 calls. Do you still feel the same
about silver & gold? Please respond.
Thank you,
Doyle Fulton
For a balanced growth portfolio I would look for things people cannot do without. Water is first. Food, people may not buy quite as much but they will have to buy. Natural gas pipelines. With pipelines you will benefit from the weather over a greater geographical area. Foreign stocks. They are likely (emerging mkts) to do better than the rest at least for the next year or two. The dollar may be rallying right now but with our economic policies in place it won’t rally for too long. Maybe take a look at commodities, metals after dollar rally has aged a little longer.i usually use technical analysis when looking at specific stocks. Mainly I use newspapers and other publications to read the news from around the world and take a best guess as to what the results of the news will be on different asset classes and regions.
Larry:
I’ve been a learning investor over 20 years. In my portfolios (husband’s, too),there are several Canadian trusts, energy, BearX, gold and silver, SH, and cash ready to invest when the big decline comes. I’d like to have an annunity but have no faith in any insurance company, although I understand that State Farm has an A plus. Any input on the safety of Canadian trusts when the big crash comes?
Jo Ann
IAM GOLD 3 THOUSAND SHARES.SOME KIND OF I SHARES OF SILVER 2 THOUSAND, THEN
CONAGRE FOODS WELL FARGO ALSO YOMAMA GOLD 3 THOUSAND SHARES AND GE AND MORE
I am basically in commodities with a sprinkling of Chinese stocks, utilities, and HBC.
Larry: I watch your Uncommon Wisdom with interest. I have invested in around 5% of assets in good gold and silver coins, have several annuities and have 2-3 401’s I am starting to use. I am almost retired, although still consulting. Any good ideas about investment strategy these days, and yet have the flexiiblity to get out for retirement income? Also, how do you access some of these ones you suggest, as I don’t see them on the major exchanges, Wall Street J., IDB paper or likewise. Your big subscription that was available awhile back looked interesting, but all too expensive when you are not working.
I do want sound advice from you. I watch you and Sean whenever a video is given. Thx.
I currently allocate about 75% of my investment funds to resource companies, contra dollar funds, and certain gold mutual funds such as BHP, BP, CNQ, CPL, FNNVF, IAG, LUFK, MOS, POT, NLC, GOLDX, PSPFX, PRPFX, PHO, UNG, VALE, and MERKX. The remaining 25% is in cash and cash equivalent currencies such as FXA, and FXC. I’m interested to know your opinion on the credit crisis part II and the direction of the resource/commodity sector when this occurs as it seems that the dollar rises everytime their is fear in the market. Anyone who believes that the US GOVT’s debt and deficits will ultimately wreek havoc on the dollar (as you have been saying for quite some time now) and is heaviliy invested in the resource sector and contra dollar plays has this same concern. Thanks Larry.
I am ashamed to admit that I haven’t a clue on where to best put my money, especially my retirement savings. I am recently retired, with a defined pension.
Thanks,
Daniel
Interesting questions to ponder, as I am re-evaluating my holding currently. Fear is an interesting
emotion. It keeps you alive, but with it you don’t like living. In investing, fear has you run, when maybe
you should look around first and see what is real. I’m combat trained, fear wants you to keep your head down, but to survive, you have to survey the battlefield, to see what is happening, so you don’t get ambushed!
I’m heavily weighted toward resources, but I lightened up on gold, because as I survey the markets, I don’t see the conditions that would have to be in place for gold to go up dramatically. The enemy is
not rushing my economic position. In fact, I see some deflation present. So what do I know?
I know allot of money is being printed, but what I see is this; inflation can only occur with increased
velocity, or turn over, of that money, and even the government can’t spend or give it to banks to loan fast enough to move the pile into action. Banks won’t loan into a deflationary market where they will get back less than what they lent in “VALUE”, and projects the government want to spend money on are still being planned. Only 30% of the stimulus money has been used, and banks are giving back the TARP moneys, the pile is stagnant, and growing. No use, no velocity, no inflation right now! So, now what? Deflation has it’s own inertia, and it depresses everything, including cash flow. No work,, no sales, no Nada! Inertia!! So products cost the same or less, but the quality goes away, but with less cash flow, fewer can afford to buy, and with lower prices, fewer want to sell. INERTIA! Hard to invest in this market! What to do? Same questions Larry is asking. I really don’t know the answers!
