Posts filed under 'Wealth Literacy'
We’ve moved the archives to the bottom of the page but they are still here. Of course you may always access the archives by clicking on the listed categories in the left hand column of this page as well. Learn the best ways to invest money during the developing dollar crisis, possible stock market crash, and developing financial crisis. Our goal is to be the only website that consistently provides you, the reader, with the REAL stories behind the stories in the investment world today and the facts you need to know about gold investments, the oil crisis and how to recession proof your investment portfolio against coming bank failures and continuing economic mayhem.
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Most Read Posts (52 articles) - Discover which articles Underground Investor™ readers are most interested in. See the full database by clicking the link above.
Sept. 27, 2007 - 101 Reasons Why Managing Your Money is the Quickest Way to Build Wealth
Sept. 25, 2007 - 10 Surefire Ways to Make an Investment Fortune
Sept. 15, 2007 - Why the U.S. Feds 0.50% Rate Cut Won’t Save the Markets
Sept. 15, 2007 - U.S. Interest Rate Cut to Have Little Long-Term Positive Effect
Aug. 20, 2007 - How Much Does the Gov’t Really Manipulate Markets
Aug. 9, 2007 - More Gov’t Foolishness (or Lies) Again: Markets are Sound…NOT!
Aug. 9, 2007 - Chinese Tariffs and the Nuclear Option
Jul. 24, 2007 - How to Invest Like the World’s Greatest Investors
Jun. 17, 2007 - Get Out of Dollar-Denominated Bonds While You Still Can!
May 1, 2007 - Uranium Stocks are Finally Getting the Attention They Deserve
Apr. 23, 2007 - The Emperor’s New Clothes Abound in the Investment Industry. Don’t Get Cheated by Your Advisor
Apr. 20, 2007 - Use Intelligent Strategies to Push Risk Back onto Investment Firms
Apr. 19, 2007 - In Risky Markets, Follow the Behavior of the Ultra-Rich, Not the Rich
Apr. 12, 2007 - The Secret to Investing
Gold Investments (32 articles) - Use traditional rules to invest in gold stocks and you’ll lose money hand over fist with this asset class. Learn more about one of the most important components of every portfolio for future years to come. See the full database by clicking the above link.
April 23, 2008 - Will U.S. Markets Crash Now or Later?
Feb. 4, 2008 - Could Chinese New Year’s Fuel the Next Rally Higher for Gold Stocks?
Jan. 29, 2008 - Even After This Strong Run, Gold Stocks are Still a Bargain Today. Here’s Why.
Jan. 5, 2008 - A Sneak Peak at Our Premium Level Information
Nov. 4, 2007 - Is Hyperinflation Coming to the U.S.? It’s Time to Stock Up on Gold.
Nov. 4. 2007 - Gold is the Best Investment Today, History Tells Us So.
Nov. 2, 3007 - Gold Expensive at $791/oz.? Not by a Longshot
Jun. 5, 2007 - Learn How NOT to Invest in Gold
Mar. 30, 2007 - Navigate the Minefields of the Investment Information Highway
Mar. 7, 2007 - This Bounce in Gold Markets Merits a Cautious Approach
Mar. 6, 2007 - Gold Stocks Correction - What it Means?
Feb. 28, 2007 - How to Profit from a Weakening Market, Gold Stocks, & More, Part II
Feb. 28, 2007 - Buying Opportunity in Gold Stocks
Feb. 28, 2007 - How to Profit from a Weakening Market, Gold Stocks, & More, Part I
Feb. 23, 2007 - Uncover the Ignored Asset Classes
Feb. 12, 2007 - How Do I Know that Institutional Money is Still Not on Board with Gold?
Jan. 25, 2007 - If You Don’t Own Gold Stocks, You Need To
Jan. 23, 2007 - Building Wealth Requires More than Just Contrarian Investing
Jan. 14, 2007 - Use the Long Tail of Investing to Accurately Predict the Price of Gold
Jan. 11, 2007 - The REAL DEAL about Gold and Energy
Dec. 13, 2007 - Commodities and Asians: Apparently We All Look Alike
Nov. 6, 2006 - Sometimes Silence is Golden
Oct. 10, 2006 - Shock and Awe Awaits Global Markets
Oct. 4, 2006 - Is Gold’s Correction Over Yet?
Oct. 2, 2006 - Fiat Currency Concerns Give Rise to a Gold & Silver Backed Currency System
Oct. 1, 2006 - The Gold Timeline - A History of Gold Prices
Sept. 16, 2006 - Has the Commodities Bubble Burst? No, No, No!
