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The Wisdom Of Looking Like An Idiot Today

Tyler Durden's picture




 

Submitted by Adam Taggart of Peak Prosperity,

IF you can keep your head when all about you 

Are losing theirs and blaming it on you,

If you can trust yourself when all men doubt you,

But make allowance for their doubting too;

 

- opening stanza to Rudyard Kipling's, "If"

So, let's say you're a prudent person who has concerns that our economy isn't 'recovering' as robustly as you'd like.

Perhaps you still remember the speed and depth of the 2008 credit crisis' arrival, and its toxic impact on asset prices, jobs, and overall trust in the financial system. Maybe you took notes during the preceding tech and housing bubbles and their aftermath. If so, you likely swore that "Never again!" would you put your wealth at risk during such obvious times of public mania.

Chances are, you've probably logged a lot of hours over the past several years on the Internet trying to read the economic tea leaves more closely. Are things becoming more stable, or less? What are "safer" measures for protecting and building wealth than simply putting all your chips into the paper markets (stocks & bonds) and real estate?

As a result, you've probably had a smaller percentage of your wealth in the stock/bond markets over the past few years than your peers. You probably also own some gold and silver, likely having bought much of it between 2009-2011 with the stock market collapse still fresh in your memory. Chances are also good you've made a series of "preparedness" investments (stored food, etc) as an insurance policy in case really tough times were to break out. Most of your family and friends didn't take these steps, nor are particularly interested to talk about your reasons for taking them.

So, if this sounds at all like you: five years after the 2008 crisis, how is the "prudent" strategy looking today?

Looking Like An Idiot

As one who took similar steps, I'll confirm it looks pretty lousy to the casual observer.

Stocks & Bonds

There has been an absolute party in the stock market over the past two years. The S&P is up nearly 40% (!) since early 2012 and has almost tripled since its 2009 lows. It's been nearly impossible not to make money in the stock market recently (unless you've owned mining shares).

Bonds have remained at historically-elevated prices. And although 2013 has seen prices come off slightly from their highs, prices are still substantially above pre-crisis levels.

The pumped-up performance of paper assets here is of course due to the staggering amounts of new money the Fed has been creating since 2008. Starting with a balance sheet of $880 billion pre-crisis, the Fed has since expanded it by an additional $3 trillion. In less than 5 years. And it's continuing to expand to the tune of $85 billion (some calculate $100 billion) per month.

Most of that money sits in excess reserves enriching the banks at zero risk, at high hidden cost to the public (a rant for another day). But enough of it is sloshing over into the markets where it does exactly what excess liquidity always does: rise all boats.

So, if you decided to stay out of the markets, you've watched the party boat pass you by. They say "Don't fight Fed" and so far, the Fed is indeed winning. In reality, it will likely prove to be the Charlie Sheen version of "winning", but to the casual observer whose 401k is up 20% this year, the Fed definitely appears to be playing the better hand.

Real Estate

How soon we forget. Home prices have resumed climbing at historically-aberrant rates. The Case-Shiller home price index just reported that, year-over-year, its national home price index grew by 11.2%.

A number of markets have re-entered bubble territory. San Francisco, where prices are now higher than at their 2007 peak, saw a 26% year-over-year increase in average prices. Las Vegas, the poster child for housing prices excesses six years ago, saw a 29% average price increase from 2012 to 2013.

The tell-tale sign of an overheated housing market -- house flipping -- is back.

If you've been holding off on purchasing real estate (as I have) -- expecting a stumble back into recession, or higher interest rates, could bring prices down to saner baselines -- again, you're watching prices get away from you.

Precious Metals

Ugh. There's no denying it has been a very rough two years for gold and silver holders. As I'm writing this, gold and silver are dropping to near 4-year lows.

For those burned by the last crisis who purchased precious metals near their zenith in 2011, hoping to protect the purchasing power of their capital -- the nauseating declines since early 2012, especially in silver, have done anything but.

Those who bought PMs pre-2008 enjoyed a long stretch of validation while prices appreciated year after year. With a material percentage of that appreciation now gone, and month after month of relentless losses punctuated by vicious price smashes, it's harder to feel as smart as it once was.

But it's maddening. With the $3 trillion in new currency recently created by the Federal Reserve, shouldn't precious metals be appreciating? Wildly? Isn't that their central promise: to hold value as the purchasing power of paper money inflates away? But instead, they're decreasing in dollar price, even as the money supply continues to expand. How is that possible? 

And Bitcoin! From almost out of nowhere, a new alternative currency skyrockets from nearly valueless to (briefly?) match the price of gold. It's like adding insult to injury for the 99.9% of precious metals holders who don't also hold Bitcoin. How can the world suddenly wake up to the advantages offered by non-fiat currency and yet still treat the granddaddy of sound money like kryptonite?

Sentiment

In 2009 and 2010, those of us who had warned our friends of the lurking risks in our economic and financial system suddenly looked like geniuses, instead of the kooks folks had dismissed us as. Now, we're back to being kooks.

A chart Chris has been sharing recently with our enrolled members shows that at no time in the past 30 years has sentiment been this bullish. Not even during the Internet stock mania of the late 1990s:

 

Faith in the current system is as high as it has ever been, and folks don't want to hear otherwise.

This extreme optimism extends beyond the Economy. In the Energy sphere, in news headlines discussion of the "shale miracle" is still omnipresent -- without, of course, any mention of net energy, extraction costs or depletion rates. In the Environment, coverage of the real-time collapse of key fisheries or water shortages likely to impact food production rarely get any mainstream notice.

In short: if you're one of those people who thinks it prudent to have intelligent discussion on some of these risks -- that maybe the future may turn out to be less than 100% awesome in every dimension -- you're probably finding yourself standing alone at cocktail parties these days.

The Madness of Crowds

Charles MacKay's excellent classic reference book Extraordinary Popular Delusions and The Madness of Crowds explains the nefarious nature of public manias: they strive to suck in as many participants as possible before collapsing.

We are seeing classic signs of the abandonment of concern by the public in favor of not missing out on 'easy gains'. In addition to the examples mentioned above, signals that the fear trade has given way to the greed trade are abundant these days:

  • Stock chasing - here's a quote the WSJ recorded from an actual retail investor buying shares on the first day of the recent twitter IPO:  "I messed up not buying any Facebook so I want to get some Twitter. I'm just buying because everyone's talking about Twitter". Not because of its product (which she admitted she didn't use). Or its business model (which has never been profitable and unclear if it ever will be). The purchase decision was made purely based on hype.
  • Priority abandonment - at Peak Prosperity, we speak with professional financial advisers frequently. The advisers we know best focus on risk mitigation and remain skeptical of the sustainability of the prolonged market rally. Many of their accounts signed on after 2008, clearly declaring that they prioritized protection of their capital over everything else. Yet a growing number of these investors are watching the continued rise in financial asset prices and are now pushing for more aggressive management. They're abandoning the prudence that was so important to them just a few years ago.
  • Bear capitulation - the path to a bull market peak is littered with the carcasses of bearish analysts that dared to challenge its rise. As the % bearish Investors Intelligence chart above shows, there are few bears left to be found anymore. Just last week saw a major defection from the bear camp, with the perennially critical Hugh Hendry throwing in the towel, exclaiming:

"I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out."

