Dave, Warren Buffett was a buyer of silver and it would rock the boat
if he started to buy real cheap all that gold still in the ground.
Also, from the Cafe.
The Dos Passos Table
Sputtering Euphoria - The Spectre of Overvaluation
Dr. Bob Dobbs
... at a crossroads of extreme overvaluation. The present US market
sentiment is one of sputtering euphoria. Last year alone the banking
system created over $1 Trillion, an increase of more than 50% over the
previous year....
World trade is sinking deeper into a morass, as beef, steel beams and
bananas are but the beginning of a nasty international trade war, yet
another reminder of how much we're sliding back into the 30's. The US
trade imbalance, ....
.... On the other hand, real money can be made in
recognizing when a major imbalance exists, as when an investment becomes
either extremely hot or cold...
... the "Illusion of the Rabbit."...
... the "Illusion of the Warm Blanket."...
... as the Rabbit provides an incentive to buy,
the Blanket provides the motivation to hold
what usually is an oversubscribed vehicle...
... This is exactly the very definition of a grand illusion in investing.
However, by understanding this herd mechanism, one can clearly see the
historic trends and how one can profit from them....
... The hugely successful mutual funds, ... must by necessity invest large
sums of money in well-capitalized stocks, so as not to disturb the market
adversely when trading. This necessarily leads to an involuntary
institutionalized overvaluation....
The biggest and most successful mutual funds are now as overvalued as the
bloated stocks they're forced to buy...
Equity markets have, in effect, become mutualized....
...last time institutional ownership was so prevalent, not suprisingly
in the 1920's, when funds were called "Investments Trusts,"...
...for paper assets has resulted in a complacent lot of investors. When
history repeats, this flock will be fleeced....
....accurately personified by the day trader.
These internet intrepids are in a Mexican standoff with fingers
nervously gripping the mouse pad, shooting glances at each other at an
ever more frenzied pace....
It is an old maxim, followed by the saaviest of Contrarian investors,
that one should buy what everyone is selling and sell when everyone
wants it....
... are overvalued and that the most attractive opportunities are
the ones most overlooked....
Take precious metals, for instance. I can't think of a more unpopular
investment vehicle ...
... most everyone on the street will tell you
gold and silver are an anachronism - irrelevant in this cashless world,
as if gold were no longer a haven for financial difficulty or that
financial difficulty has been legislated away...
... contrast to objects like pet rocks, Beanie Babies, or
bell bottoms, gold and silver are not tied (entirely at least) to
ephemeral aesthetic trends. They are tied to physics, the search for
permanence in life, the need for a reliable wealth storage medium, and
the fundamental relationship between debtor and creditor. The popularity
of gold over six millennia is due to the fact that there is no known
substance which shares its unique physical attributes of divisibility,
scarcity, and permanence. As a non-debt based asset, gold is the premier
financial counterweight to a system built upon promises to make good on
debt. This includes not only bonds and mortgages, but fractional
reserve, credit in all its forms, and fiat money systems as well.
...Mr. Buffett replied: "Too expensive for me in virtually all cases."
... Warren has been a net seller of stock and a purchaser of silver
last year. I'll play my cards the same way as the guy behind the
mountain of chips, thank you...
Bob's Bombshelter Bear Page, , bob_dobbs@hotmail.com
jps.net
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