2008 Year in Review and Outlook for 2009
I could’ve sung “It was a very good year for me in the markets if not for one big blunder – mining and exploration stocks. Foreseeing the economic and stock market crisis in October 2007 and urging reads to sell all stocks (except those related to precious metals) and actually shorting the stock market (and covering just under 8,000 on the Dow) proved to be an almost perfect year. Unfortunately, my black eye came from the annihilation of the junior resource stocks. Even knowing what I know now, I would still find it unfathomable that these stocks could nearly totally disintegrate. It does prove one thing – I put my pants on one leg at a time just like everybody else
Those of us who fool ourselves into thinking we can predict the future on a regular basis by looking into a crystal ball really end up learning only one thing: how to eat broken glass. With this in mind, I will attempt to look out into 2009 and beyond. Keep in mind that if I had any real degree of certainty, I would be writing this from my own island in the Pacific.
The Big Picture- When it comes to the good old U.S.A., I believe there’s one overwhelming view one must take despite all the political rhetoric and “I’m okay, your okay” from the “Don’t worry, be happy” crowd on Wall Street; America is trying to operate on a failed business model. While doing so, Americans have truly mortgaged their futures on a far worse situation than the sub-prime fiasco.
While there should be more bull markets to come (hopefully in our lifetime), I think one must understand that the crisis we’re currently in is going to be just a pimple to what our children and grandchildren are facing. This 30 minute video will go a long way in explaining the disaster facing us not too far down the road. I urge, no make that implore you, to send this video to everyone you know. I know in my heart it’s true and truly a prophetic message for the 21st century. If you can’t accept these findings, I don’t believe you should take any more time reading my comments.
Okay, I assume since you’re still reading, you’ve accepted the facts, figures and estimates given in the video. The $64,000 question (if our government handles it the question could likely be $6 trillion) is, “What should one do going forward?”
Praying is a good start, really. As David Walker said in the video (Davis is America’s 21st century financial prophet), we’re suffering from a fiscal cancer and the cure is nowhere to be found. I doubt the average American is not only unaware of this, but even if they now were, dealing with the current crisis has already been too overwhelming. I doubt very much they have the stomach to do anything about this cancer any time soon. This is only going to add to the problem in the future. Read
After you’re done praying, I think there are some cold hard facts we must make part of our future planning:
- America is a fallen empire. Its ability to be the world’s #1 economic power is gone. We’ve gone from the world’s biggest creditor nation to the world’s biggest debtor nation. When we add the tremendous debt of states, municipalities and consumers themselves, we see the American people drowning in a sea of red. This debt will greatly impair our government and our fellow Americans’ ability to operate and to live a lifestyle (Listen to video) that has become unsustainable.
- Uncle Sam is no longer the world’s favorite Uncle. In fact, to many in the world, they hope he never comes to visit again. The loss of political and economic clout may not be seen in our daily lives, but it will impair us nevertheless.
- No matter what any politician tells you, taxes can only go up. Medical costs will continue to rise sharply. Government services will either be curtailed or end. On the State and local government level, things are actually worse because they can’t print money.
Pandora’s Box is the 78 million baby boomers that have already started to qualify for Social Security and soon Medicare. As this video will show, they are going to be an economic tsunami to the Social Security and Medicare system. (Watch this video. It was made “before” the credit crisis). 60 minutes video
The financial playing field going forward is unlike anything ever faced by Americans. No matter what the financial services industry tries to portray (and the airwaves and print media is full of things can only get better predictions), the pieces that make up the playing board are mostly landmines that can wound or destroy players. Opportunities to profit will still exist but the methods used to capture them will be radically different.
2009 Outlook – What a difference a year makes. Last year at this time, the overwhelming majority of professionals and individual investors still had no real idea what was unfolding and before them. I find it ironic that the vast majority of so-called experts who are calling for a much better 2009, were the same folks who failed miserably in 2008. I guess one of these years they have to end up right.
Being the bearer of bad news is not profitable nor a way to win friends. In October 2007, when I suggested selling everything but precious metals and going short, the vast majority couldn’t phantom the coming carnage. And, even if they thought it was possible, their advisors talked them out of it. The professional community touted “Buy and Hold” as the savior to all portfolios. “It always comes back,” was their spiel. You would think the world would beat a path to those few who had the foresight to see it beforehand. Unfortunately, most investors are like a herd of deer in the headlights and/or are hoping “it always comes back” happens one more time (then they can run to for the hills).
One of the major problems with so many people “stuck” is they will indeed be sellers if they’re fortunate to recapture some of their heavy losses. The problem there lies in how much more percentage-wise prices must rise versus what they fell in order to get whole again. Another related issue is time. It is one thing for a 30 or 40 year old person to wait it out, but so much of the nation’s wealth is held by seniors. These folks have not only seen their wealth cut in half or more but have seen decent fixed income rates fall tremendously. We also have so many people who have had financial plans that used an 8%, 10% or more rate of return target in order to reach their “dream” retirement. Those dreams are now nightmares that aren’t going to disappear overnight.