"I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."
 
"I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell'. 
  • Warning sign dismissal - it's not as if there aren't clear alarm bells being sounded by the very experts the public looks to for such warnings. It's just that these warnings are being ignored by the market. No one wants the party to end:

"All markets are bubbly"

- Bill Gross, Nov 29 2013

"In many countries the stock price levels are high, and in many real estate markets prices have risen sharply...that could end badly. I find the boom in the U.S. stock market most concerning,"

- Robert Shiller, Dec 1 2013

"Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in [at least 17 global] housing markets"

"What we are witnessing in many countries looks like a slow-motion replay of the last housing-market train wreck. And, like last time, the bigger the bubbles become, the nastier the collision with reality will be."

- Nouriel Roubini, Nov 29 2013

When this latest global asset bubble bursts as Roubini reminds us, by definition, it must; the public will cry "Why didn't anyone warn us?" The media will reflexively utter "Nobody saw this coming". But the truth is, there is evidence galore for those who choose to look for it.

The Wisdom of Looking Like an Idiot Today

The other key characteristic about popular manias/bubbles is that they collapse suddenly. Much more swiftly than they took to build.

The resultant carnage catches the masses like deer in headlights. The Kubler-Ross stages of grief begin quickly, and since Denial is Stage 1, most folks delay taking action out of disbelief. Soon Bargaining is reached, and they continue to delay reaction as prices continue falling - praying for the chance to get out if a reversal would just happen. It's not until Acceptance that most will take action, selling after the down draft has largely run its course.

Here are some useful stats to keep in mind that show how sudden and savage the 2008 market collapse was:

  • Week of Oct 6, 2008 - the Dow Jones drops 18%; its worst week ever in terms of both absolute and percentage loss
  • March 6, 2009 - the nadir for the stock market. By this date, 5 months after the crisis began, the Dow was down 54% since October

The takeaway here is that the wealth destruction caught most investors flat-footed. Most were unprepared -- both psychologically as well as with their portfolio positioning -- to react.

Many investors thought themselves savvy and nimble enough to avoid the losses they ultimately suffered, telling themselves a similarly ill-fated narrative as Charles Prince told his shareholders:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”

- Chuck Prince, Citigroup CEO, Jul 9 2007

Most readers remember how Citigroup's price dropped from over $500/share when Prince made this comment, to $10/share in March 2009. Prince was booted from his CEO role in late 2007 due to emerging losses resulting from the bank's MBS and CDO positions, investment classes which proved to be at the heart of the 2008 crisis.

So, a smart question to ask at this time is: is the moment in time we're in today closer to January 2006, when there were several years left of exuberance to ride? Or are we more like September 2008, poised at the precipice?

A smarter answer is: there's no way to know with acceptable certainty.

Like grains of sand piling up or snowflakes falling on a cornice, we can assess the growing level of risk, but we can't identify the grain of sand or snowflake that will cause the eventual cascade. We can't predict the collapse timing with confidence. We can -- and will -- continue to make our best educated estimates; but the exact timing is unknowable.

So, given that fact, as John Hussman so pithily captures, bubble markets force us to make a choice:

The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. 

And so your choice is upon you. Look at the evidence around you -- a movie nearly identical to one you saw in 2008 and in 2000 -- and either decide to party with the herd while the music plays (look smart today), or park yourself in safety now (look smart tomorrow).

Since the timing of the next correction is unknowable, the prudent choice is obvious. But it's not easy for all the reasons mentioned at the start of this article.

A helpful question to ask yourself is: if I could talk to my 2009 self, what would s/he advise me to do?

For most of us, our past self, recently reminded of the anguish of wealth destruction, would say "Run to safety!" at the first whiff of anything bubblicious. Research has shown that when the chips are down, the benefits of loss aversion are always preferred to the joys of gain.

Don't put yourself in a position to relearn that lesson so soon after the last bubble. Exercise the wisdom to look like an idiot today.

The Need For Discipline is Greater Than Ever

OK, so what should today's "idiot" focus on doing?

  • Build cash - it not sexy. And it's not fun to see the dollar price of nearly every asset known to man escalate while you hold cash. But bubbles are designed to take as much as possible from as many people as possible. During the popping of a bubble, the real wealth (underlying assets like companies, land, minerals, etc) doesn't vaporize like the high prices do. Those assets are simply transferred at a lower (more attractive) price to those people who still have money. Be one of those people.
  • Hold onto your precious metals - I know. It's painful right now. For most PM owners, just hold onto what you have right now. Those with stronger stomachs should be dollar cost averaging in. Remember the fundamentals for owning gold and silver have not changed AT ALL over the past few years. Stay largely with physical bullion. Don't speculate with the mining stocks at this time unless you're a risk-junkie (or masochist?) and then only with money you can afford to lose.
  • Scout out locally-based hard asset investments for the future - Once this bubble pops, higher interest rates and lower prices will result. Look around your local area for assets (businesses, housing, farmland, livestock, etc) that you would consider holding at least a percentage ownership in. Calculate what price would make you an interested investor. While that price may be years away, when the impact of a market correction hits, you'll be poised to move ahead of the other savvy investors to secure the opportunities you want (and play a role in stabilizing the community in which you live).
  • Design your trading plan for a market down draft - what steps will you/your financial adviser take if the market starts cratering? If you don't have a plan in place currently, now is the time to design it. Will you employ stops? What "safe assets" will you move to? (Treasurys, cash, other currencies?). Will you strictly be a sidelines observer, or will you take any active short positions on the downside? Will there be opportunity to generate income using vehicles like covered calls? Whatever makes sense for you, devise your strategy in the calmness of today vs on-the-fly while the markets are melting down around you and everyone is panicking. And if your financial adviser is unable to provide you with a comforting answer as to his/her strategy for captaining your money through another 2008 (or worse) correction, we have a few recommended advisers you may want to consider talking with.
  • Build your roof while the sun is shining - so many of the most valuable investments are not financial (emergency preparedness, energy efficiency, community, health - to name just a few). Use the gift of time we have now to invest in expanding your degree of resilience. If it's been a while, take a fresh skim though our What Should I Do? Guide to identify any areas you aren't satisfactorily prepared in. These are the investments where its infinitely better to have in place "a year early vs a day late"
  • Increase emotional fortitude - being "wrong" in the eyes of society is trying. And stressful for many, especially if your partner or others of those close to you don't share your views. Keep learning by reading this site and a wide range of others including those with opposing commentary. Develop your opinions based on the data you determine is most accurate -- your ability to stand resolute against popular sentiment will be grounded in your confidence in the "big picture". Seek support from the thousands of other Peak Prosperity readers who are wrestling with the same issue set you are, by participating in our Groups. We created them to help people support each other both virtually and "in person" within their local communities.
  • Develop an income loss plan - if we're correct in our prediction of a major down draft, a return to deep recession is likely, and with it, a return to higher unemployment. Loss of income is a stressful trauma, especially if it happens unexpectedly and is compounded by a hobbled job market. Take some time to assess your job's level of vulnerability to another recession. If it's higher than you'd like, ask yourself what you would do if a sudden layoff occurred. Start doing the work now to at least sketch out the path you would take if that happened. And if possible, develop some relationships or related skills now that would give you an unfair advantage should you ever need to head down that route. The first third of our book Finding Your Way To Your Authentic Career has a number of exercises that provide useful guidance for those looking to do this.
  • Develop an income enhancement plan - the resilience that comes with multiple income streams really helps you sleep at night, as you're less vulnerable to having your entire life upended if a sudden pink slip appears. Also, having extra income to direct to other goals (retirement, education, homesteading, etc) enables you to hit them faster. We're all busy, but thinking creatively for a moment, what could you start doing today to secure extra income streams in the future. This is a topic that Chris often helps folks think through in his consultations.

