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Yet another Tin Foil Hat Message
Old 02-02-2008, 11:48 AM   #1
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Yet another Tin Foil Hat Message

Where do they get these Gloomy Guses anyway?

"Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse," he says. "Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."

Jim Rogers: 'It's going to be much worse' - Jan. 31, 2008
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Old 02-03-2008, 04:05 AM   #2
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Originally Posted by barbarus View Post
Where do they get these Gloomy Guses anyway?

"Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse," he says. "Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."

Jim Rogers: 'It's going to be much worse' - Jan. 31, 2008
I think this is why my mother used to tell me (as we gave a wide berth around these people) '... just ignore them dear, ... their harmless'
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Old 02-03-2008, 06:21 AM   #3
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I think this is why my mother used to tell me (as we gave a wide berth around these people) '... just ignore them dear, ... their harmless'
exactly.

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To Rogers, a longtime Fed critic, Bernanke's decision to ride to the market's rescue with a 75-basis-point cut in the Fed's benchmark rate only a week before its scheduled meeting (at which time they cut it another 50 basis points) is the latest sign that the central bank isn't willing to provide the fiscal discipline that he thinks the economy desperately needs.
Apparently he wouldn't be likely to say positive things about the Fed, in any event.

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I'm delighted to see what's happening in Shanghai and Hong Kong," he says.
Oh, good! Since we do live in a world economy (like it or not), and since many of us have money invested in China, I suppose all is not lost.
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Old 02-03-2008, 07:54 AM   #4
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The Fed has caused our current problems and the Fed is really the only ones that can dig us out without a financial meltdown. Greenspan created the "housing bubble" with a prolonged 1% discount rate and then caused the bubble to burst with a rapid increase of the rate. During this whole period the Fed could have stopped the subprime/CDO excesses with a couple of well placed phone calls that they failed to make. Bernacke had to "prove his inflation fighting credentials" by increasing it another 0.25% right after he took over but things were already wavering.

Now large amounts of financial assets are evaporating and banks are afraid to loan to other banks or make investments with their capital reserves falling. The rest of the economy is doing fine based on the earning reports that are coming in. This won't continue if financing totally collapses.

The Fed didn't cut fast enough or early enough but that's history. They are probably about done although I expect another quarter or half point cut to be made. The Fed Fund auctions Bernacke recently started are really what's saving the day. That's keeping the banks liquid so we don't go into a self-created meltdown.

Right now the last angst is whether the bond insurers are going to keep their AAA ratings. I suspect a general bailout to be brokered to keep the last shoe from falling. That will signal that the last big write downs have been made.

My prediction -- Big stock increases ahead when the situation begins to appear to be stabilizing.

We really haven't seen that big of a recent market drop based on historical swings despite the never ending "end is near" trumpeting from the media. We are seeing a tremendous amount of volatility but the market has really just been moving sideways for about a year.

Things will get better.
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Old 02-03-2008, 10:33 AM   #5
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Rogers grew up in little ole Demopolis AL, about 60 miles from me. He sure has come a long way from his somewhat meager upbringing. Made a mint using his brain, so I wouldn't necessarily write off his forecast of our economy. Having said that, I can't remember him ever saying anything positive about our economy, the fed or U. S. stocks. He has been pretty much an international investor for as long as I can remember.
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Old 02-03-2008, 11:25 AM   #6
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Frankly, his worries mirror my own. My biggest fear for the economy right now is that we are going to experience a period of stagflation like the 70s.

I find it strange that bonds have tiny yields, but the commodities are all very high. I don't see how inflation can be kept in check when gold, oil, food, copper, etc are all going through the roof.

I wouldn't buy long-term bonds at current rates without a gun to my head.
Inflation will hurt stocks too, but at least they can raise prices to help offset it.

I think the Fed is trying to be popular at the expense of damaging our currency.

disclosure-- I am 100% equities. I hope the Fed is actually right, since I added a large amount of bank stock (TCB and USB) to my portfolio at the end of last year and the beginning of this one.
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Tin foil?
Old 02-03-2008, 01:41 PM   #7
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Tin foil?

Why 'tin' foil? Wouldn't it be better to get something ferrous (i.e., electromagnetic-shunting), & covered in plastic to prevent rust ... or 'mu-metal,' like the shielding used in cathode-ray tubes? Perhaps with a retractible wire leading to an 'earth-ground,' when under 'attack.'
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Old 02-03-2008, 01:47 PM   #8
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I find it strange that bonds have tiny yields, but the commodities are all very high. I don't see how inflation can be kept in check when gold, oil, food, copper, etc are all going through the roof.
Yes, isn't that strange? Worth investigating, in my small opinion.

Take care to consider the difference between true inflation, and speculative inflation.
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Old 02-03-2008, 01:48 PM   #9
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Just spray this all over and call it even.

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Old 02-03-2008, 01:54 PM   #10
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Old 02-03-2008, 03:23 PM   #11
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Originally Posted by barbarus View Post
Where do they get these Gloomy Guses anyway?

"Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse," he says. "Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."

Jim Rogers: 'It's going to be much worse' - Jan. 31, 2008
Right or wrong about this particular topic, my impression is that Rogers is a pretty smart guy that is willing to take a contrary position and is often right when he does so. I would not put him in the category of a media shill trying to come up with a new story angle to make his deadline.

Although I may have a bias because I did enjoy his books. I think that they are a unique blend of travel and investment philosophy. I recommend them.

He also got a chapter subtitled "The Pioneer" in Steve Drobny's 2006 book "Inside the House of Money" which is about the top (according to Drobny) macro hedge fund traders in the world.

Of course it may be they he is trying to move the market in one direction so that he can bet the other way.