Sept. 13, 2006 - Sell the Rumor, Buy the News
Sept. 11, 2006 - Gold’s Speculative Stigma is Unwarranted
Sept. 3, 2006 - Gold’s Glitter is Genuine
Aug. 14, 2006- Knowing Your History is More Important to Creating Wealth than Fundamental Analysis
Financial Crisis, Dollar Crisis & Recession Proof Investing (26 articles) – Foolish investors’ eyes lit up as New Century Financial dropped from $30 to $20 a share during the recent subprime mortgage fiasco. Their hearts thumped with excitement as shares dropped from $20 to $10 and they doubled down. When shares dropped to $5 they thought it had to be the bottom and put their last remaining money into New Century. A month later, they lost everything. There is similar optimism surrounding the dollar today from self-declared currency experts. Discover why the dollar is much more likely to go the way of New Century than experience a comeback like Muhammad Ali’s Rumble in the Jungle.
June 26, 2008 - The One Question That Will Have the Greatest Impact on Your Financial Future
May 14, 2008 - What’s Driving the Price of Oil Higher? It’s the Dollar, Stupid!
April 30, 2008 - How Low Will the Feds Go?
April 17, 2008 - Monetary Inflation. How Increased Paper Wealth Can Translate into a Lower Standard of Living
March 3, 2008 - Why Investors Will Never Make Money in this Bear Market
Feb. 20, 2008 - The Secret to Building Wealth in Volatile Markets
Feb. 6, 2008 - Is Recession in the U.S. Coming? We’re Already in One.
Jan. 28, 2008 - The Outcome of the Fed’s Interest Rate Cuts? History is the Best Oracle.
Jan. 24, 2008 - The Fed’s 0.75% Interest Rate Cut - A Recipe for Future Disaster
Dec. 7, 2007 - The Dollar Panic. Is it Real?
Sept. 19, 2007 - Signs of a Peak Investment Crisis Keep Coming
June 18, 2007 - Alan Greenspan’s Call of Checkmate on China is Premature
June 17, 2007 - PIMCO’s Bill Gross and the Economist Agree with SmartKnowledgeU 6 Months After the Fact!
May 28, 2007 - The Politics of Higher Oil Prices
May 26, 2007 - Asian Countries Pooling Reserves to Protect Themselves from the Incredible Shrinking Dollar, Part II
May 25, 2007 - Asian Countries Pooling Reserves, Part I
May 3, 2007 - The Death of the 3-Year Treasury Note
Apr. 1, 2007 - The Next Cold War Will be an Economic One
Jan. 25, 2007 - Dollar-Denominated Bonds Faltering
Jan. 9, 2007 - Use the Longtail of Investing to Accurately Predict Dollar Behavior
Jan 7, 2007 - 10 Reasons Why Dollar-Denominate Bonds Aren’t Safe
Dec. 21, 2006 - Iran Presents More Trouble for the U.S. Dollar
Dec. 7, 2006 - The U.S. has Perfected the Incredible Shrinking Dollar
Free Stock Picks (22 articles) - While our top-shelf stock picks and ideas that have since returned 100% to 200% returns are reserved for our members only, here read articles about some mid-shelf stock picks and ideas that have already returned 30% returns in less than a year. Access the full database by clicking the link above.
Jun. 4, 2007 - To Prove the Effectiveness of Our SmartKnowledgeU™ Investment System, Even Our Weakest Picks that We’ve Given Away for FREE Have Soared
Apr. 29, 2007 - After BAIDU, Possibly Focus Media
Apr. 2, 2007 - Profit, Don’t Lose From Market Corrections
Apr. 2, 2007 - Global Warming Presents Easy 30% Gains for Underground Investor Readers
Mar. 13, 2007 - Beware the Perpetual Bulls, Part II
Feb. 18, 2007 - Banking Sector FY 2008 - Positive for Japan & India, Negative for China
Jan. 4, 2007 - Chinese Technology Companies to Watch in 2007
Dec. 19, 2007 - MSFT and Internet Protocol Version 6
Dec. 12, 2006 - It’s Time to Keep a Close Eye on Indian Stocks ICICI & HDFC
Dec. 7, 2006 - The Ocean Becomes a New Growth Point in the World Economy
Oct. 30, 2006 - What’s the Safest Place to Invest in the Oil Industry Now?
