Hello Malcolm, <<why shares of manufacturing companies are less promising on the average than service companies>>
... because manufacturing requires material the cost of which folks bid higher and higher, whereas service simply needs people that compete to bid lower and lower to help serve ;0?
Continuing this thread Message 19675716 , I am worried, and so it is once again time to clarify the worrying :0)
Specifically I am worried that I may inadvertently been correct in my January Wandering, Wonderings and Ponderings (“WWPs”) achamchen.com , especially the part about:
<<The Annual Party That Is A Contrary Indicator – the big play of 2004 … I thought, after mulling over what I heard, 'oops, stocks will crash, bonds will tumble, but the USD will bounce up, even though the gold bull may have a long healthy future yet'.
So, is there a scenario where stocks, bonds, real estate and non-USD currencies gets trashed, and the USD cash and gold goes up? This is the play indicated by the 'contrary Xmas party'.
In fact, the answer to my question is yes. The trigger would be stagflation, accompanied by a rising USD interest rate AND a rising gold price!
2004 is getting difficult to navigate already, for I may need to short more of the general equity market soon, in some fashion, or by other ways, even as I might have to de-camp my cash troops from Euro/Yen/DKK/AUD/CAD territories and send them into USD-space>>
I focus my observations on the US because (a) it is the superpower that leads the world, (b) the benchmark against which all else is measured, and (c) everyone who has any material savings in fact is an electorate, casting a bet for or against the USD, and can measure their NAV in terms of the USD.
What has happened since can be simply tabulated so:
(a) The US Dollar has stabilized against the other currencies, not so much because folks are jubilant that the US economy is genuinely recovering, but because people are worried that US interest rate will start to rise given inflation fears;
(b) The US stock indices have stalled, because folks presumably are worried about above (a), and are concerned about valuation in an era of asset inflation fueled jobless recovery from supposed perfect financial health;
(c) The US bond market rose a bit more, or, put another way, the US bond yield dropped still further, not as inexplicably as one could spin it, as in not because folks do not believe inflation will not be, but because the Japanese are acting out their usual role of buyer of last resort for USD paper, causing USD to rise and yield to drop, and because folks believe yields will stay low longer due to tepid demand given the economic outlook; and
(d) The US housing market continues to power ahead, absent any economically logical reason other than asset inflation driven by cheap money.
Of course, the sum of all above fears contain many contradictions, that of inflation of services and tax, deflation of paper and real assets, disappearance of jobs in one locality, and too many jobs in other jurisdictions, and the hesitation is best encapsulated in the action of the currencies grinding against currencies, desiring USD because interest rate might start to rise, and fearing USD because of mounting deficits piled on top of debt-ly sins, papered over by ink, all warmed by the escaping heat of Professor BurnAndKaput’s printing press.
The developing drama is fascinating. The scene would be entertaining if not for the fact that we ourselves may be engulfed in the bonfire of the paper assets and swallowed up in the implosion of real assets.
And now, in the middle of all the excitement, Maurice’s uncle drops a pile Message 19854204 , telling us that we may be doomed unless we win a non-existent galactic lottery, and implicitly hinting that he will not be around to take the blame.
The ship is going down and the captain in effect is ready to quit. But before he does, he tells us (a) the twin engines Fannie and Freddie may blowup, and (b) the Social Security fuel is contaminated, and must be dumped.
I remind you once again of achamchen.com and Message 19840004 .
Our era will, without a doubt, be written up one fine day when the present drama is all over, and will probably be sited in some happy-go-lucky prankster’s cyber journal 300 years from now as an example of what not to experiment with.
I figure that money is a unit of exchange, and so must be a dependable store of value that is divisible, fungible and portable. What money should not be is an experiment.
No, I will not launch into a tirade against the likes of Greensputin and BurnAndKaput. Not now, not this weekend, not ever.
I am learning to enjoy what the terrible twins are doing, and am trying to benefit from the wrongs of their ways, however much damage they are enabling to be done to our fellow travelers in the 3D world, condemning however many to financial purgatory. Such is the way of the Darwinian financial-scape where all must participate in the Last Man Standing Financial Death Match, however unwilling and ill equipped to play.
This is simply “Just Is”.
Before moving on to speculating about what we might want to consider doing for the next few months, I want to tally up 2004 year-to-date:
NAV is up 1.96% YTD, compared to 4.46% tally on January 10th.
My explanation is since January, (a) the Dollar is now up, and (b) therefore the Gold is then down, as in DUGD.
All I can say for myself is that (a) I am glad I took the contrary-wager pilgrimage to Bora Bora achamchen.com, that island of First Born, the elemental cathedral in the enchanted primordial ocean, during its low-season, so that I at least do not have that money to lose because it was spent, (b) the pilgrimage to that elemental world will no doubt pay dividends for years and years, and (c) we are only at the end of February, and so there is plenty of time to make the required -X- additional percentage points (to make the absolutely must 3-5% real purchasing power gain) before 2004 draws to a close.