That’s hard to admit, I really don’t know the answers. The problems are fear of inflation, and the reality of deflation. Life takes an incredible amount of cash flow, or an incredible cost, to be debt free!
But “FREE” is good!
Today “market strategy” isnt about “investing, its about economic survival”. There are two
gauranteed changes coming. First, huge tax increases are on the way, and secondly the US Dollar will
lose its “reserve currency” status. These changes will usher in a NEW FINANCIAL WORLD. Most
Americans dont realize the “horrific” economic events coming in our future.
Survival Portfolio: 30% gold/silver bullion, 30% US DOLLARS(CASH), 30% gold/silver mining shares,
10% major oil cos.(ENERGY).
The probability of my being RIGHT on the above are (85% to 15%) in my FAVOR.
If you are interested there is a good book that lays the ground work for the long term investor so that they are diversified with a balanced portfolio. The name is THE GONE FISHING PORTFOLIO by Alexander Green. I use this strategy in my own long term investing. As for short to medium term I watch sector rotation using options/ETF’s. For daily trading I use the futures market.
what is the future for oil & gas ? what happened to force energy corp ?
Land ,fee simple, as they a’int makin any more.
All markets are making historic turns. Fundamentals do not predict where marekts are headed. Markets are at the whim of the heard. When the heard turn pessimistic, for no other reason than moods shift like the tides of the sea, then the market will follow. We have reached that point. Pessimism and bad will are rampant. Stocks, bonds,metals, oil, and other natural resources, and real estate, contrary to popular opinion, are all turning down for what will be a historic, pronounced, and long bear market. There will be a flight to safety in the dollar as deflation takes hold. Cash will be king, as long as it is in short-term treasuries whether they earn interst or have negative returns. A speculative position in short and ultra short EFTs with close stops, the discipline to sell if volume turns down will pay of handsomely. Two to 5 years from now will be a great buying opportunity for those who have protected their capital.
I am heavy in oil co.’s that are active in the Bakken field in North Dakota, plus a couple gold mining co’s & one coal co. AND Ford. I know that this is very unbalanced, but that’s the way I want it.
I think those who do asset-allocation don’t have a clue to where the market is going and simply hope they have more winners than losers. I stay focused on whether the market is going up or down and buy the most powerful vehicles to take advantage of the direction. Right now ( 1-26-10 ) I am in double inverse Twm ( Russell 2000 ) and call options on TWM because the market has just begun a strong downward movement, possibly a crash.
We are in our early 70s, have no debt. 90% of our lifestyle is met by farm land rents, small corporate pension and social security. In addition, we take minimum withdrawls from our IRAs and 401ks. Our marketable securities portfolio is almost all in our IRAs and 401ks and consist of 27% fixed income in short and medium term A and AA corporate bonds. Equity portfolio constitutes 55%; broken down as 30% International equities, 7.5% large cap growth, 9.75% large cap value, 5% small/mid cap value and 18% cash. In addition we have gold holdings (bullion) equal to two years income and we have long term care insurance.
We feel we are well positioned for reasonable inflation increases but vulnerable to serious dollar devaluation as you predict. Any suggestions?
Larry,
Your questions of “invest in what?” and “how much in each?” should be followed by “when to exit?” and you would have the major problems an investor faces. I suggest that granting each of four highly rated people, in your business, an equal large sum of cash and have them perform to the best of their ability over a predetermined period of time with quarterly publicly disclosed performance against each other and the performance of an equal initial amount of gold. This would allow for the desired flexibility in “invest in what”, “how much in each” and “when to exit” as the world economy changes.
What’s the chances of getting four quality “investment experts” to publicly show their talents?