Essentially, the approach here is to dismiss what is not in our control and focus on what we can best do with what is. Be practical. Be prudent. Be dull to those watching you from the dance floor. 

John Hussman signed off his latest report with the advice: "Risk dominates. Hold tight."  I agree. Now is the time act with the courage of our convictions.

As Kipling put it at the end of his poem:

If you can force your heart and nerve and sinew

To serve your turn long after they are gone,

And so hold on when there is nothing in you

Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,

Or walk with Kings - nor lose the common touch,

If neither foes nor loving friends can hurt you,

If all men count with you, but none too much;

If you can fill the unforgiving minute

With sixty seconds' worth of distance run,

Yours is the Earth and everything that's in it,

And - which is more - you'll be a Man, my son!

 

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Tue, 12/03/2013 - 14:59 | 4210970 Canadian Dirtlump
Canadian Dirtlump's picture

All part of being shunned as a conspiracy theorist, something I know all too well. I have said that when some drone is presented with "conspiracy theories" by someone who has "woken up" they can do 2 things. Think the person is crazy and then write them off, or anchor themselves to the notion that they know that person isn't crazy and do some research. My brother thankfully falls into the latter category.

 

Great post because when this thing blows, it's gonna be ugly.

Tue, 12/03/2013 - 15:12 | 4211006 NoDebt
NoDebt's picture

..... and probably quick.  How many have their "Sell" button on a hair-trigger right now?  Won't take many fingers hitting those buttons to turn it into an avalanche.

Everyone thinks they're faster on the draw than the other guy.  Everyone's depending on it.  I bet most will find out they're not fast enough.

 

Tue, 12/03/2013 - 15:11 | 4211023 Pladizow
Tue, 12/03/2013 - 15:26 | 4211088 ParkAveFlasher
ParkAveFlasher's picture

Three words to describe ZHers: Uruguayan rugby team

Tue, 12/03/2013 - 15:30 | 4211108 NoDebt
NoDebt's picture

You mean survivors against incalcuable odds?  Yep.  Sure are.

Oh, you meant the cannibalism thing.  Sorry, I'm not "biting" on that one.

Tue, 12/03/2013 - 15:35 | 4211131 rfaze
rfaze's picture

If you can keep your head when all about you are lossing theirs YOU JUST DON'T UNDERSTAND THE PROBLEM!

Tue, 12/03/2013 - 15:55 | 4211213 Headbanger
Headbanger's picture

"Stupid is as stupid does"

There, somebody had to say it...

Tue, 12/03/2013 - 16:03 | 4211235 Badabing
Badabing's picture

 “Faith in the current system is as high as it has ever been, and folks don't want to hear otherwise.”

Back in 2009 I was considered a whack job deserving ridicule and a tinfoil hat.

But as the shit storm got worse I didn’t look so bad, people at parties would ask my opinion and we would have an intelligent conversation. Now I all I hear is “what’s happening with gold and silver” presented with a I told you so face on.

My answer is a question, what do think costs $85,000,000,000 a month?

We are now below the production cost of mining PMs, no doubt the big miners will get subsidized by the printing press while buying up all the little guys. Just like the banks did back in 2009, and how do they do it? By cheating that’s how. TPTB have the technology to do what ever they want, including ending the world as we know it.

When you get a chance, check out this chart with real time ticks on the right;

http://www.usagold.com/gold-price-live.html

Look at the way the western worlds currency’s and PMs are sparkling! Back in 2009 ticks came in a lot slower but today TPTB have the Algo’s working full time holding off the financial end of the world. You’ve  got to have “FAITH” for that. While we all know, that one day, we’ll be thrown back into the dark ages.

Is that when the hangings start? I wonder.   

Tue, 12/03/2013 - 16:17 | 4211296 Drifter
Drifter's picture

“Faith in the current system is as high as it has ever been, and folks don't want to hear otherwise.”

Fine, let 'em go down with the ship. 

I don't care about educating anyone anymore, not even relatives. 

And I won't be there to help 'em when they get wiped out.  That's the other resolve you have to make.  They're on their own, sink or swim, tough shit, you wouldn't listen when you had the chance.

Tue, 12/03/2013 - 16:37 | 4211350 negative rates
negative rates's picture

Lucy? Is that you hiding behing that price sticker??

Tue, 12/03/2013 - 16:44 | 4211357 Ham-bone
Ham-bone's picture

If there is any market left in this "market"...this utter capitulation of all bears, utter leverage of all bulls...the belief that Dow XXX is truly achievable and likely...that is the sign we r done (if this is a "market")...but it likely keeps going cause it ain't a market but a tool

Tue, 12/03/2013 - 17:15 | 4211473 TeamDepends
TeamDepends's picture

Oh boy!  We generally agree with your sentiment, but what if it's the females in your clan that just aren't getting it?  We have tried and tried and tried to wake them up but it ain't happening.  Call it normalcy bias or whatever, but we are starting to freak out just a little.  Please, we are not even remotely misogynist, but the ladies around here simply will not look at the bigger picture.  MsCreant, anybody, got any advice?

