Felix Zulauf: Marching Full Speed into Calamity

[LARS]

A sobbering discussion very much worth your time. Zulauf is a regular on Barron's Round Table participant. Bottom line: inflationary depression, in which no one will escape unscathed.

WARNING: Not for the faint of heart.


http://mcalvanyweeklycommentary.com/07-06/


ZULAUF ASSET MANAGEMENT AG was founded in 1990 and is fully owned by Felix W. Zulauf as an independent investment manager seeking absolute return. The firm manages a global fund seeking absolute return in a conservative way and invests worldwide in liquid assets only.

 

[ziggy29]

Would "the sky is falling" be a fair summary?

 

[LARS]

Would "the sky is falling" be a fair summary?

Did you listen to it?

To suggest it is the “sky is falling” is to suggest it is fear mongering and not a well reasoned critique of the current global state of affairs. Moreover, he highlights potential “winners” in a losing environment.

 

[FIREd]

Thanks for posting this little gem. Highly educational.

 

[kyounge1956]

Did you listen to it?

To suggest it is the “sky is falling” is to suggest it is fear mongering and not a well reasoned critique of the current global state of affairs. Moreover, he highlights potential “winners” in a losing environment.

OK, I listened to it. I heard a lot about traps and that a bad economy for several years to come (it wasn't plain to me how many) followed by a really bad economy, was pretty much inevitable, but even if Mr Zulauf's predictions are 100% correct, what then? What steps is one supposed to take in response to this?

 

[MichaelB]

A sobbering discussion very much worth your time. Zulauf is a regular on Barron's Round Table participant. Bottom line: inflationary depression, in which no one will escape unscathed.

WARNING: Not for the faint of heart.


http://mcalvanyweeklycommentary.com/07-06/


ZULAUF ASSET MANAGEMENT AG was founded in 1990 and is fully owned by Felix W. Zulauf as an independent investment manager seeking absolute return. The firm manages a global fund seeking absolute return in a conservative way and invests worldwide in liquid assets only.

I found the interview to less sobering and more inebriating - that is, it made me what to go have a drink.

Would "the sky is falling" be a fair summary?

More like the Peter Venkman "Human sacrifice, dogs and cats living together... mass hysteria! "

 

[2B]

OK, I listened to it. I heard a lot about traps and that a bad economy for several years to come (it wasn't plain to me how many) followed by a really bad economy, was pretty much inevitable, but even if Mr Zulauf's predictions are 100% correct, what then? What steps is one supposed to take in response to this?

Buy MREs and lots of ammunition. Head out into the mountains or backwoods and build a defensible position. Hold out until you die.

There are regular versions of how our world ends. One day it will but there must be something in the human psyche that just drives our fascination with the subject. Clearly, there isn't much we can do about it.

 

[LARS]

What steps is one supposed to take in response to this?

What I took away is a) being nimble with equities over the next few years will be important (more of a trading than a holding market) and b) assets/currencies of Singapore and Norway, and to a lesser extent Switzerland, could provide relative protection against monetary inflation and c) gold.

Personally I am not willing to bet the farm on his views. I suspect he is more negative than what will occur. However, I am not dismissive of his concerns by any means.

 

[haha]

There are regular versions of how our world ends. One day it will but there must be something in the human psyche that just drives our fascination with the subject. Clearly, there isn't much we can do about it.

It is your statement that what he is describing is the end of the world. What he fortells (rightly or wrongly) is more or less garden variety market and currency problems that have happened in the US to this degree or greater at least twice in the 20th century, and mas o menos in 2008-2009.

If one were convinced of this, there is plenty he could do, just by changing allocations, market positions and exposures, etc.

Ha

 

[DblDoc]

OK, I listened to it. I heard a lot about traps and that a bad economy for several years to come (it wasn't plain to me how many) followed by a really bad economy, was pretty much inevitable, but even if Mr Zulauf's predictions are 100% correct, what then? What steps is one supposed to take in response to this?

You are supposed to invest with Mr Zulauf's investment firm in Switzerland .

DD

 

[talltrees]

I found the interview to less sobering and more inebriating - that is, it made me what to go have a drink.

More like the Peter Venkman "Human sacrifice, dogs and cats living together... mass hysteria! "

Zulauf makes me want to take a Zoloft.

 

[FIREd]

Interesting reactions. I don't think that Mr. Zulauf's views are extreme at all. He is just a conservative Swiss banker who sees a lot of risks out there. Like most Swiss bankers, his number one concern is capital preservation (people don't put their money in Swiss banks to grow it, but to protect it), so he has to focus on risks. Maybe it's a cultural thing, but I happen to agree with most of what he said.

