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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: chainik who wrote (50288)	1/19/2006 4:56:49 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Well for starters pretcher made a zillion mistakes 1) Thinking that these cycles were 54 years long. That lead to all kinds of silly predictions 2) As for gold he does not seem to understand that gold is likely to rise in defltion. That aside if one invested in gold, miners, and US treasuries in 2000 one did extremely well. In a sense the move has started. The FED interrupted the start however with an idiotic campaign of slashing interest rates to 1% fueling the biggest property boom the world has ever seen. It was a mistake to not recognize what was going on and to play along with the "reflation" game. Thus no matter what the theory one is playing: inflation, deflation, or stagflation one must adjust to conditions that are happening. If GST or anyone else shorted the US$ in March of 2005 thinking the world was about to end because of some US$ bubble, well they had their heads handed to them. As did housing bears for quite some time. Equity bulls and bears may or may not have done anything for the past 18 months. The startegy that worked was buying breakdowns and shorting big runups. Anyway in spite of enormous credit EXPANSION, long dated treasuries outperformed the major indices. That would be consistent with a deflation theme. Hoisington had a great year in treasuries. +11% or so. Not bad huh? Of course anyone concentrated in metals or energy blew the socks off everyone else. Peak oil in conjunction with mammoth liquidity was a big factor there. One must always pay heed to what is happening regardless of whether or not one believes in inflation, deflation, or whatever. But those believing in deflation did not lose a zillion rounds in 10 yr treasury PUTs, and presumably were long at least some gold. I am actually convinced the safest portfolio right now would be a mix of 1-5 year treasuries and some gold. If one wanted more balance and more risk then going long the YEN might be an idea whose time has come. Oil is a freaking wildcard but if it spikes for geopolitical concerns then the market will likley have a "bad hair day". Finally those agressive can add some financial puts or QQQQ leap puts here. That is how I see it from here on out. Oddly enough those believing in inflation would buy the YEN, buy gold, but short treasuries. There is overlap but I think for the wrong reasons. Gold does well at extremes. I think we are at that deflation extreme NOT a hyperinflation extreme. IMO we just witnessed a "false spring" just as there was one after the 1929 crash as well. The brightest predicted that "echo bubble too" I highly recommend the firts and third book on this list. globaleconomicanalysis.blogspot.com Duncan talked about what I am trying to convey now. I doubt he expected this "echo" to last as long as it did. No one did (except those that still do not think we are in a bubble yet). Mish