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Comments

Steve

Great post! Keep up the excellent work!!
COMMON CENTS
http://www.commoncts.blogspot.com

ps. Link Exchange??

jeffolie

A 5% loss is nothing to brag about.

You would have had no loss if you had been in cash.

In my humble opinion, the stock market will return to much lower levels than the current 8500 during what I have predicted for 1.5 years as The Crisis in The Fall of 2009.

Save yourself, do go to cash.

jeffolie

"Sell in May and go away"

GK

A 5% loss is nothing to brag about.

Compared to most people, it is.

Knowing when, and when not to be in cash is just as hard as timing the market.

GK

jeffolie,

You predicted the crisis of Fall 2008 (correctly). You have not talked about any new 'crisis of Fall 2009'. Nor will there be one, in my opinion.

The biggest scare has passed, barring a swine flu pandemic this fall.

jeffolie

I have been posting about The Crisis in The Fall of 2009 for about 1.5 years at this and other forums. Other predictions I have been making include:

2010 - stabilizing of housing prices

2010 - beginning of inflation

2010 - renewal of a food crisis

2012-13 - Dollar crisis and very rapid inflation

2012-13 - end of the FINANCIAL world as we know it

2013 - America will survive as a political entity

Regarding the stock market, the 2010 inflation will lift stock prices in nominal terms. I am invested in physical precious metals, rare coins and commemoratives from much lower prices.

jeffolie

I also have been short the stock market using a double inverse mutual fund in a Roth IRA since March 2007.

GK

If you are short a double-negative mutual fund, you may want to cover that, after the huge gains you have made. You don't want to be too greedy now.

There are many ways to play high inflation :

Commodities ETF/Oil ETF

Emerging Markets ETF (since the dollar will weaken).

Combine both commodities + weak dollar factors, and a Canada or Australia fund could do well.

Steve

Great post - keep up the excellent work!
COMMON CENTS
http://www.commoncts.blogspot.com

jeffolie

While holding physical precious metals (PMs) pays no interest, they are tax deferred until they are sold and even then with my date of purchases the PMs will get the long term capital gains treatment. The current currency may change and I plan to ride out the possible transition while holding physical PMs. There has been much in the media how the Dollar may no longer be the reserve currency in a few years. My approach is not a strategy for trading. It is not taking gains that will be taxable. It is to take gains only when I need to take them after 2013.

The current problems with ETFs and commodities is that one can not readily get physical possession. Mostly the commodity exchanges force one to take a cash settlement unless the commodity's physical size is very large; then, one can get physical possession. And commodities contracts are not long term, they end with a settlement in terms of months usually which does not interest me since I am looking to get past 2013. The COMEX has many settlement rules that make it hard to get modest quantities of the physical commodity and even if you do, then what would you do with it, store it? Storing PMs is easy. And there are strange going ons with the ETFs where the managers are taking short positions and/or lending out the commodities making me skeptical of the honesty of the ETFs. I sleep well with my physical possession of my graded rare coins, bulk PMs, and commemoratives. In the end, it is a very personal descion as how to comfortably invest according to my predictions.

Regarding the Roth IRA using the double inverse fund, yes I plan to take profits in that vehicle when the stock market revisits its March lows. I will be patient since I have no need to access the Roth IRA. I have been retired for 11 years and am fortunate to be debt free, own our home and have adequate cash and income plus I expect an inheritance in the next 5 to 10 years. So, the Roth IRA is a very small part of my family's assets and their is no urgency to manage it as a trading asset. I do not plan to hold the short position long term because inflation will eventually rise the nominal prices of all assets including stocks.

I wish you good luck with your approach to investing but it just does not suit my personal outlook. Try to be nimble in your trading and use stop losses inorder to avoid riding down with bad trades if you happen to get into a bad trade. I used to be a trader in the sense of often taking market timing positions and I do not want the stress now.

Tkwael

I am not sure why you seem to be promoting "outperformance". You should have inversed the trade. Short Financials and Long Energy and you would have been better than cash. It seems like the divergence was even greater during this period.

Mister Snitch

I would not be doubling down on financials, if I were you. The big plunge yet awaits.

GK

Mister Snitch,

Wouldn't most of the new troubles be priced in? The new wave of ARM resets, defaults, etc. is already accounted for.

Keep in mind the still-high dividend yields.

Jay

I can not imagine why you are saying you did a good thing - you got it exactly wrong.

If you had shorted financials and gone long on energy, you would have made a positive return. You were betting energy would tank and financials would prosper. Exactly the opposite happened.

GK

Jay,

Yes, too bad I could only beat the market by 27 points. I am sure you did better.

If you had shorted financials and gone long on energy, you would have made a positive return.

+5%, to be exact, vs. the -5% that happened.

I report ALL my results, not just the good ones. Lecturing someone while you have the benefit of hindsight doesn't carry much value.

curious reader

Futurist,

Business Week published an interesting article (http://www.businessweek.com/magazine/content/09_24/b4135000953288.htm) about the lack of innovation during the last decade. I would be interesting in learning your thoughts.

GK

curious reader,

Check out : Is Technology Diffusion in a Lull?

Ken

GK, good work! May I know your name and what do you do ?

Ken

I'm trying to introduce one of your posts to Chinese readers. Could you please contact me at kshrieu@yahoo.com, so I can give you the due credit?

Thanks!

GK

Hello Ken,

Thank you for your encouragement.

I cannot disclose my identity, since some of my topics are controversial. But you can credit this blog as 'The Futurist' or singularity2050.com.

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