Financial topics

[jdcpapa]

There is one more spanner I'd like to throw into the deflation/inflation and bull/bear market theory... that of retiring boomers. It "started" 2 years ago and has a run of 10-(15?) years. This is a time when consumption will drop, jobs will disapear and debt will have to be repaid or defaulted on. Plus, what are these new retiree's going to live on when debt is at an all-time high?

Good afternoon,

If I am not mistaken, I think the baby boomer run will last for about 20+ years. The boomer population is about 79 million or about 25% of the US population. Its my guess that their preparation for retirement closely mirrors the stats at the national level. In other words, upwards of 50% expect and will require government assistance. The number climbs when you factor in likely stock market valuations. The US must adopt strong fiscal reforms in order to survive.

US poverty is about at 15% of the population. The boomers will likely push that to 30%. Boomers will keep their jobs as long as possible, as such, clogging employment for previous generations. In the US, poverty is set at approximately $30 per day. While in the rest of the world, it is set at $1.25 a day except for India(? or Pakistan) where it is set at $.64. The US cannot compete with numbers like these.

In as much as jobs are being sucked out of the US in order to take advantage of the spread in labor $'s, given the reduction in consumption (among other reasons), it is not unreasonable to expect that the poverty spread will narrow as the baby boomers expire.

This leads to the issue of immigration. According to the US 2010 census; population growth is virtually stagnant. All things remaining equal, without drastic immigration reform; the boomer transition will cause the population to decline. It is likely that the middle class will have been all but eliminated, and the poverty gap narrowed if not closed,when boomers no longer exist.

I recently returned from a trip to Bogota, Colombia where the consequences of the aforementioned scenario presently play out.

Regards,

[Higgenbotham]

If I am not mistaken, I think the baby boomer run will last for about 20+ years.

I did an independent study on this in 2003. The conclusion on boomer retirements was that, "both estimates point to retirement having a negative effect on the economy and stock market from 2007 until at least 2027."

[richard5za]

On a trading board, an e-waver who predicted yesterday that silver will break below $20 next week:

"Silver
Thursday 10:07 AM
Looks to be in a bearish triangle also. Based on the size of the triangle, we should see silver at $20.00 or less by this time next week."

Amazing and fascinating. You have no idea just how closely I am following every move of silver hoping to learn something. If you aksed me to predict various possibilities for the price of silver Thursday next week, $ 20 would have a very low probability, less than 1%. My prediction of greatest likehood for Thursday 6 Oct is $ 29 to $ 33. Lets see what happens.

Regards, Richard

[richard5za]

Silver questions
I am relatively new to silver and there's two questions that nobody has answered yet:

1. What is silver long term trend? Where will the price be in 2 years from now?

2. Why the 75% drop in Comex warehouse stocks over the last 2 years?

Have a great weekend.
Richard

[OLD1953]

Thing is, commodities contracts can be pretty highly leveraged, so when the price breaks downward, it often does so hard.

This is appropo of nothing, but too good not to share. Nihilistic as all get out though.

http://www.youtube.com/watch?v=V-fWN0FmcIU

[Higgenbotham]

This Dr describes in medical terms the mistake (I believe) Dr Bernanke has made with the stimulus. Normally, after a crash like we had into August 8, there will be an 8-10 week recovery that retraces well over half of the decline (June 1930, August 1973, August 2007, and March 2008). I believe the weakness we are observing these past 3 days may indicate that the patient (the US economy) was overstimulated and its underlying condition is very weak.

Excessive Use of Natural Stimulatory Compounds

While the use of natural compounds such as certain herbs and glandular to facilitate adrenal recovery can be of great help in mild Adrenal Fatigue (Stage 1 and 2), those with adrenal exhaustion (Stage 3 Adrenal Fatigue) pursuing this strategy can meet disastrous results if not professionally guided, and the following shows why.

Needless to say this is an undesirable recovery pattern even for those with normal or strong constitution. Overtime, this is a recipe for failure. What the adrenal needs are gentle nutrients to nurture itself back to health, not to be continually put on overdrive without rest as what some of these natural compounds may do for those with advance Adrenal Fatigue. It comes as no surprise that this undesirable recovery pattern can only get worse if the constitution state is weak, or very weak, as shown clearly below:

As the above diagram shown, the weaker the constitution, the worse the recovery outlook. Those with very weak constitution fare the worst. They never get a chance to have any sort of meaningful recovery, with rolling crashes that end poorly in adrenal failure quickly. Administration of stimulatory natural compounds should therefore be avoided unless under expert guidance in those with adrenal exhaustion (Stage 3 Adrenal Fatigue).

http://www.drlam.com/articles/adrenal_f ... asp?page=2

[Higgenbotham]

Silver questions
I am relatively new to silver and there's two questions that nobody has answered yet:

1. What is silver long term trend? Where will the price be in 2 years from now?

2. Why the 75% drop in Comex warehouse stocks over the last 2 years?

Have a great weekend.
Richard

Some of this has been covered.

Trend is arbitrary. Trend is meaningful if someone defines it in accordance with a methodology.

I posted a chart awhile back showing that the real price of silver has been generally declining for over 500 years.

