Financial topics

[Higgenbotham]

Also I convey a story from Isaac Newton, which may be true and, in any case, is a great story from Jeremy Grantham.
Newton had the great good luck to get into the South Sea Bubble early. He made a really decent investment and a very quick killing, which mattered to him. It was enough to count. He then got out, and suffered the most painful experience that can happen in investing: he watched all of his friends getting disgustingly rich. He lost his cool and got back in, but to make up for lost time, he got back in with a whole lot more (some of it borrowed), nicely caught the decline, and was totally wiped out. And he is reported to have said something like, “I can calculate the movement of heavenly bodies but not the madness of men.”

I've noted this story a couple times, first in 2008, with regards to Newton and Einstein both losing most of their money in bad investments (searching archives for "Newton" will bring up the posts). I believe it was Newton's niece who verified the story. Einstein's bad investments were revealed when many of his personal letters were published a few years ago. It's been my observation through time that otherwise very intelligent scientists and engineers make horrible investors and traders.

I think Tiberius said it best.....
"Governing Rome is like holding a wolf by it's ears...."

Along a similar vein, a friend and I were discussing the state of the world ponzi scheme, and he used an analogy that Bernanke had a bear by the tail and was swinging it in circles above his head, but he's getting tired, and when he can't swing the bear anymore, its going to eat him (us).

Wow, great analogy. I would add that as Bernanke swings the bear, Bernanke is getting more tired, but the bear is gaining strength and becoming more and more angry.

[Higgenbotham]

The divorce settlement with Mileva contained a unique clause, in which Einstein agreed that should he win the Nobel Prize he would deposit the money in a Swiss bank account in Mileva's name and she could use the interest to finance the upbringing of the children. Einstein failed to fulfill this promise, and Mileva always felt betrayed.
The newly-released papers reveal that he invested three-quarters of the money, some $24,000, in long-term bonds via the Ladenburg and Thalmann Bank in New York. Mileva was supposed to receive the interest. But the value of the bonds were wiped out in the American Depression of the 1930s and Mileva's income dried up.
On 12 June 1932, Mileva asked her ex-husband for more money to help pay the mortage on properties she had bought. "Not much is left for us to live on, especially since our income in any case has been reduced because of the loss from the papers in America," she wrote.

http://www.dailymail.co.uk/news/article ... -side.html

Of course everyone here is much smarter than Einstein and we will all make bucketfuls of money in the upcoming Depression.

[Higgenbotham]

Shorting a stock rally into the first half of October still looks like the best trade to me (if it sets up right).

I will sleep better once I have some S&P puts again. I may buy a bit today. The silver calls I got Friday are doing well. Would be nice if the market had a big rally and then I got a bunch of S&P puts. I feel like I have a nice balanced and diversified portfolio when I have silver calls and S&P puts and not so good to only have one of these.

Yeah, I agree, Vince. If I'd gotten long precious metals again on this move down, I'd want to start scaling into some short S&P. Being 100% in US dollars now, I need to be more nitpicky on what short trades to take because 100% US dollars is as close to a short position as someone can get without actually being short. Whereas you need to be thinking more about getting short S&P for crash protection I need to be thinking more about getting long some metals again for hyperinflation protection.

[richard5za]

I need to be thinking more about getting long some metals again for hyperinflation protection

The current short term down trend (for the last 25 trading days) on the gold price hasn't yet reversed but it looks like things may be turning. The RSI has turned upwards and the MACD whilst still falling is flattening out. The long term upward trend remains intact. So a good time might be quite soon. I still have an up count to $ 2080 but from recent antics in Asia it does seem that some persons unknown, perhaps Central Banks, are unhappy with gold taking on an elevated monetary status.

I am not seeing any signs of high inflation on its way. Metals may become an inflation hedge at some stage but at present I see them as a means to making some money













Quote Higgenbotham


Re: Financial topics[/quote]

[RDRUNR]

Those who speak of hyperinflation need to visit the German History Museum in Berlin, like I have, and learn about it before making such broad statements. There is no hyperinflation in our current economy (1st world), we are in a deflation period. So the fools with gold feaver, buy gold as it drops, $300 oz in a week, recovers $60, then drops again another $150 and repeat; sounds like a great investment plan while the USD gets stronger and stronger. What was the famous quote "Anyone can be rich, but not everyone can stay rich".