There’s going to be an ample supply of equities for sale if and when the stock market rises.
One thing is for sure, the book DOW 36,000 is now strictly a collector’s item.
U.S. Stock Market – There’s good news and bad news. The Good? I don’t see another 50%+ drop from here. If it did occur, life as we know it has gone from bad to worse. The bad? Despite an avalanche of “bottom is in, bottoming process underway, we’re going higher yada, yada, yada” forecasts, the “Don’t Worry, Be Happy” crowd is going to see membership continue to dwindle and it’s public mouthpiece, CNBC-TV, will be searching for new bulls as recycling of old ones no longer works.
On December 16, 2008, the Fed fired what history may show as their biggest silver bullet through a cannon but it did little to change the uphill battle. Yes, the positive spin will continue and be enhanced by the Obama “magic carpet ride” but the overwhelming bearish fundamentals should continue to pressure the market for the foreseeable future. A minimum retest of the lows around 7500 is likely in the first quarter and, depending on if it holds or not, will go a long way in deciding if I jump back in.
What’s lost among the sea of wounded bull cries is that in bear markets like this, not only do we see deleveraging but also shrinkage in multiples people are willing to pay. S&P 500 forecasts for 2009 range from about $65 to $80. I think the market can bare a 15x multiple at best and depending how bad things get, as low as 10x to 12X. That means the S&P 500 could see a low of 650 or a high of 960. It’s currently around 895. In this scenario, buying the dips and selling the rallies seems to be the only way to make money in equities as a whole. I do think oil equities are going to become attractive sooner rather than later. I also believe if and when equities in general are worthy, overweighting in foreign markets versus the U.S. will be the way to go (one reason for this is most countries are cutting taxes while the U.S. can only raise them. History has shown raising taxes are not good for the economy).
Gold Investment Comparison Chart
Precious Metals – TOUT-TV (CNBC) and the like continue to spew out how gold failed to fire in 2008 given all the turmoil. Let me ask you something, if your house was in the middle of a big hurricane and after it was over, it was the only one still standing and sustained no real damage, would you care about anything else? Of course not. If one bought gold on January 1, 2008, instead of any other investment, they would still have everything they had come January 1, 2009. How many people wish all they did was break even in 2008? Gold continues to offer not only that result, but gains of 20% or more in 2009, IMHO.
Silver is a base metal but still gets bundled up with precious metals. Like in 2008, I think it will mostly follow gold versus lead it.
Platinum appears to have seen its lows and while the upside may be limited in 2009, so appears the downside.
Base metals – I’ve been bearish on them for about two years. As we begin 2009, there isn’t anything to change that view other than further declines which could bring us to the point where accumulating them for 2010 and beyond could be worthy. Stay tuned.
I do think uranium has bottomed and can work its way back to triple digits in the next 24-36 months.
Oil - I threw my hat back into the bullish camp in the waning days of 2008.
U.S. Dollar Index – I’ve had a constant saying for the last few years that “the only party that doesn’t know the U.S. Dollar is dead is the U.S. Dollar. “If I was wrong and it was only sick, trust me the trillions of dollars being created and pumped into the system was its death warrant. Pity the poor souls on Tout-TV who say the Fed will be able to remove these trillions of thin-air created dollars from the system without causing inflation. If you believe that one, you should join those who believe Elvis is still alive and on an island somewhere with Jimmy Hoffa. Look for a test of the low 70s by years-end, if not sooner.
U.S. Treasuries – The one remaining bubble that should burst in 2009 (watch). While the 10-year can still get below 2% yield, the time has come to short treasuries. We may go down before going up, but by years-end I think this strategy can be a winner. Read
Mining and Exploration Shares – Can it get any worse? Since I didn’t think it could be this bad to start with, maybe I’m not the person to answer this. I do know gold is doing well, mine production is falling, new big discoveries are few and far between and someday juniors will be needed again to do the grunt work (hopefully in my lifetime).
I’m gathering updates from our client companies and hope to bring them to you ASAP.
Closing Comment – Most of us have made another set of resolutions for 2009. And most of us will sooner or later failed to keep them. Why? I believe it’s because we try to do it with our own strength, not God’s. Never in the history of mankind has the world seem on the wrong path. Many will suffer. I truly believe the only saving grace comes from the Creator of all that was and is good in the world.
They say you can’t guarantee anything but death and taxes. I’m going to guarantee you one more thing; Trust and love God with all your heart and do the same to others and life will become much easier and enjoyable no matter what.
“Put your hope in the LORD, for with the LORD is unfailing love and with him is full redemption.” Psalm 130:7
HI Peter and fellow readers of the blog.