Oct. 30, 2006 - You’ll Find Ignored Investment Opportunities in the DRC & Libya
Oct. 23, 2006 - Indian Banks Anyone? Four Letters: HDFC
Oct. 9, 2006 - Don’t Believe the Hype - Avoid Chinese Bank Stocks
The Peak Investment Crisis & Stock Market Crash (12 articles) - Bubbling underneath the surface, there lies a peak investment crisis. When it hits, savvy investors will build a fortune. Unfortunately, most investors will be blindsided and lose great fortunes instead. Access the entire database by clicking on the above link.
Nov. 4, 2007 - Is Hyperinflation Coming to the U.S.? It’s Time to Stock Up on Gold.
Nov. 4. 2007 - Gold is the Best Investment Today, Part II
Oct. 15, 2007 - Our New Forum on Facebook: Crisis Investing
Oct. 9, 2007 - Beware the Turbulence that Lies Beneath the Surface, Part I
Sept. 20, 2007 -The Signs of a Peak Investment Crisis Keep Coming
Sept. 19, 2007 -Why the U.S. Fed’s 0.50% Rate Cut Won’t Save the Markets
Aug. 9, 2007 - More Gov’t Foolishness Again
Jun. 29, 2007 - Don’t Let the Strength of the U.S. Markets in the First Half of 2007 Fool You
Mar. 11, 2007 - It’s the Difference Between Chasing & Building Wealth
Mar. 6, 2007 - What this Correction Means for Gold Stocks
Feb. 28, 2007 - How to Profit From a Weakening Market & Gold Stocks
Sept. 9, 2006 - The Peak Investment Crisis
Aug. 11, 2006 - How to Protect Your Portfolio During Turbulent Markets
A New Investment Paradigm for the 21st Century (10 articles) – Fundamental and Value investing may take years of patience to pay off (i.e. Apple Computers was a huge value stock at $13 a share and took more than four years of waiting to pay off huge), Growth investing often leads to chasing hot sectors that correct rapidly. Discover why changing conditions in today’s global market has created a new investment paradigm that is hands down the best way to invest today. Click the link above to see all articles in this category.
Jul. 24, 2007 - How to Invest Like the World’s Greatest Investors
Feb. 25, 2007 - Frontrunning Can Make You a Fortune
Jan. 30, 2007 - The New Paradigm of Successful Investment Strategies
Jan. 21, 2007 - 10 Reasons the Longtail of Investing is the Only Way to Build Wealth
Jan. 16, 2007 - Use the Longtail of Investing to Predict Major Market Events with High Accuracy
Jan. 9, 2007 - Accurately Predict U.S. Dollar Behavior
Sept. 1, 2006 - What Mark Cuban Failed to Realize About Investing
The Biggest Investment Myths (59 articles) – All investment professionals, from investment firms to financial consultants to the financial journal purposely spread tales of lies and deception. Jim Cramer, an investment professional that amassed a fortune as a hedge fund manager, recently stated that the last thing he ever wanted to do is to tell the truth. Find out why deception is part of the game in the investment industry. Click the link above to access the full database.
Oct. 25, 2007 - New Home Sales Went Up. So What?
Oct. 15, 2007 - Beware the Turbulence that Lies Beneath the Surface, II
May 6, 2007 - Economic Reports Drive Short-Term Behavior, but Hardly Represent the Truth
Mar. 21, 2007 - The Short-Term May be Rosy, but Beware the Financial Crisis that is Building Steam
Mar. 4, 2007 - Foreign Markets aren’t as Risky as the Pundits Say
Feb. 23, 3007 - Evolve Your Investment Strategies with Evolving Technology
Feb. 6, 2007 - My Problem with Investment Newsletters (except ours, of course!)
Feb. 4, 2007 - 10 Questions to Help You Find a Superior Financial Consultant
Jan. 30, 2007 - A New Paradigm of Successful Investment Strategies
Jan. 25, 2007 - Despite Evidence to the Contrary, Millions of Investors Will Believe Whatever they Want to Believe
Jan. 7, 2007 - 10 Reasons Why Dollar Denominated Bonds Aren’t as Safe as You Think
Jan. 5, 2007 - How Understanding MMA Champions will Make You a Better Investor
Dec. 18, 2006 - The True Determinants of Wealth Have Nothing to do with Asset Allocation
Nov. 12, 2006 - The Greatest Investment Myth Exposed: Why Modern Portfolio Theory WILL NEVER Make You Rich.
Wealth Literacy (74 articles) – Wealth Literacy is the new Financial Literacy. Financial Literacy may teach you to be fiscally responsible but you can still be financially literate and remain poor. Wealth Literacy fills in all the holes of Financial Literacy and teaches you how to build wealth today.