Tue, 12/03/2013 - 17:42 | 4211575 Ham-bone
Ham-bone's picture

Let them not get it...your marriage is more important than your worldview...unless your marriage sucks then have at it.

None of us knows how, when, or in what order things could take place. 

All you can likely do is take very sensible actions (have a big pantry...not a doomsday cellar; explain there are four types of investments and wise to own all four (PM's, RE/CRE, stocks/bonds, cash) and make the case to own minimum of 10% of each...you will be miles ahead of most but not busting your marriage.  Try not to sound like some messianiac psycho bout it all.  Shouldn't be hard to explain why less debt is better than more.  All pretty conservative thinking.  Anyway, good luck.

Tue, 12/03/2013 - 20:23 | 4212072 Drifter
Drifter's picture

Let 'em go down with the ship. 

Hubris is equal opportunity, non-racial, non-gender, etc.

If it's your wife, she'll pull youi under with her, maybe drown you trying to stay afloat herself.  Most women have no loyalty in a crisis.  Glad I'm divorced, best thing with what's coming.

Tue, 12/03/2013 - 15:13 | 4211024 Canadian Dirtlump
Canadian Dirtlump's picture

I think, perversely, this self aware computer network of skynet trading has made it tougher to even have a crash.... but, when it finally does come and it will, when you have sell orders moving at the speed of light competing to get out the door, it will be spectacular.

Tue, 12/03/2013 - 15:41 | 4211048 Ham-bone
Ham-bone's picture

I've been nailing the idiot thing my whole life...it comes so naturally.  Like I was born to do it!?!  Can't wait til being an idiot is cool and I'm the first there on my block.

 

Tue, 12/03/2013 - 17:40 | 4211577 max2205
max2205's picture

If it goes up tem moar years, we all will look stupid

Tue, 12/03/2013 - 16:12 | 4211258 RaceToTheBottom
RaceToTheBottom's picture

"moving at the speed of light competing to get out the door, it will be spectacular."

I think that we will get some records then. 

Even people who consider themselves bears are talking like 5-10% is all that could happen.  I suspect that will happen before opening...  And accelerate from there.

Tue, 12/03/2013 - 17:20 | 4211490 Harbanger
Harbanger's picture

Those who didn't learn from biggest financial crisis since the 1930's shouldn't cry later.  Sleeping well at night knowing that you're ready for the next big one is priceless.

Tue, 12/03/2013 - 16:08 | 4211263 Emergency Ward
Emergency Ward's picture

Nobody, noooobody beats the HFTs.  Direct fiber-optic links to the heart of the exchanges, nano-second arbitrage......

Tue, 12/03/2013 - 16:32 | 4211333 August
August's picture

>>...when this thing blows, it's gonna be ugly.

When this thing blows it will be... Biblical. And ugly.

(hat tip to Mr. Bill Murray)

Tue, 12/03/2013 - 17:38 | 4211566 bwh1214
bwh1214's picture

I go with, make sure the people close to you know what your thoughts are including predictions.  After that there is no point, beyond some reminders, of beating a dead horse. right now they may think your crazy but after some vindication the will come around and then look to you for guidance.  If you push to hard you will drive them away.

Tue, 12/03/2013 - 18:09 | 4211672 yofish
yofish's picture

In the 70's, behind every rock, there was something conspiratorial to me. I bet the farm on silver and merely had to wait 40 years to not be laughed at by my friends. And, it turns out that the cabal the Nixon was the head of in my delusions, was merely a bunch of clowns. 

My advice is read that poem for it's wisdom and forget everything that you 'think' you know. If you want to wait 40 years to crow, best to you. 

Tue, 12/03/2013 - 15:01 | 4210982 Colonel Klink
Colonel Klink's picture

Wut?

I know nuthzink!

Tue, 12/03/2013 - 15:04 | 4210985 NOTaREALmerican
NOTaREALmerican's picture

So, basically,  wait and buy the really really really BIG fucking dip.

It looks like BTFD is all there ever was.

(Disclaimer:  I'm waiting to BTRRRBFD)

(Disclaimer 2:  I'll probably wait to long to actually buy tho.   Then I'll just wait for the really really really really really really really really really really really really really really really BIG fucking dip)

Tue, 12/03/2013 - 15:11 | 4211017 Skateboarder
Skateboarder's picture

Next BTFD is the last BTFD. ;)

Tue, 12/03/2013 - 15:35 | 4211130 walküre
walküre's picture

Ask yourself this question. Would you have bought the dip in tulips when their price crashed? How many did and how did they make out after buying? Probably buying turds was equally effective.

Lots and lots of tulips out there in the investment fields. MOST WILL TURN OUT TO BE JUST TURDS.

The only dip I'm buying is in precious metals, land and livestock. Once the paper blows, the paper queens cannot reflate for a very long time. During that very long time, people still need to eat and trade and have an economy.

I welcome the opportunity for the real forces of nature and a real market to establish. The weak paper weaslings will be jumping from windows because that is all they can do. The future will have no place for weaslings and their paper or for that matter their crypto wealth. BTC's porn star will be crying the blues.

Tue, 12/03/2013 - 15:46 | 4211179 ZerOhead
ZerOhead's picture

I wonder what a good horse might be worth in an apocalyptic collapse scenario.

Just in case those few gasoline tanker trucks don't make their meagre deliveries outside of the Hamptons...

Tue, 12/03/2013 - 15:50 | 4211197 walküre
walküre's picture

What you want is a younger horse with some training to ride. Heavier horses to pull wagons or heavy equipment. Oxens will do as well for that part. Land is necessary to keep the livestock fed.

I don't know about calling it an apocalypse. I think it's a long overdue rebalancing of priorities. Hollywood, Wall Street and DC might face starvation. It would be their apocalypse. To me personally it would be a welcome challenge where I can apply myself and my skills and meet guys that are cut from the same cloth. Paper pushers and pencil grenadiers could line-up for a job with a shovel or pitchfork.

Tue, 12/03/2013 - 16:18 | 4211297 F22
F22's picture

I'll call it "Obamageddon"

Tue, 12/03/2013 - 18:21 | 4211711 yofish
yofish's picture

Why do so many of you here that have reasonable sounding plans ruin the suggested intelligence that that might convey by saying stupid wishful shit? 'Paper pushers and pencil grenadiers'? Really!  And you now are a keyboard grenadier, congratulations. 

Tue, 12/03/2013 - 19:27 | 4211926 walküre
walküre's picture

In between working with my two hands, I come in from the cold and post. Everyone but you seems to understand what a "paper pusher" is supposed to mean. We have too many useless paper pushers that are employed by one gigantic bureaucratic nightmare.