Am wondering how you think the 3 bigest mining companies Rio Tinto PLC, BHP Billiton Ltd, Freeport-McMoRan Copper & Gold Inc in the world will perform vs XOM, CVX, and COP.
Would appreciate all comments, no reply is to small, by replying to this blog we are becomeing more informed.
Thanks again Peter and readers for your input.
After reading this I’m glad that my office is on the first floor. Happy New Year, Peter.
Thanks again, Peter, for you continuing efforts on behalf of all of us.
Your forecast is a totally comprehensive document, and I have sent the link to all my contacts so that they, too, may share in your largesse.
All best wishes to you for 2009…..and your beloved Giants! (as long as they don’t beat my Packers again)(and even if they do!)
There it is ….An Analytical Masterpiece Of Wisdom To Light The Path For The New Year ….Mr. Peter Grandich at his best.
Wishing all a safe and prosperous Happy New Year.
Hi Peter:
Thank you!! I appreciate the fact that you are willing to share your thoughts with us.
My question is this…in all of your videos, no one talks about how we can make dramatic changes to social security and medicaire in an effort to reduce the future problem – are you familiar with anyone who is pushing for major changes?
To our Canadian friends…is Canada facing similar issues?
Happy New Year!
A smorgasbord of food for thought …. the me generation owed a debt of gratitude to past generations who built the country and fought the wars giving us freedom and prosperity. We also owe the future generations for the mortgage we will leave them so that we could have such a wonderful life.
Strange how I see people cutting back, looking for ways to do more with less …. sad the government uses an alternative approach … doing less with more!
If the financial system is broken its because the political and justice system is also broken (Wilson learned while still in office the creation of the fed would be the countries ultimate destruction and tax) …. we can not truly fix the financial system without also fixxing the political system …. it is so deeply flawed bowing to lobbyists and using the media to barrage the citizens of the great country with propaganda about their morality.
As a Canadian I mourn the loss of our Great Neighbour and my heart is heavy for the future plight of it wonderful citizens brought on by their own “leadership.”
The Prophet.
Paul, we have had both budget surpluses and trade surpluses for a decade +. Prior to that time we ran a number of years of deficits and most of the surpluses have been used to reduce our debt. Canada has nowhere near the debt problem at the government level and on a personal level we have somewhat lower levels of debt ( IMO still too high).
Given Canada’s biggest trading partner is the USA representing 70% of our exports … we will be badly hurt by the terrible times you will have in the USA. Ou banking system is controlled primarily by 5 large banks … the others really are relatively inconsequential and we are unlikely to have bank failures (even without government bailouts).
All the best in the new year.
The Prophet
First of all Happy New Year to everyone and may 2009 be a more profitable (or at least less unprofitable!!) year for us all. Many thanks to Peter and to all those who post progressive, educative and helpful posts on this blog.
I have a question for those who are more knowledgeable than me.
Peter has mentioned about buying DXO to obtain leverage against the price of oil. I am also interested in DGP as getting leverage on the price of gold. However I would like to know how these ETN’s function and how they are able to obtain the leveraged returns. In the case of the unleveraged ETF’s I understand that these funds are “supposed” to keep inventories of the relevant commodity to guarantee the value of the fund. I say “supposed” in the current climate of financial shenanigans!! If anyone has anything to offer about these ETN’s I would be greatly appreciative.
Also, on another note. Does anyone have any comments about BBR.V. I have been in contact with them and they appear to be amply funded to survive this credit market, have a decent resource and are partnered with Kinross. They look like a decent investment to me.
Thanks and wishing all the best for 2009
Peter , your analysis is wise and logical, but as a technician using Gann trend lines, I find ; 0n a 34yr HLC chart and using a Gann line from ‘87, the drop in 08 stopped dead at the Gann line, from that I believe firmly that bottom will endure and not be tested again. Also using Gann lines the rally presently taking place and depending where the gann line is placed should reach approx 9800 or 9200 when a different approach is made. From this date on, the dow has two support lines one at 8200 and 7800, I believe the 8200 line will hold.
Should the down line at 9800 be penetrated, I believe it will be caused by someone in gov’t doing the right thing, be it the new president, or world events or in your case, divine intervention. These things take time to develope and will follow the economy as it improves or developes. The present rallycould fail at the 9200 area but will not spell disaster not crash and should stop at the 8200 area or higher.
I feel better now that i have added my two cents, Good Luck
INFORMATION & PROSPECTUS FOR poster JD (DXO Prospectus)
http://seekingalpha.com/article/81776-deutsche-bank-and-powershares-team-up-for-new-etns-rebrand-existing
Hi JD….Good question… What is DXO? Above is a link to general info and within the article is a link to the prospectus for DXO. My eyes glazed over a few times due to the unfamiliar terms, but someday I will get to read all of it. It’s a long life ‘Commodity Note’ A/K/A a derivative that’s not backed by a physical commodity – Oil. The expense ratio is a low .75% per annum which is apportioned on a daily basis. The price of DXO is pegged to an Oil index, but it can go lower or higher. Recently, the price of DXO imploded more so than the price of Oil, and personally I interpreted that as a value. It can go the other way too in the right type of market. The product is guaranteed as a general obligation of Deutsche Bank, and that doesn’t seem to be a problem today. Perhaps I should have read the entire prospectus before buying the issue, but everything in due time.