What now?
Let’s start with the believed natural story line and the trusted obvious script:
(a) Global equalization of cost and revenue will continue as always;
(b) Many in all localities will fall by the wayside on the road to TeoTwawKi (definitions achamchen.com ), to be picked clean by the scavenging marauders speculating by night and wagering by day;
(c) Officialdom interference in global equalization will be, encouraged by the mob electorates, and will inevitably make matters worse, not better;
(d) Officialdom interference will invariably take the predictable forms of protectionism, currency destruction, attempts at using asset inflation to alleviate the pain and muffle the birthing cry of a new world;
(e) The program, in its finite variations, will always be achamchen.com << ... scam the rich ... screw the poor ... soak the stupid ... reward the undeserving>>
(f) A variation of revolution then must, as in always will, happen;
(g) In the course of the revolution, the bloated financial markets will clear, crimson excesses will drain, frivolous spending, in real terms, will decrease, and debt-ly economies, by true measure, will contract;
(h) Folks will re-learn the ways of the ancient, namely thrifty savings, and diligent work, taking care of aged parents and illuminate the way for the young;
(i) Wisdom will reassert, debt will be not trusted, money will be recreated to be faithful, and then all will again be well, and
(j) True and false abracadabras will merely serve to distract and delay what must be, namely global de-leverage of obligations, and planet-wide arbitrage of unequal, because what must be is dictated by nothing more novel than math and is no more mysterious than physics, however random the Brownian motion phys.virginia.edu. appears to be.
If so, then what can we do, and what must we do, so that we are not de-leverage away and arbitraged out of existence?
I do not know the full and precise answer, except that we that our money must move, and always be ready to move again, else we are as doomed as any in the past who refused to move in face of pending disaster.
The years 1711 achamchen.com and 1790s achamchen.com comes to mind, as do 1929 in NY achamchen.com , 1930s in continental Europe, and 1800s-1980s in China.
The guiding philosophy is a simple one; when the going gets tough, don’t fret, don’t pray, just pack up and aim for the exit.
The guiding philosophy is definitely not just being contrary. Being truly contrary now would dictate that we invest in the fine sands of Saudi Arabia and move to beautiful mountains of Tora Bora ;0)
Hindsight can be so clear and obvious, and therefore so helpful if used correctly :0)
Should what I fear most not happen, great, wonderful, fabulous, fantastic, and therefore so unlikely ;0)
I have a simply radical idea.
No, not the one about holding tight to the energy royalties until they effectively yield only 6% to the crazed hoards looking for yield. Again, not about the idea where we add more energy shares now in anticipation of Saudi Arabia being cleansed of its parasites. And, no once more, not about hoarding cash of all flavors, waiting for you-know-what that must happen at some point.
The idea is radical in that it is born of a fevered mind scoping for loot, and simple in that is easy to explain:
· Platinum metal is precious, in that it is valued for industry and hoarding, and is rarer than gold;
· Platinum metal price is at a historical peak kitco.com , and no more can be found outside of the control of a few companies;
· Palladium metal is almost as useful, but for all the good reasons at a low kitco.com ;
· Neither metal can be printed by central banks, and none can be treated as desired or unfashionable money by the fickle crowds;
· Platinum pure-play share Impala Platinum (IMPAY) pcquote.com is appearing peaky pcquote.com due to presumably already very high platinum price (limits platinum price appreciation upside potential) and concurrently strengthening South African Rand (increases company cost, thus reducing profit and its previously high dividend);
· Palladium pure-play North American Palladium (PAL) pcquote.com has been zooming, but only to its old high;
· PAL is option-able, IMPUY is not;
· Platinum price may drop, stay even or rise further, but palladium ought to rise more or at least not drop as much;
· The USD has been dropping, and may strengthen, and the SA Rand has been rising but should eventually fall; and
· So, a puzzle. There is a NToeAwsBe truth (definitions achamchen.com ) amongst the above facts, somewhere, somehow, or we need to do is to figure it out :0)
Just buying the physical is not an answer, because just buying the physical cost money, and we like money, the more the better, now better than later, and in our pockets better than in their bags.
There ought to be a clever way, as in the world of chemistry and physics, to tap off the frictional heat of the interaction of the above-mentioned thoughts and generate useful and certain energy without too much exposure to the toxic downside ;0)
Chugs, Jay
P.S. I have existing positions in platinum metal, IMPUY, PAL, and shorted PAL covered call, and am thinking about a new series of wagers if someone can come up with the answer that fits in with the new times, in tune with the Force. |
