Category Archives: Essays

Profits and Asset Bubbles Everywhere?

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Anthony-Wile1

“Before long we may be minting the first trillionaires – and I can remember when we were still reporting on millionaires as significantly wealthy individuals. It’s just been announced, for instance, that Facebook is worth US$200 billion. These are ‘bubble’ numbers. If you’re out of this market, you may lose out on some phenomenal profits, not because the market is priced properly but because a confluence of interests is likely determined to continue to expand security prices. If you decide to ‘stick in,’ please take care to be allocated across numerous asset classes, including gold and silver. You can hedge positions via futures, options, etc. My bet is that this party ‘continues’.”

http://www.thedailybell.com/editorials/35643/Anthony-Wile-Profits-and-Asset-Bubbles-Everywhere/

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John Hussman: A Warning from Graham and Dodd

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“The fact is that the most reliable valuation measures we identify are generally within just 15-20% of their 2000 extremes, and are already at or beyond levels observed in 1929, 1972, and 2007. Of course, that same advance to extreme overvaluation is also what has raised the total return of the S&P 500 from 2000 until today up to about 3.9% annually. We believe that even that total return is transitory, and presently estimate negative total returns for the S&P 500 on every horizon less than 8 years. We encourage buy-and-hold investors to understand and mentally prepare for the potential depth of interim losses inherent in that strategy (we would presently allow 40-55%).”

http://www.hussmanfunds.com/wmc/wmc140915.htm

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The “Social Contract” Is a Fraud; Anyone Enforcing It Is A Criminal

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“If an adult wants to sign away his rights and make himself a serf to politicians, that’s his choice, and I won’t take it from him. But for the deal to be legit, a clear agreement and authorizations on both sides are required.  Fraud is a ‘false representation with the intent of persuading the victim to part with property,’ and that is precisely what is being done with the social contract, and on a gigantic scale.  We have a supposed contract, and we have trillions of dollars changing hands, based upon its legitimacy. If, in fact, it is not a contract, then the entirety of the arrangement is a massive criminal fraud. So, is this ‘social contract’ legitimate? Let’s examine some crucial aspects of contracts.”

http://www.caseyresearch.com/cdd/the-social-contract-is-fraud-anyone-trying-to-enforce-it-acting-criminally

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Ron Paul: Nixon’s Vindication

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“Forty years ago many Americans celebrated the demise of the imperial presidency with the resignation of Richard Nixon. Today it is clear they celebrated too soon. Nixon’s view of presidential powers, summed up in his infamous statement that, ‘when the president does it that means it is not illegal,’ is embraced by the majority of the political class.Nixon’s abuse of federal power to spy on his ‘enemies’ was abhorrent, but Nixon’s abuses of civil liberties pale in comparison to those of his successors. Today literally anyone in the world can be spied on, indefinitely detained, or placed on a presidential ‘kill list’ based on nothing more than a presidential order.”

http://www.thedailybell.com/editorials/35631/Ron-Paul-Nixons-Vindication/

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John Hussman: The Two Pillars of Full-Cycle Investing

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“While many observers pronounce victory at halftime, in the middle of a market cycle, at record highs and more extreme market valuations than at any point except the 2000 peak, remember the two pillars. First, the combination of high confidence, lopsided bullishness, overvaluation, and overbought multi-year advances has predictably been resolved by steep market losses, time and time again across history. Second, strong market return/risk profiles warranting constructive or leveraged investment positions emerge in every market cycle, generally following a material retreat in valuations, coupled with an early improvement in market action.”

http://www.hussmanfunds.com/wmc/wmc140908.htm

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Broken Links: Fed Policy and the Growing Wall Street-Main Street Gap

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“Probably the strongest feature of the foregoing chart is the tendency for inflation to move higher and lower in trends that have very little to do with unemployment, and for unemployment to move up and down in trends that have very little to do with inflation. Not to ruin a good theory with the facts, the failure of this misguided Phillips Curve formulation to describe the real world has resulted in a wide variety of ways to ‘augment’ it using expectations, varying ‘natural’ rates of unemployment, and so forth. The idea seems to be that using the right set of assumptions, we can make sense of the fact that the planets that circle around the Earth keep stopping and going backwards.”

http://www.hussmanfunds.com/wmc/wmc140825.htm

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Bill Bonner: What I Learned in China About the Fate of the US Dollar

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“‘China is the nation to watch,’ begins a Beijing colleague.  It is already the biggest trading nation in the world. And it will soon pass the US as the world’s biggest economy. But what is really important is that it will also overtake the US in two other important categories: military power and money.  Now, the US is making a show of supporting the nations around China… as though it could stop China by teaming up with the Philippines and Japan.  This is like the early 19th century, when France tried to get all of Europe to unite against Britain, the rising power of that era. It didn’t work… You can’t stop a nation whose time has come. And China’s time is coming.'”

http://bonnerandpartners.com/learned-china-fate-us-dollar/

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Bill Bonner: Can This Simple Trading System “Beat the Market”?

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Bill-Bonner2

“Large-cap US stocks, for example, tend to trade between 10 times earnings and 20 times earnings. Occasionally, they are more expensive. Sometimes they are less.  When they are more than 20 times earnings, buyers typically have a hypothesis that justifies the higher prices. ‘This time it is different,’ the sentence begins, followed by ‘because…’  We can never know that this hypothesis is true. We may know from experience that similar hypotheses have been proven false. But we can’t be sure that this one will be disproven too.  But as the price of stocks rise, the potential reward for betting against the extraordinary new hypothesis goes up.”

http://bonnerandpartners.com/can-simple-trading-system-beat-market/

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Bill Bonner: The Real Reason American Capitalism Is Failing

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Bill-Bonner2

“Come to China, and you will be impressed, as we are, with the material progress made over the last 30 years.  China’s success is widely misunderstood. Then again, so is American capitalism.  What does it take to produce prosperity?  Property rights – you have to believe that you can control and enjoy what you produce. Stable money – you have to be able to count on the medium of exchange. Freedom of action – you have to be able to go on with your business without too much state intrusion. Meanwhile in the US, the planners… regulators… controllers… meddlers… and zombies – all those who prevent real prosperity – grew bolder and more numerous.”

http://bonnerandpartners.com/real-reason-american-capitalism-failing/

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Are You Making This Financial “Mistake”?

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“Not many people give much thought to the financial standing of the banks to which they entrust money. That’s a mistake. When you deposit money in a bank, you become an unsecured creditor holding an IOU. That IOU is only as good as the financial standing of the bank.  In return for assuming this risk, what do you get? The highest interest account I have in the US pays me a whopping 0.46% annually.  That reassuring FDIC logo on your bank’s front door masks the fact that the FDIC Insurance Fund has a reserve ratio of 0.79%. For every $100 on deposit, the FDIC has only 79 cents to back it with.  The new global model is the ‘bail-in,’ first seen during the Cyprus banking crisis that began in 2013.”

http://www.nestmann.com/are-you-making-this-financial-mistake

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