Tue, 12/03/2013 - 20:03 | 4212030 Nobody
Nobody's picture

The folks in Hollywood, DC, and WS will have a true shock when they jump into their jets to scoot down to the Caribbean to their fine, big houses only to find out that those islands don't produce food and the only drinking water comes from diesel fired RO plants.
Out of the frying pan, into the fire!
There is no such thing as a Fiscal apocalypse! (Yeah, Right)

Tue, 12/03/2013 - 15:48 | 4211185 ZerOhead
ZerOhead's picture

Agreed...

Tue, 12/03/2013 - 16:44 | 4211364 ShorTed
ShorTed's picture

Like BTFATL (Buy The Fcuking All Time Low)?  I'm ready!

Tue, 12/03/2013 - 17:55 | 4211601 Harbanger
Harbanger's picture

Buy the last dip with what? King Dollar, the self devaluing whore of babylon everyone is running from?

Tue, 12/03/2013 - 15:15 | 4211037 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Exactly. Wait for the moment to buy. As someone once infamously said, "Buy when there is blood in the streets, even if it is your own blood."

Tue, 12/03/2013 - 15:25 | 4211077 El Hosel
El Hosel's picture

Really BIG fucking dip? Like Gold? Like Grains? Like Silver? Like the companies in those sectors?  http://finviz.com/futures_charts.ashx?t=ZC&p=d1

http://finviz.com/futures_charts.ashx?t=ZW&p=d1

http://finviz.com/futures_charts.ashx?t=SI&p=d1

Tue, 12/03/2013 - 15:03 | 4210987 frankTHE COIN
frankTHE COIN's picture

I concur. We all looked like Assholes in 1999 and mid 2007 for being short. But it always found its way to working out.

Tue, 12/03/2013 - 15:03 | 4210993 Kreditanstalt
Kreditanstalt's picture

"Income enhancement plan"???

WHAT "income"?

And - similarly - I'm tired of hearing "investors in X or Y should consider taking profits now"...WHAT "profits"?

Tue, 12/03/2013 - 15:05 | 4210995 AngelEyes00
AngelEyes00's picture

https://www.google.com/#q=dow

Dow down 135 points!  Starting to dump.

Tue, 12/03/2013 - 15:07 | 4211003 NOTaREALmerican
NOTaREALmerican's picture

Just investors taking profits.

Tue, 12/03/2013 - 15:16 | 4211042 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Time to clean out the muppets before the end of the year run.

Tue, 12/03/2013 - 16:24 | 4211309 Uncle Remus
Uncle Remus's picture

It's beginning to look a lot like Christmas.

Tue, 12/03/2013 - 15:06 | 4211005 10mm
10mm's picture

I said it a thousand times. The day it comes when i walk down the street, grab a drink at the local tappy, be a guest at a get together and the conversation becomes what we know as "FACT", not conspiracy,it will be too late.

Tue, 12/03/2013 - 16:10 | 4211279 CvlDobd
CvlDobd's picture

I thought that day was here with the Snowden revelation. I thought my "HAHA I told you so!" moment had arrived.

Long story short. It hadn't, no one gives a fuck about anything!! The political elites can get away with anything right now and that scares me.

Tue, 12/03/2013 - 18:03 | 4211640 Real Estate Geek
Real Estate Geek's picture

Same experience RE Snowden. The response from two colleagues was especially frustrating because each said "So what? We already knew that." To which I replied, "Bullshit. People like me suspected it and people like you called me a conspiracy theorist."

I should have saved my breath. It was like water off a duck's back.

Tue, 12/03/2013 - 15:10 | 4211016 jeditolstoy
jeditolstoy's picture

We live in bizarro world, where up is down and down is up. Believe in yourself. We're not the crazy ones; they're the insane ones. Hold your ground. Know your points. And use their craziness to your advantage.

Tue, 12/03/2013 - 15:14 | 4211032 BandGap
BandGap's picture

It can be difficult in the face of all the sunshine being blown up people's asses these days.

But I have stacked away, gotten to be a decent shot and generally stay grounded. I suggest others do the same.

Tue, 12/03/2013 - 16:23 | 4211307 WarPony
WarPony's picture

Up is down and left is purple, and my tin foil top hat and tails still fits fine!  But in a crazy world, to be sane ...

Tue, 12/03/2013 - 17:52 | 4211617 CHX
CHX's picture

Sane is insane in a crazy world.

Tue, 12/03/2013 - 15:16 | 4211047 wisehiney
wisehiney's picture

"IF" that's the case, I've been one GIANT HUMONGOUS MAGNIFICENT INCREDIBLE MAN for YEARS now.

Tue, 12/03/2013 - 15:19 | 4211057 beegle
beegle's picture

thanks tyler , this does help a lil'

Tue, 12/03/2013 - 15:19 | 4211058 reload
reload's picture

This article describes me pretty accurately. I keep quiet these days, and will do if / when the world grinds to a juddering halt under its burden of financalisation.

I sometimes wish I had a more optimistic outlook, was not convinced that CB monetary policy and government madness were designed specificaly to rob me of what I manage to gererate from my labour and as an employer.

Only this weekend I spent an evening with a couple of contemporaries (all late 40`s) who I would describe as financialy stable and astute. They have both ridden this last 4 years much much more successfuly than me. My aim has been to try and keep what I have, they have seen oportunites to profit and have been buying stock markets, fire sale commercial property and fun stuff like high end classic cars.

It is depressing to be wrong, year after year after year.       

Tue, 12/03/2013 - 15:30 | 4211104 NOTaREALmerican
NOTaREALmerican's picture

Re:  It is depressing to be wrong, year after year after year.       

Are you a pathological pessimist?  Your contemporaries sound like normal pathological optimists or - the happiest of all people - the pathological oblivious.

You can't do or act how your brain isn't designed to act.   Your contemporaries are doing the same.

Tue, 12/03/2013 - 16:20 | 4211302 MachoMan
MachoMan's picture

You can't do or act how your brain isn't designed to act.   Your contemporaries are doing the same.

We are only automatons if we allow ourselves to be.  While the path of least resistance is to operate how we're wired, most of us are blessed with the ability to either change that wiring altogether or, at the very least, mitigate its control.  What makes us human isn't the fact that we can think or even contemplate, rather it's the ability to defy our creator.

Tue, 12/03/2013 - 16:35 | 4211342 NOTaREALmerican
NOTaREALmerican's picture

Re:  What makes us human isn't the fact that we can think or even contemplate, rather it's the ability to defy our creator.

Unless what you just said is also part of the wiring.