DGP is the Double Leveraged Twin for Gold and works similarly. Anyway, above is the link for the DXO prospectus.
Hey Peter,
Thanks for your current assessment. As always, insightful, straight forward and no punches pulled.
You should stop beating yourself up regarding the juniors. You have been one of the very few (the majority of so called “experts” referred to as the lunatic fringe) that saw the train wreck coming way in advance and put your reputation on the line by pounding the desk telling people to prepare. No, you didn’t anticipate the collateral damage deleveraging would have on the precious metal and mining markets but who else did. You offered your opinions and did not force anyone to follow your advice 100%. In the end, people are ultimately responsible for their own decisions and fate.
Paul, Orgprophet summed up the Canadian situation well. Our banking system regulations have helped us somewhat avoid the issues facing US banks. On the other side of the coin, Canadians have been caught up in the buy now pay later mentality and have little to no real savings. In addition, we have a leadership vacuum at the Federal government level and our central bank Governor has been hit and miss in actions to help Canada better deal with this mess.
Happy New Year Everyone!
HI Peter. And Happy New Year.
Thanks for the advice and the video link. That is one of the scariest things I’ve seen in a long time. God help us.
All the best to you and yours in the New Year, Peter, and to your readers. We in Canada are about a year behind in the financial turmoil. Yes, our banks are well capitalized and government debt is low (for now,) however our housing bubble is starting to burst and although we may not have as far to fall, the economic contraction of our largest trading partner, the U.S. has yet to hit us with full force – lest any of us are tempted with “schadenfreude.”
Hi Peter, Recall meeting me and my friend Pete at a gold show in Vancouver some years ago? We had lunch together along with good conversation about, what else – gold etc! Heard somewhere you were going thru some serious sounding health issues. Sincerely hope all is well in that regard. Don’t feel like the lone ranger in testing the resource juniors – now we know – short sellers abound in the Canadian junior market. Doesn’t take much to push these babies around as thin as the market is.
Just passing on our best wishes for the New Year to you and yours.
Bob and Pete
This whole monetary mess was deliberately planned and executed by the privately owned Federal Reserve. If you really want to know what caused all this and how to fix it you can look to them. I can’t believe this was not mentioned. Talk about the elephant in the room. No mention about who, what and why controls the Federal reserve either. You have to go much deeper than this surface level information folks if you want answers it is that simple and so are the answers once you understand the story.and the proper questions to ask. I never lost a dime because this whole mess was like I say…..the elephant in the room. You just have to pay attention thats all.
Hello Peter
I am a big fan and enjoy every time you appear on BNN up here in Canada. I am a very big fan of gold in any form although the majors appear to be enjoying things right now. I expect the producing or near producing juniors will surge but later in the cycle. Likely the good prospect non producing juniors will see good fortune at the peak of the gold frenzy not unlike the assetless dot coms did in 1999 and 2000.
I do wonder however if the collapse of the ABCP market has given the treasury and the fed some breathing room to print money and get away with it for now. They likely can’t borrow much more as they have maxed out their lines of credit with the rest of the world and no one at home has any money to lend. My logic goes as this. I believe ABCP used to be a liquid asset easily convertable into cash. Now no one wants to touch it. If ABCP was a cash equivalent then huge amounts of “cash” have been destroyed in the freeze up. Can the fed now print money with impunity given that so much appears to have been destroyed? Just a thought. Happy new year.
Hey Hal….. Do you like ‘Scary Movies’? Check this one out to start off the New Year.
http://www.foodshortageusa.com/
*** NEW WILD THINGS ***
Below is the suite of Direxion ETFs which debuted last Wednesday:
–Direxion Developed Markets Bull 3x Shares (NYSEArca: DZK)
–Direxion Developed Markets Bear 3x Shares (NYSEArca: DPK)
–Direxion Emerging Markets Bull 3x Shares (NYSEArca: EDC)
–Direxion Emerging Markets Bear 3x Shares (NYSEArca: EDZ)
–Direxion Technology Bull 3x Shares (NYSEArca: TYH)
–Direxion Technology Bear 3x Shares (NYSEArca: TYP)
The triple leveraged ETFs have become popular in a hurry. Within a few months Direxion has already amassed nearly $1 billion in ETF assets.
Short ETFs are also offered by Rydex Investments and ProShares. Each of these providers limit their leveraged ETFs to double the daily performance of their benchmarks.