 

[MichaelB]

It is your statement that what he is describing is the end of the world. What he fortells (rightly or wrongly) is more or less garden variety market and currency problems that have happened in the US to this degree or greater at least twice in the 20th century, and mas o menos in 2008-2009.

If one were convinced of this, there is plenty he could do, just by changing allocations, market positions and exposures, etc.

Ha

He goes beyond that. In addition to a collapse in the equity market, loss of value for treasuries, and loss of value of the currency, he is also forecasting he same for Europe, along with failure of the monetary union. He is predicting an economic collapse of the developed world.

 

[eridanus]

He goes beyond that. In addition to a collapse in the equity market, loss of value for treasuries, and loss of value of the currency, he is also forecasting he same for Europe, along with failure of the monetary union. He is predicting an economic collapse of the developed world.

Given that, gold would be worthless unless you physically owned it. Wouldn't land be the place to put money? (Along with a tall fence and some shotgun shells and seed. )

 

[LARS]

One of my favorite quotes is by Patrick Henry. I find it sound advice and when I hear something I don't like, or agree with, his words force me to consider the possiblities. I think it applies to many aspects in life, including investment philosophy. Comments on this thread put me in mind of it:

"It is natural to man to indulge in the illusions of hope. For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst, and to provide for it."


March, 1775

 

[haha]

He goes beyond that. In addition to a collapse in the equity market, loss of value for treasuries, and loss of value of the currency, he is also forecasting he same for Europe, along with failure of the monetary union. He is predicting an economic collapse of the developed world.

Even if all the things you mention come to pass, to me that does not equate to the collapse of the developed world. Now WW2, that was a (temporary) collapse of the developed world.

Ha

 

[traineeinvestor]

Interesting reactions. I don't think that Mr. Zulauf's views are extreme at all. He is just a conservative Swiss banker who sees a lot of risks out there. Like most Swiss bankers, his number one concern is capital preservation (people don't put their money in Swiss banks to grow it, but to protect it), so he has to focus on risks. Maybe it's a cultural thing, but I happen to agree with most of what he said.

I tend to agree with this - if capital preservation means preserving the real value of your capital. It's consistent with the views of a lot of the European private bankers that I speak with (not just the Swiss). Currency debasement leading to inflation is a recurring theme driving their investment strategies.

 

[harley]

I tend to agree with him regarding the inevitability of some bad years until the financial situation stabilizes at a reasonable level. I'm not sure of the timing, but his guess sounds pretty well thought out. I particularly liked this analogy:

I say that we are moving into a thunderstorm here, and it will rain and pour. There will be lightning. There will be flooding. There will be mudslides. Everybody will get wet. But the most important thing is, not to stand where the lightning strikes, not to be where the flooding is, or the mudslides. That is how I describe it. It is very difficult to come out as a winner, and actually, if one is smart enough to figure out what exactly to do, and comes out as a winner, I am pretty sure that governments will tax his profits away quite dramatically.

 

[kumquat]

Believe it or not, DW & I already own a chunk of farm land that's hard to get to. No roads, just a trail (called a road allowance here). I also own a couple of (unregistered in Canada) firearms.

Am I ready for what's comin'?

 

[MichaelB]

Even if all the things you mention come to pass, to me that does not equate to the collapse of the developed world. Now WW2, that was a (temporary) collapse of the developed world.

Ha

Well, that's economic collapse. Not as severe as a war, much more severe than the '08 crisis, and I believe Mr. Zulauf overdoes it. But he is trying to make a point which is valid, that developed countries need to get their (our) sh!t together and start showing greater financial responsibility.

 

[dixonge]

"it's going to feel very hard, harder than anything they've experienced in their lifetime now, for a long time to come." - Timothy Geithner

 

[kyounge1956]

Well, that's economic collapse. Not as severe as a war, much more severe than the '08 crisis, and I believe Mr. Zulauf overdoes it. But he is trying to make a point which is valid, that developed countries need to get their (our) sh!t together and start showing greater financial responsibility.

But he also says that it's nearly impossible, in practical political terms, to do this in a democracy. Any government (and he also said it's becoming harder and harder for any one party to form a strong government) that starts being financially responsible is likely to be voted out at the next election.

Mr Zulauf says: this economic crisis can't be prevented. Government action will not be effective, and any government that did take effective action would probably be out of power soon afterwards. If an individual does take his advice and come out of the mess with a profit, the government will tax it away. What he's describing is a no-win situation, and I still have my doubts that there is any practical value to this information. What good is it, except to promote anxiety?