Agoracom

I learned more about economics in a cab ride from the airport to a conference in New Orleans with Jim Grant then everything I ever heard from the Talking Heads on CNBC. Jim was a columnist for Barron’s for years before going out on his own. I’ve had the pleasure of being on the same program at conferences with Jim around the world. Like with Jim Rogers, I’m all ears when I’m blessed to have some private moments with these folks.

I saw on BNN’s website Jim was interviewed on BNN today. As always, he was most informative:

Link

Link

Many of us on the speaking circuit called Jim Clark Kent. See if you agree.

Watch

If it’s true do we really want President Biden or Pelosi?

I nominate Joe Klecko     

Long time readers of mine know what pushed me over the edge in turning incredibly bearish in October 2007 was a 60 Minutes interview of then U.S. Comptroller David Walker on 60 Minutes (he has since resigned his position).

I was just chatting with a good friend who said the following to me,”Peter, I know you spoke recently about getting back into the stock market if it goes much lower. Before you go any further, I want to remind you of what helped you get out at the top. Watch this video as I think it will help you remember how smart you were in 2007.”

Please watch this (link)  He was indeed right.

So let me see if I get this straight. I run a business that continues to lose market share because customers believe the competition makes a superior product. While losing market share, I decide to reap the benefits of customers willing to pay big bucks for certain products of mine that have much bigger profit margins, yet I do nothing to make myself leaner, meaner and a superior product. Things turn bad all over and demand for my big ticket items falls off a cliff. I gave the store away to the people who work for me so I go to my neighbors and say you need to bail me out.

This is exactly what the Big Three automakers did. For years now, Americans have chosen foreign makes over them in increasing fashion. Despite tens of billions of dollars spent, their product still can’t capture market share back. In America’s desire to drive big cars and trucks as a status symbol, the Big Three turned out as many SUVs to satisfy this desire knowing they make so much more than a car. Meanwhile, they make token efforts to build cars for the 21^st century. They allowed the autoworkers union to run all over them and now they tell us unless we bail them out, they will go under and it will send the already recessionary economy into a tailspin.

 What’s next? I think the airline industry is far more important to commerce. Do we bail them out too for not being more efficient? What about state and local governments? Do we bail them out to for not balancing their budgets? The whole problem with what’s wrong today is the fact that for years, government, corporate America and Americans themselves have lived far beyond their means and its all come home to roost. The pain is severe and no one wants to deal with it. Quick fixes just like fad diets that melt the fat away overnight is want we all want. If we cave in to avoid the pain, it’s only going to be ten or hundred times worse down the road and we’re running out of road to kick the can down. Read this

• Please don’t send market/investment questions via email. Post them here on the blog. This way a multiple number of people who may have the same interest can see my response. Thank you.

• Many emails keep asking about shorting the stock market. I believe we hit a home run with the short  from DJIA 14,000 to under 8,000. While the stock market can still fall another 10%-25%, I think getting back into oil-related investments if oil does come near $40 should offer not only more potential gains in the long run, but have far less downside risk.

• It’s amazing how many people continue to predict a bottom in the stock market when most of these folks never saw the top forming. Please, I make misjudgments too but after numerous wrong calls on the bottom, isn’t it a bit like the boy who cried wolf? People like Peter Schiff and the like are the ones the financial media should seek out for an opinion but media outlets like CNBC-TV continue to use the “Talking Heads” from Wall Street (what’s left of them).

• Believe it or not, the NY Post has an excellent daily business section that is always willing to speak about both sides of a topic. I’m bias here as I’m a big fan of John Crudele, a gentleman who has challenged some of the biggest names in government and Wall Street. http://www.nypost.com/business/business.htm

• Gold has so far held the $775 area. It won’t surprise me to see the vultures on the Comex do their normal 11AM attack but if we can close back above $800 this week I think everything can be in place for a run to $1,000.

• The holiday season can be very trying for those who are depressed or sadden by a lost of a love one, a job or feelings the world is caving in on them (I know). Please feel free to email me if you like to speak about it.