Oct. 15, 2007 - Our New Facebook Investment Group - Crisis Investing
Oct. 9, 2007 - Beware the Turbulence that Lies Beneath the Surface, I
Apr. 23, 2007 - Beware the Emperor’s New Clothes -Don’t Get Cheated by Your Adviser
Apr. 20, 2007 - Intelligent Investment Strategies Push Risk Off of You & Back onto Investment Firms
Apr. 19, 2007 - In Risky Markets, Follow the Behavior of the Ultra-Rich, Not the Rich
Apr. 17, 2007 - Why Wealth Literacy is More Important than Financial Literacy, Part II
Apr. 15, 2007 - Why Wealth Literacy is More Important than Financial Literacy, Part I
Apr. 13, 2007 - Pop Investing is All the Rage, but it’s a Loser’s Game
Apr. 12, 2007 - The Secret to Investing in 3 Easy Rules
Apr. 10, 2007 - Build Wealth by Answering These 5 Questions
Mar. 30, 2007 - How to Navigate the Minefields of the Investment Information Highway
Mar. 12, 2007 - The Short-Term May be Rosy, But Beware the Financial Crisis that is Building Steam
Mar. 11, 2007 - The Difference Between Chasing Wealth and Building Wealth
Feb 23, 2007 - Uncover the Ignored Asset Classes
Feb. 21, 2007 - Why Traditional Education Stifles Your Ability to Build Wealth
Feb. 15, 2007 - 7 Habits of Highly Effective Investors
Feb. 8, 2007 - 10 Reasons Why a Professional Athlete’s Best Friend Needs to be his Financial Adviser
Politics and Stocks (27 articles) - Think you don’t need to understand politics to be a good investor? Think again. If you don’t understand politics, you’ll never fully understand the most likely future direction of global stock markets, oil, gold, and currency markets. Click the above link to see the full database of articles.
Apr. 11, 2007 - Building Great Wealth in Stocks Requires Understanding Politics
Apr. 1, 2007 - The Next Cold War will be an Economic One
Apr. 1, 2007 - Possible U.S. Military Intervention in Iran
Mar. 13, 2007 - To Err on the Subject of Chinese Tariffs May Expedite a Shakespearean Tragedy
Dec. 17, 2007 - Do Free Markets and Free Trade Exist?
Oil Crisis (13 articles) – Think oil prices are controlled by supply and demand, futures traders, or Peak Oil Theory? Think again. Discover the true determinants of oil price behavior, primarily dollar devaluation.
May 14, 2009 - What’s Driving the Price of Oil Higher? It’s the Dollar, Stupid!
May 28, 2007 - The Politics of Higher Oil Prices
Nov. 26, 2006 - Does the end of Mid-Term Elections Mean Higher Gas Prices Again?
Nov. 8, 2006 - The Peak Oil Theory was Created by - You Guessed it - Big Oil!
Oct. 30, 2006 - The Safest Place to Invest in the Oil Industry Now? - Oil Refiners, Pipeline Manufacturers, Deep Sea Platform & Drilling Manufacturers, and 4D Imaging Companies
Oct. 30, 2006 - You’ll Find Ignored Investment Opportunities in the DRC and Libya
Oct. 12, 2006 - How Has Prince Bandar bin Sultan Affected Oil Prices in Years Past?
Uranium Investments (2 articles)– The bulk of this information is contained within our members only area, but you’ll find an article or two here.
May 1, 2007 - Uranium Stocks are Finally Getting Some Attention. Better Late than Never.
May 1, 2007 - What Does Uranium Futures Mean for the Future of Uranium Stocks?
Africa Investments (4 articles) - For the more daring investor willing to place small bets for HUGE returns, Africa awaits.
Canada Investments (3 articles) – Articles about Canada and the Canadian stock market and hands down some of the best opportunities in ANY global stock market.
China Investments (19 articles) – Articles about Chinese stocks and the Chinese stock market.
India Investments (3 articles) – Articles about Indian stocks and the Indian stock market.
Japan Investments (3 articles) - Articles about the Japanese economy and stock market.
Russia Investments (1 articles) - Articles about the Russian economy and stock market
U.S. Stocks (23 articles) - Articles about U.S. stocks and the American stock market.
Vietnam Investments (1 article) - Articles about Vietnam and the explosive yet unregulated Vietnamese market.
Investment Psychology (20 articles) – One of the most important but yet most overlooked and ignored aspects of investing is psychology. Discover how an improper mindset can be the difference between huge losses and huge gains in your portfolio.