MB
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Old 02-03-2008, 07:14 PM   #12
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Originally Posted by ScooterGuy View Post
Why 'tin' foil? Wouldn't it be better to get something ferrous (i.e., electromagnetic-shunting), & covered in plastic to prevent rust ... or 'mu-metal,' like the shielding used in cathode-ray tubes? Perhaps with a retractible wire leading to an 'earth-ground,' when under 'attack.'
The inherent resistivity of the ferrous metals is too high. Silver offers the best conductivity to ground and would represent the best shield. The problem of atmospheric corrosion in the form of tarnish is one of aesthetics rather than function as long as the earth ground is solid at both ends.

Silver, while initially more costly than a baser metal such as copper, has the further advantage of also offering the possible opportunity for financial gain through capture of rising value. This concept, however, might quite possibly initiate criticism from those who would observe that making the observation of the potential for PM rise is fundamentally linked to the perceived need for cranial shielding in the first place.
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Old 02-03-2008, 08:35 PM   #13
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For optimal protection against external statics, one should investigate living a Faraday cage. But, as a Boglehead, I don't need such enclosure. I just filter out the noise and stay the course.
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Old 02-03-2008, 11:12 PM   #14
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For optimal protection against external statics, one should investigate living a Faraday cage. But, as a Boglehead, I don't need such enclosure. I just filter out the noise and stay the course.
I'm in the camp of those on the board who think that Jim Rogers is a pretty sharp guy, likely a few steps ahead of most of us here. Certainly he is ahead of me.

As Dawg52 said he grew up in a small town in Alabama. He went to Yale on a scholarship, took a job with George Soros not long after graduation, and was initially a stock picker for that organization. His first big score was on oil service stocks in the very early 70s, when no one had paid any attention to oil and gas for a long time. Rogers and Soros reasoned that years of underinvestment were going to leave us short of needed infrastructure, and invested accordingly.

He is not rich like Soros, but is certainly rich. He thinks the US is more or less shot in any role similar to that which we have occupied at least since WW2. Whether he is right or wrong, he is serious about it and has recently moved his family and investing operations to Asia, I think Singapore.

He was very early on the current commodities boom, recommending commodities during the dot-com craziness. Frequently early, but not often wrong. He has shared a lot of good advice over the past 10 years or so, and many of us would have made more money had we followed his plan rather than do whatever we did do.

Certainly pitting gold and oil against the S&P is no contest over this period, though gold and oil too went down for a while around the millennium.

As a general working hypothesis I assume that protecting oneself from attitudes that differ from those you already believe is at best a sub-optimal course to follow.

Ha
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Old 02-03-2008, 11:15 PM   #15
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If I only had a brain heart...
Speaking if heart, the careerBuilder commercial at the Super Bowl was really funny. A heart popped right out of a woman walked over to her boss's office and sticked out a sign with a message "I quit". The idea is to follow your heart and change career/job.
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Old 02-03-2008, 11:33 PM   #16
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Ha,

You should follow the guy's advice if you really believe that he is right. I have nothing against Mr. Rogers personally and I don't doubt his record, but I will remain skeptical of anyone's ability to predict the future with any measure of accuracy. There are many great investors (including Warren Buffet and Georges Soros) who made mistakes at one point or another in their career and bet their money on the wrong horse, which prove that even geniuses are fallible. Who knows if Rogers happens to be right this time. The fact that he was born in Alabama or went to Yale has nothing to do with his ability to predict the future IMHO.

I will stay on Mr. Bogle's side (which by the way does not mean that I don't agree with Rogers that investing abroad makes a lot of sense).
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Old 02-03-2008, 11:52 PM   #17
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Ha,

You should follow the guy's advice if you really believe that he is right. I have nothing against Mr. Rogers personally and I don't doubt his record, but I will remain skeptical of anyone's ability to predict the future with any measure of accuracy. There are many great investors (including Warren Buffet and Georges Soros) who made mistakes at one point or another in their career and bet their money on the wrong horse, which prove that even geniuses are fallible. Who knows if Rogers happens to be right this time. The fact that he was born in Alabama or went to Yale has nothing to do with his ability to predict the future IMHO.

I will stay on Mr. Bogle's side (which by the way does not mean that I don't agree with Rogers that investing abroad makes a lot of sense).
I really don't get the point of your post. Of course no one is always right. That doesn't mean that the ideas of those who have been frequently right should not inform whatever course we decide to pursue. However, you know the old saying ymmv, and you seem convinced that your mileage will be best with Mr. Bogle. I am not arrogant enough to tell you to do this or do something else; I assume that you have good reasons for doing whatever you do.

As a sidelight, of all the people mentioned above, Mr. Bogle is the only one who has never been an investor. He is a businessman who tells others that it is useless to actively invest.

But for you , I am very happy that you have found your talisman in Mr. Bogle, and that "[You] will stay on his side." I guess I didn't realize that we were choosing up sides.

I do find comments like, "You should follow blank if you think he is right" somewhat aggressive and generally unhelpful. I use this as a discussion board, not as a source of recipes for my personal investing. I don't give recipes either. Your purpose here apparently includes giving advice, at least to me.

For me, although I wouldn't say that I "have followed Mr Rogers advice", those who have been around here a while know that my portfolio has at times been very heavy in commodities and commodity related equities, and probably will tend to stay that way much of the time.

Ha
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Old 02-04-2008, 12:08 AM   #18
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Ha,

I wasn't trying to be aggressive at all... Are you in a bad mood?
and by the way if the following statement is not passive aggressive, I don't know what is:

Quote:
But for you , I am very happy that you have found your talisman in Mr. Bogle, and that "[You] will stay on his side." I guess I didn't realize that we were choosing up sides.
My original statement was probably one of the least controversial posts in this entire thread and I really don't understand how it became a lightning rod...
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