A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain.
- Mark Twain

First and foremost, I want to extend my deepest sympathy to all those who lost their lives and were wounded in the terrible tragedy in India as well as their families and friends. While it’s always hard to imagine how such evil can exist, we must never forget that the creator of the universe always makes good out of bad.

I hope my American readers had a most blessed Thanksgiving. I don’t wish to see turkey, stuffing and pumpkin pie until Christmas.

 I spoke about last week being highly likely to see a rally due to seasonal factors and a very oversold market. My November 24^th update noted that the bear market rally would likely hit resistance at the last spike DJIA high of 8,923 but we could turn down even before that. The DJIA fell short of this mark last Friday and fell off a cliff today. Once again the “Don’t Worry, Be Happy” crowd filled the airwaves last week with “this time it’s the bottom”. How many times can these folks draw lines in the sand before investors kick them out of the sandbox? I’ll say it again, we’re in the worst recession since the Great Depression and even when the bottom does come, it should be an “L” bottom (means we go sideways and build a base). I continue to suggest no equity exposure except related to precious metals and uranium.

Oil - I’ve suggested that $40 a barrel is a reasonable target. The combination of bad fundamental news and technical deterioration makes me feel this target is a question of when, not if

As you can see, oil has plummeted from $140 to $50, a low it made in early 2007 before skyrocketing. We tested this low last week and only managed a 10% or so bounce before closing below that level today. Meanwhile, I believe OPEC made a tactical error this weekend by not addressing quota cuts before its next meeting on December 17^th. By not even suggesting come then we could see some production cuts, and the continuing poor economic news worldwide, OPEC has opened the doors wider for the bears because there appears to be no news to halt the slide forthcoming.

Remembering the old saying that adversity creates opportunity, I believe we’re going to see one of the best buying opportunities in oil by the first half of next year, if not sooner. The tremendous amount of cash one should have on the sidelines should be ready to go to work in oil and related investments if and when a buy signal is given. Stay tuned.

Gold - Just when it appeared safe to go back in the water, the savage attack on the paper market in gold resurfaced. Here again, adversity is creating opportunity as I suspect we can see a big bounce back as early as tomorrow. I believe the low at $700 is a major bottom and may not be seen for years. I will eat crow if I’m wrong (but I must be allowed ketchup with it).

U.S. Dollar - Here too, the “Don’t Worry, Be Happy” crowd is the loudest voice in the financial media, preaching a strong U.S. Dollar going higher. I don’t know about you, but the U.S. Dollar Index is at best moving sideways but given all the un-wounding of short U.S. Dollar positions, Uncle Sam’s paper is not doing that well. I would be short and add to such a position if the Index manages to get to 90-91 

Special Note - In my other life, I’ve had the honor and privilege to work with professional athletes. The news this weekend of a shooting incident involving some NY Giants football players has once again tarnished the image of the vast majority of players who do great work for society. Please read this press release of mine

link

link

link

link

link

link

link

link

link

link

Link

www.kereport.com

Read

Americans will be wishing one another Happy Thanksgiving but how many of us will be thanking God? And how many of us will fail to do so many times throughout the year? And if we do pray will our prayers be self-centered? I know for me my prayers are usually seeking His assistance or a 911 call versus just praising Him for being Him.

We’re called to be obedient by praising Him and when we do we’re blessed. God is the author of every good thing and should receive the honor. When I was a legend in my own mind, God was at best an assistant to my success. I was too caught up in matters of the world and I failed miserably in truly expressing my gratitude to our Lord. Only know have I begun to give Him my requests with thanksgiving. By doing so, I’m finally at peace knowing he guards my heart and mind against a world filled with anxiety and concern.

Remember, giving thanks can be done any time and any place. I’m no longer embarrassed or concern about what other people may think when I offer thanks at a dining table in public or at home. I’m no longer worried to respond to someone’s notation of a good thing that happened to them by responding with a “praise God”.

May everyone have a most blessed Thanksgiving and remember where all our blessings come from. Our office will reopen on Monday. The holidays can be a sad or depressed time for some. Please email me at peter@grandich.com if you feel down or troubled.