Sorry, you get "choices" but they are limited in scope.   Humans do what their brains are capable of.     An optimistic risk taker can take risks and - if he's smart enough - know when to cash out.   But, most people are just average dumbasses,  listening to their own brain chatter, (and worse) listening to other people's transmitted brain chatter (aka bullshit),  and making average decisions.      Just life.  

Tue, 12/03/2013 - 17:16 | 4211475 MachoMan
MachoMan's picture

No doubt that many of our "preferences" are decided before the age of reason...  thus, when we feel like we're making a choice, we're really just following the path already laid.  I get it.

However, I think you're playing into all or nothing thinking.  While there are some aspects that either cannot be changed or require so much effort to change it becomes practically impossible, there are many others that can be easily changed or changed with a minimal amount of effort.  Further, I think it's specious to think that people are too stupid to change or that most people aren't fully capable of leading productive and fulfilling lives.  The simple fact is that most people are not sufficiently incentivized to change, therefore they do not.  Once change is required, humans have a miraculous tendency to adjust accordingly...

It seems that you're busy focusing on trends and generalities, rather than human capacity...  In other words, what humans do, rather than what we're capable of doing...  big difference. 

Tue, 12/03/2013 - 15:20 | 4211060 comrade rally monkey
comrade rally monkey's picture

Aapl tsla..  all  we need to know

Tue, 12/03/2013 - 15:22 | 4211063 FieldingMellish
FieldingMellish's picture

"... if a leader is one step ahead of his people, he is a genius, but if he is two steps ahead of his people, he is a crackpot." -Rabbi Shlomo Riskin

What if we have neither crackpots nor geniuses as leaders?

Are we all just crackpots alone in the wilderness?

Tue, 12/03/2013 - 15:21 | 4211072 Fix It Again Timmy
Fix It Again Timmy's picture

In retrospect, it seems that it would have been wise to invest in a market that is manipulated UPwards [stocks] then to invest in a market that is manipulated DOWNwards [PMs]... Just saying....

Tue, 12/03/2013 - 15:24 | 4211083 NOTaREALmerican
NOTaREALmerican's picture

Re:  Just saying

Those who doubted the power of the dark-side have suffered accordingly.

Tue, 12/03/2013 - 15:27 | 4211091 NoDebt
NoDebt's picture

Don't worry, you'll get another chance.  They're not nearly done manipulating.  

Tue, 12/03/2013 - 15:58 | 4211227 Toolshed
Toolshed's picture

That is only true until the manipulation ENDS. Then the paper is worthless while the PMs are not. How fast can you dump your paper when everyone else is dumping theirs? Not fast enough.

Tue, 12/03/2013 - 17:34 | 4211548 geewhiz
geewhiz's picture

You can only do that if you are a club member and club members don't post on this forum, only their trolls. Gertrude where are you?

Tue, 12/03/2013 - 15:24 | 4211082 Jack Burton
Jack Burton's picture

I will admit it. "The Fed has made me look like the world's biggest fool. I based all my positions on the coming collaspe of 2008. In that collapse I never lost even a nickle, in fact my returns were just under 4% for the crisis years 2007-2009. The rest of the story is not sweet. Once the Fed took full control, they have beaten me to death as I refuse to change my positions based on the belief that 2008 was a beginning of the crisis, not THE crisis. For now the Fed makes me the worlds number 1 idiot. Will it remain that way?"

Tue, 12/03/2013 - 15:34 | 4211125 Colonel Klink
Colonel Klink's picture

You're in good company Jack.  I'd rather take the appearance of a loss on physical now, than a real loss on "paper" later.

Gambling in a rigged casino is a suckers game.

Tue, 12/03/2013 - 15:37 | 4211151 Clowns on Acid
Clowns on Acid's picture

Don't know...how long do you have left on the put options?

Tue, 12/03/2013 - 15:57 | 4211220 Toolshed
Toolshed's picture

Don't be too hard on yourself. I, and a large number of readers here share your pain. My freinds and relatives think I am totally insane. Even my duaghter, which hurts the most by far. So don't feel isolated or alone Jack, or like the world's #1 idiot, because many of us are right there with you. Actually, I hope my freinds and relatives prove to be correct, because if I am right, things are going to get really, really ugly. However, while politicians lie and media talking heads lie and humans have an awful tendency to lie to themselves, math simply does not lie. And the math says we are seriously and truly fucked.

Tue, 12/03/2013 - 17:27 | 4211520 The Proletariat
The Proletariat's picture

+1

Tue, 12/03/2013 - 15:28 | 4211097 rlouis
rlouis's picture
"The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak." With enough experience, one can be an idiot on both sides of a peak - I know, I'm talented.
Tue, 12/03/2013 - 15:32 | 4211118 daveO
daveO's picture

The dollar is going to signal this stock market's ultimate top. It ain't like it was in 2000, when Reno sued Microsoft. Or 2007, when the banks started croaking. The FED has so rigged all the markets, that the only one to watch is if foreigners flee the US. That could happen(has to a certain extent) with rates being depressed by the FED. When you see shortages of metals, it's already too  late. We had temporary metal shortages in April and May. 

Tue, 12/03/2013 - 15:32 | 4211122 scrappy
scrappy's picture

I knew I wasn't crazy ordering all of that better than bullion and the med kit with tooth saver yesterday.

Tue, 12/03/2013 - 15:34 | 4211127 Godisanhftbot
Godisanhftbot's picture

 nah, you just think you're smart, you're really just as dumb as the next guy.

 if you aint bankin', you stankin'

 

 period

 

Tue, 12/03/2013 - 15:35 | 4211140 Clowns on Acid
Clowns on Acid's picture

Big difference between 2007 and 2013. The Fabian Fed is printing out of thin feckin' air. The credit event that triggered 2007 bubble cannot happen in 2013 because Fed will just print moar.

The only event that could cause bear market is USD collapse, and that cannot happen as EUR and JPY wil "collapse" just as fast. PMs could rise but taxation and Gov't regulation makes it a 10 to 25% of portfolio investment for Mad Max environment.

Everyone being bullish (No Bears) is virtually like the old USSR, except that the "collective" is allowed to function more efficiently to move goods and services thruoghout via technology. You just have to believe in the Fed's omnipotence and do "your part".

Obamacare is just the beginning of the gay (y'know- "gay" like XMas) secular march toward a better world where everyone is free to do whatever the Fed gov't says is "free".  

Tue, 12/03/2013 - 16:00 | 4211231 Winston Churchill
Winston Churchill's picture

You misunderstand what happened in 2008.

There was not a shortage of liquidity per se, there was no acceptable good colateral to REPO.

The FedRes can reverse colateral back into the market, but only the UST's on its balance sheet,

not the toxic RMBS.How much longer will UST's be good colateral.Not long after the PBOC

leak last week.The only major US export market left ,USTs, is now dead.Drones don't count as

exports.