Direxion has more triple leveraged ETFs waiting to obtain the green light from the SEC. Among the pending ETFs are a bull and bear 3x shares for the: BRIC, China, Clean Energy, Commodity, Dow 30, India, Japan, Nasdaq and Real Estate.
Hi Peter,
Happy New Year, the graph lacks the 2008 performance of long bonds, or an ETF like TLT, they were the best of 2008, far better than gold
COACH 23 ……LONG AGO AND FAR AWAY IN ANOTHER SYSTEM
Long ago and far away in another system called the ‘Junior Galaxy’, there was a nobleman who wielded his keyboard with the deftness of a knowledgeable Jedi Knight. Unless I’m mistaken, is this you Coach 23?
Alas, the ‘Junior Galaxy’ was vaporized by a Death Star Bear Market, bringing me here. While I never discuss the ‘Junior Galaxy’ because that could be interpreted as a promotion, this is a developing forum for the exchange of ideas & entertainment under the guidance of an especially competent if not prescient host. We shall recover.
But your question is valid for consideration, Coach 23. Which is better Big Cap Oil or Big Cap basic mining and here’s some thoughts……
BIG CAP OIL – This is lunch for the masses someday and the first target for a knife & fork will be Exxon. You will recall last Spring / Summer when Oil was much higher, the masses caught the attention of the Presidential candidate. His promise to expropriate Capital from the Oil companies and redistribute as a special dividend to the general public seemed to be well received. Such reactionary measure would effectively destroy the Oil companies exploration incentive and benefit physical Oil with growing scarcity which is why I much prefer DXO over DIG.
Exxon has had a surprisingly good run since October, but appears to be near resistance, vulnerable to a pull back. Perhaps it’s the dividend that investors seek or the prospects for a recovery of Oil that has moved Exxon higher, but it does seem to require a good measure of higher Oil prices to continue moving ahead. Perhaps the same is also representative for Chevron, but Continental Oil looks constructive here, apparently in a basing phase.
GENERAL MINING – Perhaps a bit too early according to our host, but the isssues Coach 23 mentioned are attractive at least to the extent that they appear to be basing. RIO is just too much base metal for my taste especially when the Precious Metals issues are considered. The Big Cap Gold issues could pull back soon, IMHO, and that would be another opportunity, IF it occurs. BHP has exposure to Uranium and is attractive near these levels. FCX looks equally as good. Although the base metals exposure is a bit of a weight at the moment for FCX, it does seem to be constructively basing and attractively priced.
So of the two sectors, perhaps the General Mining issues are more attractive at least from the perspective that ‘Big Oil’ is a lunch bucket waiting for the eventual delivery man.
Happy New Year
SGGroup
Peter, I echo others who THANK YOU for hanging in there and trying to help all of us weather these most difficult of times. You are doing God’s work in many ways, one of which is sharing your insights about investing. We need those thoughts….keep them coming….especially given the pundits who surround us and who are either misguided or intentionally misguiding us. Either way, Peter…..we need you…..stay the course!
On another note for what its worth, I am looking for some higher yield investments to park some cash and did reseach on pipeline, storage and transport companies….both master limited partnerships that pay higher yields and their corporate parents. Below are the choices I have narrowed them down to based on research including Investors Business Daily. If anyone has these or thoughts, would appreciate hearing from you.
WES – Yield 9.2% – $1.20; profit margin 31.6%; PE 11; IBD rating 97; fee based therefore more insulated from commodity prices (pipelines associated with Andarko); recent presentation indicates positioned to deliver distribution growth in ‘09 with substantial liquidity (Master Limited Partnership “MLP”)
NS – Yield 10.7% – $4.23; profit margin 8.9%; PE 9; IBD rating 92; international presence; presentation indicates that 4th Q will be lower due to decrease in crude prices; only gas pipeline that has international presence and asphalt operations which apparently is good given low supply and high demand given Obama’s infrastructure drive (MLP)
ENB – Yield 3.3% – $1.07; profit margin 7.7%; PE 10.8; IBD rating 89; increased dividend by 12% on 12/3/08; Barrons had a positive article given their increased revenues from their storage facilities (corporate structure with their MLP being EEP for a higher yield)
OKE – Yield 5.8% – $1.07; profit margin 3.6%; PE 8.3; IBD rating 88; listed on GS’s conviction list; Barron’s 11/17 positive article; 4 new pipelines coming on line in ‘09 which should increase earnings (associated MLP is OKS, a Jubiak pick)
I have not purchased any of these yet – just in research mode. According to research the MLP’s should not be held in a retirement account due to taxation issues.
Susan
congrats on surviving 2008. what a tough year. i am curious, what is with all the religious stuff? i assumed most people that conduct fundamental research and common sense reasoning would rank god along side sant and the tooth fairy? am i the only athiest trader? i don’t write this to cause offence and am sorry if i have done so. you are far from the only financial commentator that uses logic in their day job, and blind faith in regard to religion. i find this most illogical.
ps the above comment should say santa i am a bad typist and missed the a off the end.