Feb. 7, 2007 - Investors Should Apply the Rule of Shopping 101 to Buying Stocks
Jan. 3, 2007 - Will the 2006 Year End Rally Continue into 2007?
Dec. 21, 2006 - Perception Can Overrule Reality in Driving Behavior but Reality Will Overrule Perceptions in Driving Outcome
Nov. 30, 2006 - The Recency Effect Hurts Investment Decisions
Nov. 2, 2006- Canadian PM Stephen Harper & Hungarian PM Ferenc Gyurcsany - the More Things Change the More They Stay the Same
Nov. 2, 2006 - Irrational, Not Rational, Behavior Often Drives Markets
Oct. 24, 2006 - The Financial Media are Like Bad Weatherman
Oct. 8, 2006 - The SmartKnowledgeU Reader’s List
Oct. 4, 2006 - Hungarian PM Ferenc Gyurcsany: We LIED Morning, Noon, & Night!
Sept. 26, 2007 - Move Over Harry Potter! The Deceptive Wizardry of Fund Managers
Sept. 17, 2006 - When it Comes to Investing, You Get What You Pay For
Sept. 16, 2006 - Why Do People Believe One of the Dumbest, Most Flawed & Deceptive Measures of Economic Conditions?
Sept. 13, 2006 - Why Book Smarts Won’t Help You Build Wealth
Sept. 10, 2006 - Investment Psychology 101
Aug. 24, 2006 - To Become Wealthy, Abandon Widespread Beliefs About Investing
Aug. 18, 2006 - Following Mainstream Media Will Lead You Down a Disastrous Investment Road
Aug. 3, 2006 - Following Short-Term Fluctuations Will Create Poor Investment Decisions
Options Investing (9 articles) - We don’t discuss options much here but occasionally, if there is a compelling play, we’ll write an article or
two.
Water Investing (1 article) - Read articles about investing in water as a commodity as the world’s fresh water supply becomes more scarce.
The Zen of Investing (41 posts) - Read articles from our resident martial arts expert regarding how understanding principles of martial arts can make you a much better investor. A combination of “The Art of War” and “The Art of Investing” if you will.
Technorati Tags: investment blog, investment strategies, dollar crisis, financial crisis, oil crisis, stock market crash, gold investment, recession proof, best ways to invest
July 29th, 2008
July 16, 2008
There are two rules that every investor should abide by not only in volatile markets, but in any type of market: (1) Keep your losses small and cut your losses early and (2) Let your profitable investments ride. So why is it so difficult for the average investor to abide by these rules? With so much information so easily accessible today, the internet was supposed to level the playing field between the big boys and the small retail investor. It has, but conversely and unfortunately, it has also provided a medium for the big boys to mercilessly manipulate the inexperienced retail investor into making poor investment decisions as well. Read more …
July 16th, 2008
July 10, 2008 -
If you’ve suffered stock losses this year, this will be the most important article you will read. Back on April 23, 2008, I wrote an article called “Will the U.S. Markets Crash Now – Or Later?” and I opened the article with the statement: “Every time I’ve written about the imminent disaster that awaits U.S. stock markets, and subsequently global markets, the response has been overwhelmingly negative.” In that article, I further stated, “People seem to forget one central and critical point. Most people seem to believe that they have to lose a great deal of money when crises materialize and forget that it is absolutely possible to prosper during crises as well. Read more …
July 10th, 2008
July 7, 2008
In the 18+ years I’ve been involved in finance, I’ve seen a common thread among investors during bear markets that is extremely detrimental to their financial future. The syndrome I’ve seen afflict many investors is similar to the psychological state that University of Pennsylvania world-renowned psychology professor Dr. Martin Seligman coined “learned helplessness.” This condition is more pronounced in investors that have had their money managed by a large commercial investment firm for many years but often afflicts those that self-direct their investment portfolios as well.