Tue, 12/03/2013 - 15:43 | 4211169 wisehiney
wisehiney's picture

OK Tyler, thanks for the tip on POMO x 2 today. I'm gonna risk looking like an idiot today. Just took a bet on SPY's. If it works out, $50 for Zero Hedge!

Tue, 12/03/2013 - 15:54 | 4211207 El Tuco
El Tuco's picture

A feel good article for the folks that invest on principal. Why not listen to the market instead of listening to your emotions?

You got another chance because 2014 is ramping up to be a record year....DOW 18-20k....you heard it hear first...

If I remember correctly, Robotrader was crucified here....but who got the last laugh.....

Tue, 12/03/2013 - 16:15 | 4211293 NOTaREALmerican
NOTaREALmerican's picture

Re:   listening to your emotions

The "emotions" involved are political and religious tho,  so very difficult to override.  

Tue, 12/03/2013 - 16:39 | 4211332 MrSteve
MrSteve's picture

I didn't know a credit crisis in the EU periphery, say Austria and its Kredit Anstalt, had a voice to listen to. Does the Italian small business and related banking collapse there have a voice we can hear today? Certainly their voices are not heard as easily as the loud voices on Wall street proclaiming Dow 18K. Why should we listen only to the loud voices in the market?

Those listening to the voices of the now-credit deprived and cash-poor are right to be concerned about their remaining cash position. The BIG $$$ wil be HFT'd and thrown short on Wall Street faster than you can say "but my stop....". Train wrecks and Wall Street tend to run through "stop" signs. Maybe your stop order will be cancelled, like the start of ACA, (no oorrelation) or there will be "glitches" you don't now foresee. (MF Global)

Folks cruising on the old rules; the FED has the market's back, the PPT won't let the market crash, etc, etc, etc, are not following the East China Sea scenarios, the Ruskie's need for high oil prices scenario, (doublecheck the Stans) the Japanese need for a low yen scenario, etc. These are all not helping the Dow 18K Klub...

Zerohedge means you pack your own parachute, or do you shoot to the sky without one? Once, I heard it said: better years too soon than a day too late.

Tue, 12/03/2013 - 16:21 | 4211283 ebworthen
ebworthen's picture

A lot of bananas on one tree.  All the monkeys climb the tree to grab at the bananas.  So many are on the upper limbs grabbing at bananas that the tree bends, the trunk snaps, and all the monkeys fall to the ground.

Tue, 12/03/2013 - 16:14 | 4211291 geewhiz
geewhiz's picture

I tune in to CNBC with bated breath every morning to listen to Steve Liesman because I know he will warn me before all these cute little bubbles burst.

Tue, 12/03/2013 - 16:42 | 4211292 WarPony
WarPony's picture

I've been here a short time - a year +. Had I listened to "sound reasoning," I would have missed an ~ 40% rise in the markets and also would have been monkey-hammered on gold and other barbarous (/s) relics.  While the reasoning and analysis was spot on, once you factor in mark-to-unicorn, then fundamentals aren’t and weren’t.  So, talk here is mostly fear porn that has YET to see the light of day.  I KNOW it will, BUT!

Of course, you’re right, Tylers.  But the same thing happened in the late ‘80s when the market was gonna blow due to the debt bomb when all of a sudden Mike Milken-(it) junked us up another leg.  Then, derivatives came to save the day.  Now, HFT and helo-Ben.

I’m no financial guru, but I agree it will work until it doesn’t.  However, unless you sit around with the Roth Co. and know the inside shot, you either get lucky by muppetting in the market, or you continue to only stack. And, in Stack we trust!  Last thought: China’s QE has blown US up another leg or two and perhaps that is where there’ll be a take down.  Imagine China pulling her plug out of the Western markets, shorting US down to another Brilliant (not just great) Depression?  It would be glorious (/s) for them to cripple a hobbled horse and ruin US without a single shot fired.  I’ll get back to stacking now.  Thank you.

 

Tue, 12/03/2013 - 16:18 | 4211295 aardvarkk
aardvarkk's picture

I'm not sure I agree with the premise of the article, at least the "sentiment" part:  "In 2009 and 2010, those of us who had warned our friends of the lurking risks in our economic and financial system suddenly looked like geniuses, instead of the kooks folks had dismissed us as. Now, we're back to being kooks."  I sometimes gently bring up the idea that things suck, and nearly universally the response is wholehearted agreement.  I see the surveys and stuff that say everyone is bullish, but how much of that bullishness is confined to the cocoon of the trading pits?  Because there seem to be LOTS of people out in the world that know things suck and are pretty sure it's going to get much, much, worse.

I "woke up" to the awfulness of things in 2006-2007, and it's been getting steadily worse since then (especially in 2008-2009, of course).  At the start of this period, a lot of my friends and acquaintences did think I'd gone a little batty.  These days those same people are starting to see my point.  I already feel vindicated to a certain point...and I suspect (I hope I'm wrong) that I'm going to look like a damn genius within the next couple of years.

I don't have a lot in the market these days.  In about 2007 I cashed out my 401K and paid off all my debt.  I've piled up some food, medicine, tools and so forth...my goal is to have everything I need for a year or more without going to a store, plus the means to protect it.  If you've never tried that, it is EXPENSIVE.  My final big project is to put in a woodstove and pile up a winter's worth of wood assuming that will be the only heat source (a difficult task in the northern plains).

What little I do have is in physical gold and silver, and a token amount in a retirement account.  I'm not putting much in the account...any extra I have, well, the indie precious metals guy in town likes me a lot, is all I can say.  I'm far from a rich man now, but if things go a certain way we could end up one of the wealthier families in town.  That would be nice, but I'd rather not see the events that would be needed to make it happen.

Tue, 12/03/2013 - 17:26 | 4211522 therearetoomany...
therearetoomanyidiots's picture

Great post.  Thanks for adding it!

Tue, 12/03/2013 - 16:19 | 4211300 Inthemix96
Inthemix96's picture

The wisdom of looking like an idiot eh?

That clown cunt in the whitehouse this time round has fooled ZH then, (not the posters obviously).

Never in my life have I seen a more inept, lying, disgraceful, pencil necked choomed cunt masquerading as a human.  The daft, drugged up idiot cannot speak without words provided by a machine for fucks sake, the fucker probably doesnt even know its christmas shortly.

He even makes the peodophiles running this shit house over here look respectable.  He is an idiot, and I know a few, and they are far more respectful and more wisdom wise than sotero the fraud.

The idiot probably cant get dressed without help for dogs sake.