Don
Inflation or deflation? I think it will be some of both at the same time. So, I’m invested in stocks and ETF’s which should do well or survive in either case. 30% Gold stocks, 20% Oil and Gas stocks/ETF’s, 20% China and Brazilian stocks/ETF’s, 10% Junk bonds, 20% US company stocks with high cash flow and low to zero debt. Stop Loss set on all but the Gold stocks.
The trend to watch is the US Treaury interest rate and weekly sales. When it changes, its time to get in or out.
Looking for extreme volitility this year. So, Larry keep up the recommendations, so we can all make great returns.
Hi Larry,
Nice theoretical question. How would I clean up a neglected portfolio?
If I were serious (and I should be), I would do it as if I were cleaning the basement. Start with the half empty paint cans, the stiff but salvageable brushes and rollers, the scrapers and partly used sandpaper. Get all the similar stuff together and then make one decision: Am I going to use this stuff. If the answer is no, dump it. On to the next classification: plumbing stuff accumulated over the years. Inventory it. Ask if I am serious about tackling my own work, or will I employ a plumber. If the latter, dump all the plumbing oriented stuff. Now do electrical, wiring, radio, tv and appliances the same way. Start with the small stuff for the easiest decisions. If its not working, pitch it. You see where I’m going with this. Start with the least important, least meaningful stuff and have a reason to keep the stuff you keep. The experience you gain will help in the decision making process as you advance to the more involved and elaborate questions. Should I replace the 11-year old water heater and hope to get a few more years out of it/ What about the oil burner? Replacement parts are getting scarce. By thinning out some of the no brainer paint/plumbing/electric stuff, funds become available for the more expensive upgrades to stuff you must keep. By the time you get to the more important parts of the job, you will have gained the experience to get it right and the plan will unfold itself in the proper order. You will see progress right from the start and not develop the bad habit of jumping from one unfinished project to another. And with all the little stuff out of the way, the big decisions become easier to act on and confidence develops.
Just my two cents worth because you asked how I would go about it. Both my basement and my portfolio are scary places, and in 2010 I plan to make the effort to clean them up and try to develop a better understanding of each. Both have in common a lot of impulse buying, and that stuff takes on a life of its own.
Thanks for the chance to blow off some steam. Bill Tyrrel
Larry:
Bob Brinker on his weekly syndicated show continuously states that the cpi index does not demonstrate traditional inflation. This is nonsense. He tends to berate simple folk who call and state that food, tuition vehicles virtually everything is going up in price and this guy says we’re not seeing in it in the figures. I think he spends too much time playing golf and the maid ’s doing the shopping. You suggest the figures are manipulated. I believe you are right . Give me some ammo to refute these people. They are such a crock and millions of our citizens cannot get a clear answer on inflation, deflation and our dollar buying less.
Thanks in advance
if you want to at least maintain your purchasing power ….you need some gold…if you want to make a bunch….you need silver(will outperform gold 3-4 to 1)…my broker only executes my trades…energy (canadian royalty trusts and the canada fund should keep you above water) also fast food stocks(overseas/jollibee and restaurant brands for the grandkids)…..chemicals(sulfuric acid) for the leaching of gold etc etc /Chemtrade(10%plus yields)…hope I am right but thats where I’m at…
gold for purchasing power and silver for a home run(will outperform gold 3-4 to 1
canadian oil trust for staying above water
chemicals…chemtrade (10% plus yield)..used in leaching(gold etc etc)
foriegn food chains (next McDonalds) jollibee&restaurant brands…for the grandkids
also ..only use your broker to execute trades..newsletters(wiess safe money/ 12%letter./.lee beringer./.dan pilla/ porter/etc etc..make up your own statergy and live with it…better or for worse ed
10% stocks of that 3% in emerging markets(malaysia,africa) 5% in high yield bond fund adgax 2% miscellaneous mutual funds. 90% in cash looking to go to gold silver and platinum. also 2 peices fo real estate with 50% ecquity and comfortable payments