Whenever I’ve spoken to investors that have their portfolios managed by large investment firms after a period such as the past 12 months when many investors world wide have lost 20%, 30% or even 40% of their portfolio value and ask them what they are doing to repair the damage, more often than not, they have replied, “Nothing.” When I have asked them why they would do nothing when they have lost significant portions of their wealth, they always state that their advisors inform them that long-term markets always rise higher, so if they just hold on, they should recoup all their losses over the next several years. In many facets, this response is very similar to the condition of “learned helplessness”. Investors believe that the commercial investment firms are the experts, that they should listen and blindly follow them, and that they don’t have a choice in this matter because they often tell themselves, “I know nothing about investing.” Read more …
July 7th, 2008
June 26, 2008
The other day, on MarketWatch, a headline read, “Markets hope strong inflation warning from Fed in Wednesday statement will keep dollar firm as growth slows, delaying or eliminating need for rate rise later in the year.” I’ve read similar headlines too numerous to count in the past couple of months spinning the same false hope. If the best weapon the U.S. Federal Reserve has right now in their arsenal to keep the U.S. dollar afloat and to check rising commodity prices is mere words versus sound structural actions, then indeed we are in deep trouble.
Several years back, U.S. Federal Reserve Chairman Alan Greenspan stated that the economic behavior of rising prices was the same as the debasement of currency. Not similar, not spurred by, but the same. Today we have all kinds of voodoo economic analyses that try to attribute rising prices to everything but its primary cause – i.e., ethanol production causes higher corn prices, bad weather and lower crop yields cause higher food prices, oil speculation causes higher oil prices. Basically whatever reason the think tanks can conjure up today to distract the masses from the real cause of rising prices seems to show up in newspapers and TV tomorrow. Sure, the above reasons undoubtedly contribute to rising prices, but they are not the primary reason nor do they constitute the greatest component of rising prices worldwide. Read more …
June 26th, 2008
May 22, 2008
There’s a saying “Fool me once, shame on you. Fool me twice, shame on me.” Our motto at SmartKnowledgeU is to never be fooled. We are at a crossroads today where things are going to get a lot better or they are going to get a lot worse. As the permabull sales culture of the commercial investment industry dictates, the practical deluge from the commercial investment industry about the worst of the crisis being over has been almost non-stop for the past several weeks. Here is just a sample of numerous recent headlines that have crossed my desk in the past several months that proclaim or support that now as the best time to buy stocks in a long time.
“Are You Ready for Dow 20,000?”
“IMF Chief Says Worst of Financial Crisis is Over”
“Paulson Says Worst of Financial Crisis is Over”
“Citigroup Chief Says Worst of Credit Crunch Crisis is Over”
“Financial Crisis Mostly Over, [JP Morgan CEO] Dimon Says”
Astonishingly, the person that inspired the Dow 20,000 headline, James Finucane, was predicting this mark within a timeframe of just one year and called today’s markets, in his words, the “perfect” setup, implying that this is about as risk-free opportunity as you will ever receive in your lifetime to make a fortune by investing in the U.S. DJIA index. Numerous other journalists seem to agree as evidenced by the latest headline I read just four days ago in the New York Times that boldly announced:
” An Alarm is Blaring: TIME TO BUY” (emphasis mine).
Besides the fact that the commercial investment industry will always utilize any rally to inform their clients that a massive bull run is coming and to stick their clients with the “better invest now if you don’t want to miss out” sales approach, perhaps some of these extremely giddy predictions about the imminent future of stock markets are also based upon a look back at history. Read more …
May 22nd, 2008
May 11, 2008
There has been a lot of speculation for many years now that during extreme financial crises, the U.S. Federal Reserve and other entities intervene in free markets from behind the scenes and do not allow free market forces to operate. There are usually two schools of thought that dominate this hotly contested issue. One group of people asserts that free market interference is entirely acceptable because the alternative of allowing free market conditions to create a market crash is not an option. Another group of people asserts that interference in free markets is undemocratic and self-destructive as intervention in free markets do not solve problems but only cover-them up and delay them, thereby only allowing the elite money who truly understand such actions to exit stock markets at the heights of these artificially manufactured rallies while laying waste to the wealth of the common investor when things inevitably fall apart in the near future.
Those that argue that free markets are dead state that free markets ended when U.S. President Ronald Reagan signed Executive Order 12631 into law on March 18, 1988, establishing the Working Group on Financial Markets, known as the Plunge Protection Team (PPT) in more conspiratorial circles. The Working Group’s members consist of the most powerful men in global finance - the U.S. Secretary of the Treasury, the chairman of the Board of Governors of the Federal Reserve, the chairman of the SEC and the chairman of the Commodity Futures Trading Commission. Reagan’s decision to form the Working Group was inspired by Black Monday, a day when U.S. Dow Jones index shed an incredible 508 points, or 22.6% of the index’s value at the time, in a single day.