Hi Susan:
The last thing that you were hoping for is a reply from a ‘Pundit’, but every one’s away on Holiday so I’ll give you some sound advice. Besides, I’ve got time on my hands today with new twin grandchildren arriving home and my wife’s time occupied.
Anyway, the recommendations are quite attractive for Income / growth and WES & NS seemed especially interesting. The balance sheets are strong and the Dividend Yield is well covered. Is it a value anomaly caused by the decline of stock prices in general or are there fundamental reasons for the high dividends amid strong financial circumstances. ENB & OKE seemed less attractive at least from the standpoint that the balance sheets are a good bit more leveraged.
Investors Business Daily does a good job crunching numbers, but there’s no fundamental analysis behind the numbers or insight to the industry. What you need is an expert on the industries for more understanding. While I have not had a subscription for some years, Value Line Investment Survey, http://www.valuelineinc.com does a very good if not excellent job rating individual issues and industries for Timeliness & Safety. If you take a trial subscription for a modest cost, you’ll find an experienced industry analyst commenting upon all the criteria necessary to make a sound decision. Good luck.
INVESTMENT DEFINITIONS / ACRONYMS FOR 2009 (Courtesy Of a Canadian Acquaintance)
CEO — Chief Embezzlement Officer.
CFO — Corporate Fraud Officer.
BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET — A 6 to18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no attention.
VALUE INVESTING — The art of buying low and selling lower.
P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing.
BROKER — What your broker does for you.
STANDARD & POOR –Your life in a nutshell.
STOCK ANALYST — Idiot who just down-graded your stock.
STOCK SPLIT — When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER — A guy whose phone has been disconnected.
MARKET CORRECTION –The day after you buy stocks.
CASH FLOW– The movement your money makes as it disappears down the toilet.
YAHOO — What you yell after selling it to some poor sucker for $240 per share.
WINDOWS — What you jump out of when you’re the sucker who bought Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR — Despondent investor who’s now locked up in a nuthouse.
PROFIT — An archaic word no longer in use.
SG Group…..you are kind and I appreciate the advice/information…..maybe by working together on this blog we will all find our way. God bless…..susan
Peter, Very good article, good links that tell ‘the rest of the story’. You are correct about the small PM miners, they have been decimated, much of it through shorting, mostly illegal by hedge funds and those who want to buy them on the cheap. Finding ‘no debt’, producing miners with large targets is very difficult. I’ve been looking for the ‘right one’ for a long, long time. The best one I’ve found is a little company that you should look into, operating near Manitoba, Canada. I own a few shares now and after I visit the site and interview management I may buy a lot more. They have recently discovered a large ore body very near one of their underground tunnels which should be very economical to develop. I’m not touting the stock, I am just asking those who are interested in looking at good companies that have a fair shot at ‘making it’ to take a look. Do your own due diligence. I reluctantly tell you it is San Gold. They have a very informative website which show their drill results and the ore bodies they are looking to develop. At present they are flying ‘under the radar’. I just hope they continue on and refuse to be bought out by a major.
Could the internet be the tool to expose the FEDERAL RESERVE ? First IMHO most people do not seem to know that it is a PRIVATE BANK practically ruling the USA.. A distribution of this information on the internet might eventually expose some of the people behind the Fed. Reserve. The MEDIA surely does not touch this issue ! How could one start such a campaign ?
maxi … i hope so …. they certainly appear to be the root of all evil …. after all the banks always have an inordinate love of money.
the internet is a great vehicle for communication … still the information needs to be passed along to the skeptical who actually believe our governments are moral … not only will they hurt other nations … even if they don’t have weapons of mass destruction they will lie to their own people (more moral hazard) about countries who have weapons of mass destruction.
These are not the only lies … those who believe Kennedy was not the victim of a conspiracy are few and far between.
Lets face it the first mandate of every government is re-election … that is above all else. The best way to get re-elected is to get support from those with the greatest influence … lobbyists, big business, banks, the media … bottom line is there are very few that are elected that are there to truly serve the general public interest, and those that are pay a huge price.
We must all educate ourselves to the maximum to enlighten others with the truth. We must take painstaking efforts to keep our minds open and not judge other ideas on our own pre-conceived notions. We must acknowledge that there is much we do not know or understand but … the evidence when assessed by a reasonable man certainly does point towards a political and financial system which is broke. The basis of that breakdown is greed and corruption.
For those who have eyes to see and ears to hear …, use your mouth to communicate with others and share the information.
Thanks to Peter, a person with significant credibility this site exists and is dedicated to open discussion of ideas. The blog/ bulletin board has numerous viewpoints and by and large the audience and fellow board authors are respectful of Peter, each other and the website.
