Hello Pezz, You tended to, or at least seemed to, deliberately ignore the macro and devote much of your SI time to the here-and-now next trade. This has served you well (and me:0), especially since the officialdom has been hell-bent on releasing the liquidity deluge to float all ships, even the Amazons and United Airlines, and others with great big gashes in them.
Recently, doing what you do, after much cajoling, you got into the Newmont Mining trade in a hurry, and it worked. Perhaps your NEM trade was inspired by whatever it is you normally do, reading the charts, sensing the energy and being in tune with the Force; maybe the trade was done as a result of you being forced to look at the ‘Big Ugly’ macro; or possibly and more likely, your action was a result of a blend of motivations.
Investment and speculation in 2003 was easy , in hindsight. It was as easy as 1999, whereby one merely needed to buy something, anything, whether tech, emerging market, energy, or commodity, real estate or bonds, or near-money gold or further away non-USD cash, and they all went up. Easy money tends to have that effect:0)
2003 was a year where USD cash was trash. Easy money tends to have that effect as well;0)
My read of 2003 is as expected, in that I was wrong on some wagers and right on other gambles, just as my read of 2002 was right and wrong:
My view for 2002 was
Message 16640110
Message 18056227
My view for 2003 was
Message 18266240
Message 18278958
Message 18344188
Message 18362943
Now, here we are, on the cusp of 2004, I once again ask the thread a question that I had asked before,
Message 18525536
<<February 2nd, 2003
… The central bankers are grinding the currencies against each other, devaluing each in turn, and yet again;
The central bankers are yoyo-ing the equities between euphoric joy and despairing gloom;
The sheople are alternating between the fear of missing trains and the terror of coming crashes; and
So I asked of no one in particular, 'what is the obvious trade, the natural exchange, the apparent play, and the lonely path forward?'
I figured I heard the answer, 'take a position in some asset of seemingly huge apparent individual risks, play them against each other as the crowds zigged and zagged".
… I am anything but dogmatic …>>
My allocation on December 24th, 2002 was so
Message 18388681
<<Cash 34% of gross assets (16.2% Euro, -1% USD, 8.5% AUD, 3.8 % CHF, 3.2% HKD, 2.1% CAN, 1.2% Japanese Yen)
Precious metals 11.9%
Bonds 21.6% (20.9% USD, 0.7% Euro, valued at lower of cost and market)
Rental Real Estate 22.1%
Equity 10.3%: comprised of …>>
And my allocation during 2003 was zigged this way and zagged that way achamchen.com and is this minute just so:
Cash 36.2% (3.8% Euro, -1.9% USD, 9.8% AUD, 0.4% DDK, 3.6% HKD, 19.9% CAN, 0.5% Japanese Yen)
Physical/paper gold/platinum 9.7%
Bonds 12.7%
Rental real estate 19.9%
Equity 21.6%
In the course of 2003, I took measure of what appeared to be happening, and adjusted my views otherwise or foolishly thus:
February achamchen.com
June achamchen.com
August achamchen.com
October achamchen.com
November achamchen.com
What now?
The biggest dangers are quite well known:
- Debt cleansing leading to flight-to-safety asset deflation threat, encouraging continuation of monetary inflation ‘solution’;
- Perpetual war leading to monetary deluge outcome
- Perpetual war leading to the ultimate ‘tilt’, energy crisis
- Monetary inflation eventually leading to asset and/or cost inflation and hollowing out of wealthier economies
- Hollowing out of wealthier economies leading to protectionism, engendering cost inflation without helping out people employment
- Asset inflation leading to further financial asset re-valuation and further impetus to hollowing out wealthier economies
- Debt cleansing and cost inflation leading to higher interest rate, opening the door to financial asset deflation
- Debt cleansing, perpetual war, financial asset volatility, equity market confusion, money mayhem, all leading to flight away from USD
- USD-space chaos leading to other-space losing leadership to varying extent, resulting in global socio-econo-politico-financial mayhem
- Global socio-econo-politico-financial mayhem resulting in everybody pulling in neck and staying in home markets, contracting global trade, reducing planet-wide exchanges, leading to declining need for USD as global currency
- Et cetera, so on and so forth, once again and twice more, ad infinitum, ad nauseam, until we hit ACF Mike’s demographic wall
- So, there is the Big Ugly, comprised of inflation, deflation, unemployment, devaluation, volatility, until either we hit the demographic wall or until some combination of monetary/political leadership and multilateral consensus that presses the Big Reset Button – socio-econo-politico-financial reform/restructuring.
Can we simply muddle through? Sure we can, until we cannot ;0)
So, given the possible financial-scape through which we may very well have to travel through, what do we do about allocation?
I think, once more, and nothing original, go heavy on peace-loving commodity based and interest-paying currencies, dividend-paying energy and mineral resources, and gold, gold mining, and their derivatives, the most dependable of commodity-currency-mania dream plays during times of max uncertainty.
Chugs, Jay |