The Working Group was assigned the mission of ensuring that such an event would never happen again. Instead of addressing the root causes of Black Monday such as money supply growth that encourages the formation of speculative stock market and real estate market bubbles that lead to inevitable crashes, many have contended that the Working Group instead operates by intervening in the free markets Read more …
May 11th, 2008
April 30, 2008
In a couple of hours, we’ll soon find out how low the Fed will go in their attempt to inflate their way out of the current subprime/housing market/financial sector mess that we are currently mired in. Last March 18th, the Federal Reserve cleverly manufactured a downturn in the commodities sector off of a 0.75% rate cut to the Feds Fund rate after futures markets had shown their hand by forecasting the probability of a 1.00% or greater cut at 100%. The market then illogically interpreted this less than expected rate cut as a sure sign that the Feds must have fighting inflation as their new priority despite its clear willingness to sacrifice the dollar for the past several months. So what will it do this time around?
Well, there really is no sense in making a prediction because who knows what they will do? I don’t and neither does the futures market. However, what they do will clearly outline their thought processes about the future. Could they have saved the additional 0.25% rate cut that everyone expected in March for this rate cut so they can surprise everyone again with a deeper than expected rate cut this time that will undoubtedly continue to feed this stock market rally? Read more …
April 30th, 2008
April 17, 2008
Consider this. If you owned a prime piece of real estate in 2001 that was valued at $1.8 million that cost 7,200 ounces of gold to buy it back then (at a price of about $250 an ounce), and if you could now sell that same property and receive $2.6 million for it, even at this inflated price, it would now require less than 2,800 ounces of gold (at about $930 an ounce). So while you may have become richer in the paper currency of U.S. dollars, this increase in paper dollars does not mean much if this increase in paper will enable you to buy less “stuff” today. Certainly, despite the inflated price of this property in paper dollars, you have become much poorer in ounces of gold (real currency). Thus, Central Banks, by inflating money, create the illusion of growing wealth when in fact they are stealing wealth from right underneath our very noses. This is EXACTLY what Alan Greenspan meant when he said “deficit spending is simply a scheme for the confiscation of wealth”. By the way, Mr. Greenspan was only bold enough to make such a statement in 1966, decades BEFORE he knew that he would eventually became the Chairman of the U.S. Federal Reserve.
Perhaps, an even easier way to understand the above illustration is as follows. Read more …
April 17th, 2008
March 25, 2008 -
Dark pools are pools of stocks listed on private or proprietary electronic exchanges that allow a buyer or seller to move large blocks of stocks anonymously without causing the bumps in the price of a particular stock as would happen if an investor were to buy or sell a large position of a stock in a publicly followed exchange. For example, if an individual or an institution wanted to offload a block of 2 million shares in a dark pool, this transaction could be executed without affecting the stock’s trading price that day whereas normally such action by an influential individual or institution would cause the stock’s shareprice to fall. Erik Sirri, Head of the Division of Market Regulation for the U.S. Securities Exchange Commission, stated that “while the increasing use of hidden orders may be troubling,” the SEC plans to do nothing until it is clear that the use of hidden orders in dark pools is damaging the individual retail investor’s ability to buy and sell stocks at a fair price.
In 2007, an estimated 17% to 25% percent of shares listed in the NYSE exchanged hands via dark pools, a significant percentage of the total market. In today’s environment, Sirri’s comments do not bode well for the retail investor. The trading activity of large institutions and influential individuals, and along with it, their real feelings about the U.S. economy, often remain hidden from public view via trades executed within the secretive confines of dark pools. As none of the problems of systemic risk in the financial system have been solved by any of the U.S. Federal Reserve’s actions within the past two weeks, it may very well be that the activity reflected in these dark pools as of late directly contradicts the story being spun to the public. The problems with these dark pools is succinctly summarized by NYSE President Catherine Kinney, who stated that every single share traded in the dark was a share that would not assist the market in determining a fair price for that share. In other words, without the benefit of knowing the extent of buying and selling volume occurring in these dark pools, retail investors would indeed be purchasing and selling the same shares without critical market information, aka, “in the dark”. Read more …
March 25th, 2008
March 9. 2008 -
Diversification: The World’s Worst Investment Strategy
Diversification, cash and AAA-rated instruments with exposure to Mortgage Backed Securities – If you’re deep into all three, these are three definite signs that it is time to let your advisor go. Many “professional” advisors today argue that diversification is a reason to stay fully invested through bear markets. After all, if your advisor had diversified your portfolio into a bunch of housing and financial stocks that are all sitting on 40% to 70% losses right now, he or she would probably tell you that the bottom is certain to be near and that the worst performers of your portfolio this year will be the best performers of your portfolio in the years to come. Well, here’s a news flash. The time to sell out of these stocks was 9 months ago, and if you’re still holding on, the odds are that you will be hurt even more.