Let us all work to strengthen our understanding, supporting each other with either agreement or respectful constructive criticism to any thought or idea which may contradict truth.
Let us all pray for the wisdom and strength to make ourselves useful vessels to each other so we can be a beacon of light to a dark world.
The Prophet.
Andy – Ever eaten in a restaurant that was so good you couldn’t wait to take your friends there? Ever seen a movie you can’t wait to tell your friends to go see? For me, Christianity has made my life full of meaning, with purpose, and assisting me greatly in my profession. You’ve the right to choose to be an atheist. I’ve the right to share my faith on my own blog. You can choose simply not to read it – God Bless!
Who can be sure of the daily events as they are unfolding? No one really. Still, a wise man will weigh all his knowlage, seek good advice and try to discern truth in the face of confusion. Of course.
I personally weigh all opinions. Once the obvious is confirmed, It is timing and circumstance of events that will remain a challange. In a way, almost all aguments can be declaired correct at the right moment in time. But theory is not always usefully to those of us who seek to respond to real time events. The product of intense scrutiny yields an ability to recognize inportant markers when they appear and help to show the path to follow. The work required to understand always yields value. Even if the bennefit is only being grounded in truth which provides a solid foundation for anyone’s life.
When it comes to controlling Government, the only way I can see that has a prayer of hope is to make sure they have no ability to control our money, or just that we stop giving them any money. Not by taxation, confiscation, Foreign Bankers , decree of Congress or any other method by which Government can lay hands on private wealth should be tolerated. The reason is simple. Our problems would not exist if we do not allow Government to control our money. If they do not have our money, they cannot squander it. If we alow them to take from us what is ours, they will, and the solution is to make sure that we cut off their ability to take at will. The prospect of a two currenty system sounds good to me. A system of Hard Money for the public, and a system of paper money for the Politicians. Never give them Gold or any real money, then we can deside if we will accept or refuse their “Paper” whenever we want to. Paper money will be irrevelant, and the theft will come to an end. Additionally, if the US dollar belongs to the Federal Reserve bank, then let them deal with all the “Dollar” Debt. It is their money, not ours, lets give it back to them. They have been using their privilege to steal from us since the beginnng of the Federal Reserve Bank . Surely they have already gotten more than their share of our wealth. It is time to stop it. and even turn the tables back to us again. We should go back to real money once again, in the hands of the people and throw the Bankers and Thiefs out in the streets.
Governments are characteristically dishonest. Power attracts sociopaths. Narcissistic individuals seek public office. One reason it is safe to drive on American highways is because most of the thieves have government jobs. And believe it or not, they get the high offices, not the low ones, because they don’t care what they have to do to get them. Honest, intelligent people tend to stay below them in the chain of command, because ethical behaviors make personal success more difficult to achieve. In the meantime, the vultures gorge themselves, and they use knowledge of these facts to benefit themselves. From their perspective there is little difference between human beings and foxes or jackals.
Peter:
Thank you for all the insights, your humanity.
The US$ is in deep trouble and these are without doubt historic times. I’ve tryed to warn friends of the seriousness of the situation before us. Most are still complacent.
2009, if nothing else will be very interesting. All the best to you…and to all your readers.
Denis
Great read, I always enjoy your insight. I think we have a buying opprotunity of a life time here for the Gold junors. I have not been this excited for a long long time.
As usual well worth the read. It is insightful, genuine and spoken with true modesty and humility. Mr. Peter Grandich and Mr. Peter Schiff are two individuals who truly tell it like it is. Its a great pleasure to hear from two such commentators who
know the meaning of honesty. Well done gentlemen and God Bless.
Peter,
Thank you for your detailed outlook. It has a sobering effect. Part of me hopes that you’ve got it all wrong Peter and I wish I didn’t know the truth. But, escaping and avoiding reality does nothing to solve the problem and it’s probably got us where we are today.
No, I won’t try to escape this reality, I’ll engage it by being accountable and responsible for “Me Inc.”, making sure my financial house is in order, then holding our elected officials accountable as well.
Glenn
Some great British satire on the financial crisis:
http://www.youtube.com/watch?v=st3BlOKtvnA ( watch all the parts )
http://www.youtube.com/watch?v=hXBcmqwTV9s&feature=related
http://www.youtube.com/watch?v=SwRFoxgEcHc&feature=related
http://www.youtube.com/watch?v=hNYxTpEVQWc&feature=related
http://www.youtube.com/watch?v=7sTL4lcPFF0&feature=related
Reply to #32 (Poster rrr) ….. Nows there’s a guy who understands the heirarchy of government. Infrequently the good people do get through. Too late to elaborate. Good Nite.