;-)

Tue, 12/03/2013 - 16:34 | 4211345 RichardENixon
RichardENixon's picture

Whoah, settle down there big fella! Things over here are sure to get better soon because we're https://www.readyforhillary.com/

Tue, 12/03/2013 - 16:39 | 4211352 El Tuco
El Tuco's picture

Don't hold back...tell us how you really feel...hehe...

Tue, 12/03/2013 - 16:43 | 4211355 Fix It Again Timmy
Fix It Again Timmy's picture

Every damn thing is rigged and manipulated... It's like a...

https://www.youtube.com/watch?v=yVRe5qWuP5A

 

Tue, 12/03/2013 - 16:44 | 4211361 starman
starman's picture

two things, there is the sheep and the sheep hurder

Tue, 12/03/2013 - 16:47 | 4211378 resurger
Tue, 12/03/2013 - 16:49 | 4211386 Jambo Mambo Bill
Jambo Mambo Bill's picture

WOW ! I feel so much better now ! Thx

Tue, 12/03/2013 - 17:06 | 4211446 debtor of last ...
debtor of last resort's picture

The pendulum from quantity to quality; paper to physical; promises to delivery. It's coming. Current silver/gold ratio is child play to what is coming.

Tue, 12/03/2013 - 17:29 | 4211527 sudzee
sudzee's picture

OT:

Abe declares no radiation contamination in Tokyo as decontamination begins in Tokyo suburb:

http://www.fukuleaks.org/web/?p=11883

Tue, 12/03/2013 - 17:32 | 4211538 Handful of Dust
Handful of Dust's picture

It's a Deflationary Bump in the road. Be patient.

Tue, 12/03/2013 - 17:31 | 4211542 therearetoomany...
therearetoomanyidiots's picture

I know...exactly when...this will all go to shit...1-20-2017.

Nothing will ever be done to make this man child look bad.

Accept it.

Caveat:  Unless they're done with him.

Tue, 12/03/2013 - 17:35 | 4211551 The Proletariat
The Proletariat's picture

I too am an idiot!!! 

I had my metals, whilst listening to (syphonic, melodic, kick-ass) metal, in my (aluminum) metal boat and hit a damn rock this summer...sunk all of my metal.  Darn it!

Metal On Bitchez!!! \m/

Tue, 12/03/2013 - 17:39 | 4211568 CHX
CHX's picture

S/he who laughs last laughs hardest, or so they say. Idiot or not, time will tell, not the looks of today. Anyway I'm just afraid that when reality hits and it all crumbles, no-one, NOBODY, even the "winners" will have much reason to laugh. The next crash, unprecedented since it will be global, will be so epic, I just hope there will be people around to write history books about it. Good luck to all, we will all need it.

Tue, 12/03/2013 - 17:39 | 4211572 Michelle
Michelle's picture

Today was a great day if you owned TSLA.....

;>)

Tue, 12/03/2013 - 18:00 | 4211635 geewhiz
geewhiz's picture

The most impotant person I don't want to be an idiot to is my best friend, the guy I always see when I look in the mirror. Eveything else is fluff, stay real.

Tue, 12/03/2013 - 18:10 | 4211670 CHX
CHX's picture

What will be the "last man standing", when(?) / should(??) all fall apart (e.g. futures/stock exchanges, banks, fiat currencies, the internet etc ) ? I don't hope that I get to see this, but I can envision various scenarios leading to some sort of Mad-Max world in my mind, and this is something nagging me constantly. Our societies world-wide, and especially in the west, are on thin ice, not only because of the ponzi-money, but the long-term effects of too many people in a world of finite resources, with hugely non-sustainable economies, farming practices, land use etc etc is frightening. The human population grew ~exponentially for many centuries, but all sorts of constraints will end this. At best, we'll reach some global stagflation equilibrium, and then a managed reversal. Chances of that happening? Not good.

Tue, 12/03/2013 - 18:22 | 4211717 CHX
CHX's picture

What's happening is Gresham's law. Physical PMs are drawn from the system, and go into strong hands. For every seller there's a buyer. As long as the PM price is dominated by paper PM vehicles, there is no true price discovery, only/mostly speculation driven price swings in PM paper markets. The disconnect of the phyz and paper market is in the doing, and when PM shortages or some major default occurs, then we're closer to free gold and true price discovery for the metals.

Tue, 12/03/2013 - 19:20 | 4211895 22winmag
22winmag's picture

Maybe I am an idiot. Maybe I am zombie bait. My idea of physical, liquid assets is booze, bullets, silver, and canned salmon. To hell with that FRN monopoly money.

Tue, 12/03/2013 - 19:55 | 4212005 css1971
css1971's picture

I have a simple spreadsheet which tells me what to buy and what to sell. Just now it says my portfolio should be 120% cash and -20% assets.

Tue, 12/03/2013 - 20:27 | 4212111 malek
malek's picture

 five years after the 2008 crisis, how is the "prudent" strategy looking today?

Pretty good.
When you make the conscious decision to buy an insurance policy (in the true original meaning) the best thing that can happen is you never need your insurance.

I missed out on some paper gains, but if I were owning more bubbly stocks I would be nagging myself over the question when is the right time to sell.
I can wait for the dip, the big one.
As I still have income from ordinary work, I can ignore what US Dollar nominated "valuations" of certain things are trying to imply.

Tue, 12/03/2013 - 20:40 | 4212144 BigSpruce
BigSpruce's picture

"Develop an income enhancement plan - the resilience that comes with multiple income streams really helps you sleep at night, as....."

I most wholeheartedly agree.  For the last seven years I have had a very profitable business on the side. Two weeks ago I was given an unexpected pink slip and thanks to my side business the shock of the layoff wasn't that bad. The next day I was working and have been every day since. Its extremely comforting to have that safety net when you work in an environment where you know the axe can fall at any time.

Tue, 12/03/2013 - 21:43 | 4212327 Greenskeeper_Carl
Greenskeeper_Carl's picture

this is a great article. But its hard to explain to a family member why I sold UPS at 85 and bought gold/silver, a little of each, and since then UPS has gone to over 100, and PMs have gotten hammered, and that rather than sticking with UPS, id rather sell more and buy PMs at even lower prices. Just trying to explain it from a buy low sell high prospective is tough. Ill never go all in on anything, but just getting some one to understand that with ups around an all time high, and silver near its 4 year low, it makes sense to sell the one thas high at a large profit, and buy the low, even if it stays at this low level a while. And no one seems to understand the difference between having an ounce i hold in my hand, and having a electronic record stating i own shares in company 'x' that is worth 'x' amount of dollars

Wed, 12/04/2013 - 03:25 | 4212970 scaleindependent
scaleindependent's picture

I would tell my 2009 self to "buy bitcoin mfer!"

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