Here’s the reality. Diversification is the world’s worst investment strategy and has only served to erode a great deal of net worth and purchasing power for both Americans and Europeans alike. During the past 8 years, many of the major indexes in these regions are negative on an inflation adjusted basis. Thus, for 8 years of buying and holding, if your money was invested in funds pegged to the S&P 500 or the FTSE 100 (and 98% of money managers peg their portfolios to the major indexes of their home country), your net worth has been significantly eroded.
The Warren Buffet Argument is a Sham
Financial advisors often praise the benefits of diversification to advocate a buy and hold strategy so that they can continue to earn fees on depreciating portfolios during bear markets. To convince you that doing this very wrong thing is the right thing to do, they utilize the Warren Buffet argument. They argue, “Look at Warren Buffet. He’s a buy and hold guy and he’s one of the richest men in the world”. In a rational world, such an argument would be called a selective reconstruction of reality. What these same money managers fail to tell you is that Warren Buffet built his wealth by concentrating his exposure, not through diversification. At times, Mr. Buffet has held a mere five positions in his entire Berkshire Hathaway equity portfolio. Mr. Buffet did not diversify, because with his level of expertise, there was no need to do so. Mr. Buffet can buy and hold because he is concentrated in positions that will continue to do well whether markets are bear or bull markets.
That’s what anyone that knows what they are doing will do. In bull markets, financial advisors that truly are on top of their game will concentrate to outperform the markets significantly. In this case, since a rising tide lifts all boats, those that choose to diversify can conceal their incompetence as they earn money simply through luck. However, in a bear market, incompetence is much more difficult to hide. Read more …
March 9th, 2008
February, 20, 2008
“This is your last chance. After this, there is no turning back. You take the blue pill, the story ends, you awake in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit-hole goes. Remember: all I’m offering is the truth, nothing more.” - Morpheus, from the film “The Matrix”
Simply put, we are at the tipping point of a major investment crisis today and the opportunity to radically reallocate our portfolios to make a fortune is quickly evaporating. Though I offer investors the opportunity to see how deep the rabbit-hole goes, most investors will shy away, gladly ingest the blue pill and remain firmly grounded in Kansas. Why? The secret of building wealth from this coming crisis is not knowledge itself, but rather an understanding of how your brain processes information that is granted to you. Once we understand that we have been programmed to believe certain investment falsehoods, this will clear our path to truly “see” the current investment crisis that is unfolding.
Most of us have no understanding of the triggers that drive our investment behavior. We are like the people that live in the fantasy computer generated world of the Matrix, constrained by the delusional statistics and reports produced by the commercial investment industry and governments that eventually filter down to us through the media. The great majority of us have come to blindly accept certain investment “soundbites” as truth without having questioned the validity of these truths even once. So today, I encourage you to challenge these beliefs if you have never before done so. Read more …
February 20th, 2008
February 6, 2008
The other week, a friend of mine sent me an article from a financial advisor in the U.S. asking me for my opinion. In the article, the advisor stated two things that stood out to me like a two-ton boulder falling out of a clear blue sky. They were the following. In response to the short rally that U.S., European and Asian markets were experiencing at the end of January, he stated, “I see this time as a BUYING and repositioning opportunity with great potential gains soon to come”, further clarifying that statement with the exclamation of “It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble.” When I read those statements, I had to read them again to make sure that I was reading them correctly. I thought to myself, What is this advisor smoking? His comment of there is “so little evidence of serious trouble” must have been drawn after scouring the pages of mainstream newspapers and financial websites that merely spit back what the commercial investment industry wants them to say and after studying government statistics that grossly distort the true picture of economic health. Yes, I know that there are certain asset classes that will rise even in bad, terrible markets. In fact there are those that will rise through the roof in terrible markets. But it was clear from the context of this message that this advisor was speaking of mainstream S&P 500 and Dow 30 type of stocks.
A quick perusal of the last six months of my archives here will tell you exactly why government statistics and mainstream financial media never tell the truth about the health of the global economy. Remember, Jim Cramer, a former Goldman Sachs broker, the founder of the Street.com, and host of CNBC’s Mad Money TV show, said, “What’s important when you are in hedge fund mode is to not do anything remotely truthful, because the truth is so against your view”. He claimed that it was easy to plant rumors in newspapers and the medias to drive the prices of stocks down when he had bets on the Read more …
February 6th, 2008
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