Below is the address for an article in Barrons today from a well respected oil analyst – not an oxymoron intended. Unfortunately I don’t know how to copy it so you can just click on it so you will need to copy and paste it to your browser.
http://online.barrons.com/article/SB123015855662833571.html?mod=djemBMP
susan
susan:
Another possibility to consider for yield is to buy a beaten down stock with a good business and sell covered calls on the shares for income. You would need option approval for your account to do so and it’s riskier than just buying for yield but you appear to be one who does a thorough job of researching the companies first.
One example I can find quickly (I haven’t done any thorough research, just a quickie look at yahoo finance) would be Excel Maritime Carriers (EXM). They are a dry bulk shipper and have been beaten down severely to $7 a share or so. Trailing earnings are over $10/share, though that is likely going lower with the drop in shipping rates recently. (They may have long term contracts at higher rates that will dampen the drop in earnings.) The dividend is shown at $1.60 for a yield over 20%.
You can buy shares around $7 and sell February calls at $7.5 for around $1. That would provide roughly a 14% return in about 5 weeks if the share price stays above $7.5. There are also March options you could sell after that.
Of course the risk you assume is a drop in the stock price or in the worst case the failure of the company (same as any other stock), but at such low prices the equivalent yields on sale of options are very high at over 10% per month, plus you could get a potentially large dividend too.
This may not be something you are comfortable with, but it is a means of generating much higher yields with only modestly higher risk at these stock prices.
As always, you are responsible for your own investment decisions. This is not a recommendation, just an example.
Best wishes to everyone in 2009.
Great comments, can do without the religion though, let’s not forget that the march to
insolvency was accompanied by much praising the lord and walking with Jesus, to
cover obvious sins and downright crimes.
Dave P – I’m extremely open-minded here and welcome all voices providing it’s done in good taste. I would like to hear you expand on how the insolvency was accompanied by praising and walking with Christ. That’s news to me. And I’m sorry if it troubles you but faith in God will be part of this blog. Why? Because I know in my heart HE is the reason for the blog in the first place.
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I think TOLERANCE on this blog needs to be the word of the day folks. Peter is doing us a great service in helping navigate this crazy market situation. The beauty of America is that all of us either Christian, Jewish , Muslim or non believer should be allowed to express our peaceful opinions. If they give us better insights into the market, so be it. If more wealth leads to better health,happiness ,peace & stability then we ALL benefit. If one’s religious beliefs helps this occur, go for it!
Happy New Year to all & a successful 2009!!
Bill – Amen
someone asked about our Canadian social security programs. fortunately ours are in much better shape than the American plans. we have 2: the CPP (canadian pension plan) & OAP (old age pension plan. the CPP which every employee pays into is fully funded. it is invested in financial securities, globally. although it has taken a big hit lately, to the best of my knowledge it is still fully funded for at least 20 years. the OAP is more like U.S. social security & is just paid out of general revenues.. most retirees have a company/govt pension + the CPP & eventually the OAP at 65. the CPP pays approximately twice as much as the OAP & can be drawn (with a penalty) starting at age 60.
re: religion on this site. i’m an atheist but am not at all offended by Peter’s religious comments/references.
like i said, sorry if i caused offence. i was curious. i dont intent to exercise my right to stop reading. enjoy 2009 peter i wont quiz you again on your religious beliefs.
To All – Please don’t feel you can’t speak about religion or any other topic here. I believe ignorance is the cause of many problems and dialogue can solve a lot of that. Just keep it in good taste and understand there’s always two sides to everything..
Enjoy the day!
Peter
Dear Peter:
Your good articles posted on Kitco have been interesting and helpful to me and, I am sure, to others
I was a typical heathen until, 41 years ago (near my 22nd birthday), the Spirit of God convicted me that I was a sinner and, soon thereafter, that I was a LOST sinner — “without Christ … without hope, and without God in this world” (Bible ref.: Ephesians 2:11-13). I then asked him for mercy, not knowing that he ALREADY had provided a way of salvation: Christ Jesus, who by his death paid for our sins and then was raised to live forever to be our savior. He has endless power and an endless life (Hebrews 1:2, 7:16). Religion availed nothing, but God’s spiritual work in my heart changed my heart and life. I now am a member of “the household of God” (Ephesians 2:19), aka “the household of faith” (Galatians 6:10). Peter, I am glad that you seem to be in the same blessed family.
Any of your readers who are not interested in the Kingdom of God can still profit intellectually and financially from your articles. And for those of your readers who might be interested in populating that kingdom, I quote our Lord again: “Jesus … said, ‘Verily, verily, I say unto thee: Except a man be born again, he cannot see the kingdom of God” (John 3:3) and “I am the way, the truth, and the life: no man cometh unto the father but by me” (John 14:6).
Thanks, Peter, for letting us know what God did for you. And thank you for your perceptive, honest analysis in all those good articles posted by Kitco over the years.
[...] Market – I said in my year-end commentary that the U.S Treasury market was the last bubble and it would burst. I recommended shorting the 10yr [...]