News from Europe - Europeans think North American's are silly. On the news here in the UK, they said "The "Amercians" are getting all excited about the proposed EU plan", "The ECB has 10 billion in assests which they will leverage using highly complex investment vehicles to get $2 Trillion". Funny enough, the Europeans don't believe at all it will work; but the Americans do. Aparently Greece needs $174 billion now (vs. the $108 asked for a little over a month ago).

How many trillions upon trillions of dollars do you think will be lost when not only Greece defaults but also the EU?

That my friends, is hyper-hyperdeflation.

[shoshin]

check out this strikingly honest assessment from a trader...

http://news.yahoo.com/blogs/cutline/bbc ... 24196.html

[vincecate]

Those who speak of hyperinflation need to visit the German History Museum in Berlin, like I have, and learn about it before making such broad statements. There is no hyperinflation in our current economy (1st world), we are in a deflation period. So the fools with gold feaver, buy gold as it drops, [...]

Nobody is claiming that we have hyperinflation currently. The claim is that the US has the setup for hyperinflation. The setup is lots of debt and high deficits so that they have to keep printing money (borrowing from the central bank). The US has the typical numbers, over 100% debt to GDP and deficit over 40% of spending. At some point people will stop buying the US government debt and the central bank will be the only buyer. They will be buying with newly made money.

The hard question is how soon hyperinflation will start. I think it is in the next 3 years. If you leave bonds early you might miss a couple years of 0.25% interest. Not a big loss.

Paper money sort of suffers from a tragedy of the commons problem. The Germans will resist paying for Greece themselves but there is nobody who fights hard enough to keep the central bank from printing money as it does not seem to hurt anyone enough for them to take up the fight.

America had hyperinflation in 2 of the 3 previous generational crisis. It would have had it in the 3rd as the central bank went bankrupt and paper money became worthless except that they made it illegal for people to own gold and saved the central bank the indignity of going bankrupt.

Anyway, I really have done some homework on hyperinflation and really do think I understand it. I also don't think many people in the current generations in power do understand it, which is why it can happen again.

http://pair.offshore.ai/38yearcycle/#hyperinflation
http://howfiatdies.blogspot.com/
http://howfiatdies.blogspot.com/2010/11 ... ndard.html
http://www.treasury.gov/resource-center ... ts/mfh.txt
(This last URL shows that Foreign holdings of US Treasuries are about what they were 5 months back and have been going down last 2 months. Some of the people who think there is no reason to worry about hyperinflation claim that Foreigners have to keep buying Treasuries (Mish, Pettis, others) but the data shows this is not true. My prediction has been that at some point people will stop buying and that seems to be coming true.)

[aedens]

shoshin » Wed Sep 28, 2011 6:45 am
check out this strikingly honest assessment from a trader...
http://www.guardian.co.uk/media/2011/se ... s-bbc-hoax

What you will find is a trail of a few footprints that pushes the one under the bus who do not pocess the contagion's anymore we trend here anyway.
It was said long ago, I do not trust in the Gods in private but in public I must to keep the power of Rome. Between the extremes of all views the truth is always scarificed to internal calculation to maintain a percieved quo to power alone. What I implicity mean is the truth does not matter to control individual view of group dynamics. For a empirical look in a secular view of context the Whitehall Study followed the consequences.

http://www.ucl.ac.uk/whitehallII/pdf/Wh ... let_1_.pdf

As you will see ongoing is the true Value of stress reduction since they do not above him to keep order. Some management teams are aware of this and distill it to depression effects. There will be some who will consider him discredited if he defends himself. And discredited now if he does not. Political calculation is what it will distill to maintain a position of those above him and opinion of those below.

[richard5za]

check out this strikingly honest assessment from a trader...

Yes, I also believe that banks and large monied interests control the world

[richard5za]

So the fools with gold feaver, buy gold as it drops, $300 oz in a week, recovers $60, then drops again another $150 and repeat;

This hasn't happened yet. Is this your forecast for the future?

Gold's long term upward trend is still intact as the following chart illustrates. There have been temporary correction periods in the past. This is normal in the long term trends of most asset classes and is to be expected.

20110922gold.jpg (52.39 KiB) Viewed 255 times