Earlier this year I talked a little about exchange stocks and why an increasing ratio of paper silver to underlying physical silver could actually cause the silver market to crash. Summarizing: "In reality all of these paper markets have potential to crash and revert back into deflation (for awhile, not necessarily permanently). The crash would need to be tremendous in order to overcome the barrier the Fed has put up, but it's very possible and even likely. The reality is that there's potentially less ability to convert paper silver into real silver than there is to convert paper dollars into something real. A paper silver contract could in reality be more worthless than the equivalent in US dollars due to nonexistence of the underlying." This may be why the crash has been so violent but who really knows.

[shoshin]

here's a new reason to hunker down, get lots of canned goods and water, and maybe some weaponry....a massive solar flare is due, and it would wipe out the power grid for weeks, and probably lead to nuclear power plant meltdowns...

http://www.popsci.com/category/tags/cme

John, I may need to retrieve those cans of soup I "loaned" you...

David

[Higgenbotham]

I didn't sell at the April top using any known methods. I used my own cyclical methods that are based on years of study of event sequences that occur in parallel. So far as I know, nobody in the world uses these methods and I don't tell anybody how I do this.

Higgie, I am watching with fascinated interest. Silver at $ 20 by October 5 or there abouts cannot be predicted by charts, or any other method that I know about. So you seem to have something unique.

I did make one post along these lines (the underlined part is what I'm mostly talking about):

"First is the April 18, 1906 SF earthquake and fire. A financial panic followed this disaster with an 18 month lag time.

Second is the April 26, 1986 Chernobyl nuclear power plant disaster. A financial panic followed this disaster with an 18 month lag time.

Now we have both an earthquake and a nuclear power plant disaster rolled into one. However, this duo disaster has occurred at the tail end of an unraveling or early crisis period rather than at the tail end of a high. The 1907 and 1987 panics were false panics due to their location in the generational sequence and may have been held off for longer than this one will be held off. There are fundamental reasons as to why panics follow these types of disasters with a lag time. As noted, the systemic risk is higher due to the increased linkages in the world financial system as compared to 25 and 105 years ago. For mathematics fans, dividing these years by 5 results in 5 and 21, which are fibonacci numbers 3 removed on the sequence and have an ideal fibonacci ratio of 0.236.

It can also be observed that the 1930 rebound high in the stock market followed the 1906 SF earthquake and fire by EXACTLY 24 years. The theoretical rebound high in the stock market would have therefore followed the 1986 Chernobyl disaster by 24 years, which it did EXACTLY, as April 26, 2010 was the high in the stock market before QE2 was instituted."

I made a load of money shorting the April 26, 2010 high on this basis. I also lost a load of money betting that high would not be exceeded even if Bernanke did a QE2. Overall, I made more than I lost but there are no guarantees when a person gambles in the markets and gambling is not something I enjoy even when I win.

There are many cycles like this that I have discovered and that is pretty much how I have made all my money trading. Some of these cycles go back for centuries, all the way to the fall of Rome. The reason this is so difficult to do is because within each cycle, even though human nature is essentially unchanged, the events that manifest are significantly different and difficult to correlate. It's not something that's even remotely within the capability of high powered number crunching, HFT programmers, or IBM's Watson.

[Higgenbotham]

With a great deal of effort and a unique edge, it's probably possible in a benign market environment to make enough gains making good guesses at what markets will do to outweigh the losses from the bad guesses, but predicting the future is not possible. A good recent example shows Warren Buffett bought a lot of stocks right before the late July and early August plunge.

Buffett Bet on Stocks Before Rout by Spending Most Since 2008
By Andrew Frye - Aug 7, 2011 11:01 PM CT
Buffett Bet $3.6 Billion on Stocks in Quarter Before Rout

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), whose top three shareholdings declined by about $1.6 billion last week, disclosed its biggest quarterly purchase of equities in almost three years.

Berkshire bought $3.62 billion of stock in the three months ended June 30...

Repeats from last year:

"There is no investment strategy that will preserve capital over a long time horizon, just strategies that allow it to go extinct more slowly. Wealth never survives more than a few generations no matter how much it is or who manages it."

Yeah. They knew that back in 30 C.E. "Where moth and rust doth corrupt and thieves break in and steal." Not to mention the guy whose wealth was secure, but apparently his health wasn't. "You fool! This night will your soul be demanded of you." Oops... or as is said when many a fat cat or member of the Powers That Be has a heart attack, "They examined his heart and found nothing"?

"After decades of experience and many superb market calls, Harry Browne came to the conclusion that a "permanent portfolio" of 25% stocks, bonds, cash, and gold with yearly rebalancing is the best way to maintain your capital."

Forecasting the Future

Rule #4: No one can predict the future.

Events in the investment markets result from the decisions of millions of different people. Investor advisors have no more ability to predict the future actions of human beings than psychics and fortune-tellers do. And so events never unfold as we were so sure they would.

Yes, there have been forecasts that came true. But the only reason we notice them is because it's so exceptional for even one to come true. We forget about all the failed predictions because they're so commonplace.

No one can reliably tell you what stocks will do next year, whether we'll have more inflation, or how the economy will perform.

Investment Advice

Rule #5: No one can move you in and out of investments consistently with precise and profitable timing.

You'll hear about many Wall Street wizards, but the investment advisor with the perfect record up to now most likely will lose his touch the moment you start acting on his advice.

Investment advisors can be very valuable. A good advisor can help you understand how to do the things you know you need to do. He can help call your attention to risks you may have overlooked. And he can make you aware of new alternatives.

But no one can guarantee to have you always in the right place at the right time. And worse, attempts to do so can sometimes be fatal to your portfolio.

http://www.harrybrowne.org/articles/InvestmentRules.htm