Good evening ladies and gentlemen, welcome to SDA Late Nite Radio. Tonight, for your delectation and pursuant to our Friday night old-time radio crime-detective show, here is the Blond Lipstick episode of Casey, Crime Photographer (1947, 28:17), brought to you by the Anchor Hocking Glass Company.
Your Reader Tips are, as always, welcome in the comments.
Well they finaly did it, a new messiah is born. Found this at Five feet of fury.
TODAY IN MR. PERFECT: WHAT OBAMA CAN TEACH JESUS
http://www.dailygut.com/?i=3870
The Gospel Of Barry
http://unclemeat.wordpress.com/2008/07/25/the-gospel-of-barry/
Some thoughts that could save you more than $149 . . .
============ From a newsletter promo . .
The Rise of China — according to Rogers, few investors (or politicians) understand the true significance of China. He maintains that, like the UK of the 19th century and the US of the 20th , China will be the preeminent nation on Earth in the 21st century. And not only in production, but also in consumption. Case in point: The average Chinese middle-class citizen saves or invests 35% of their income. The average American, only 2%.
Why is this? Because the Chinese aspire to the luxury and lifestyle that we westerners take for granted. And soon, they’re going to be able to buy it.
Rogers walks like he talks, living in bilingual (English and Chinese) Singapore and educating his 2 young daughters to be fluent in Mandarin Chinese. His single best piece of advice for Americans: Learn Chinese, and teach it to your children and grandchildren…
The Fall of the Dollar — According to Rogers (and lots of the big thinkers here at the Symposium ), the United States’ monetary system is **out of control.** In fact, he strongly maintains that it’s the official policy of The Fed to debase the dollar.
Currently, America owes various creditor nations the world over more than $13 trillion. And that number increases by $1 trillion every 15 months. Rogers states that he has as little of his money as possible in the U.S. dollar, a currency he calls **horribly flawed.**
On the other side of the coin, so to speak, Rogers has succeeded in finding several relatively stable currencies in which to hold his assets He named about a dozen of them rapid-fire, but I was too busy furiously taking notes on his comments about how crappy the U.S. dollar is that I could only remember one: The Canadian dollar.
It’s a good thing I’m getting my own copy of the 2008 Symposium recordings to help me remember what he said — and convert what lucre I have into these recommendations…
The Supremacy of Commodities — For the most part Rogers claims he says **nah** to stocks and bonds. Commodities, he says, are the place to be, now and for the foreseeable future. He also has what some would call unconventional views about diversification. **I don’t believe in it,** Rogers says. **Diversification is a concept stockbrokers came up with to protect themselves. Nobody gets rich by diversifying…**
Again, I was furiously scribbling all this down during his speech. I’d hesitate to get too specific with his involved investing recommendations here — for fear that I’m leaving out some crucial detail or that I misread something from my own chicken-scratch…
However, what I DO have in my notes (and what you’ll learn precisely if you pony up as little as $149 for the recordings ) are these things:
* Rogers’ 3 hottest commodity categories right now
* The 2 kinds of Taiwanese companies Rogers is scooping up stock in
* The one type of stock he thinks is a foolproof bet to cash in on Japan’s birth crisis
* The 4 countries on Earth Rogers thinks are best for small-cap speculation today
* The 3 Latin-world nations that have the brightest resources profits outlook
[ . . . ]
==================
Worthy of consideration. .= TG
http://atlasshrugs2000.typepad.com/atlas_shrugs/
Gateway Pundit commenter Patm said…
“That is a very fine and heartwarming story. I’m sure the press will ignore it.”
http://gatewaypundit.blogspot.com/2008/07/obama-talks-about-lifting-child-in.html
Obama WTF (What’s The Facts?) is the original, and most comprehensive, authoritative site about the life, votes, and positions of Senator Obama and his political backers. As his campaign is based on words… not on a proven track-record… if his words are not supported by facts, there’s nothing left but an empty blue suit.
http://obamawtf.blogspot.com/
Regarding the taser death issue:
I can’t understand all the people who posted saying there is no way for an unarmed person to deal successfully with a young man who has a knife (let alone a pint of loganberries, but I digress..). I spent some time watching an interesting documentary this evening, which showed conclusively that you can win a knife fight using such simple tools as a piece of furniture, a small stick, a bedspread, or even, in one extreme example, a tuxedo jacket (taken off, of course, and whirled bolo-fashion). I think police departments across the country should require all officers to view this documentary, which I understand is widely available.
It was titled “Rush Hour 3”.
Further evidence of the results of UK socialist policies.
Painter fined for smoking in van
“A painter and decorator from Ceredigion says he is “dumbfounded” after
being slapped with a £30 fine for smoking a cigarette in his own van”
http://news.bbc.co.uk/2/hi/uk_news/wales/7524526.stm
Paul
TG:
There is no way to prove Mr. Rogers wrong when he asserts that no one got rich by diversification but no one has ever gotten poor by it. And lots and lots of people have been bankrupted by not diversifying.
Look at the plight of those who have put all they had into the south west or Florida real estate market. Or the electrical business a few years ago.
I would caution you regarding Mr. Roger’s permanent bullishness towards commodities by saying that we have been down this road many many times before. Same goes for china- 2 words, on past, one future: japan and china. China lacks a key thing that Warren buffet and others look for : an enduring competitive advantage.
“The Three Steps of Socialism
Socialism is the mechanism which transforms government from its noble role as a protector into a predator and, since the citizens of our fine country seem determined to plow through socialism to its bitter end, we should examine the territory through which these three sad steps lead. The core result of socialism is the destruction of private property and wealth.
The events described in this piece are a composite of the ravages of socialism experienced in other countries. While each country does experience all the events portrayed, all socialist countries follow the same miserable path. The U.S. doesn’t have to go down this path, but it seems determines to do so.
We’re Off to See the Wizard”
http://www.freerepublic.com/focus/f-news/2048965/posts
Mao Stlong say, 12 + 30 = 42 weathel folecastels 100% collect evely day.
…-
“A dozen of the world’s top meteorologists along with 30 members of China’s weather team will work around the clock during the Games tracking high temperatures, humidity, torrential rains, thunder, lightning, hale, gale, typhoons, fog and smog. Their goal is to provide weather updates every three to six hours for each venue.”
“‘Extreme’ weather in forecast for Beijing Games”
(ctv)
Gord Tulk:
Actually, there is scientific, practical, and anecdotal experience that suggests diversification can reduce returns, and increase risk.
The scientific data is based on portfolio studies where the portfolio contains elements with “short memories” ( i.e. items lacking long term track records). Because the chance of significant “dislocations” (nice term that; that’s when you when you wake up and discover you’ve lost half your net worth) cannot be computed properly, adding such items to your portfolio can increase the variability of return (both positively and negatively) and increase risk. Here’s a simple thought experiment: suppose you make $50k/yr, and you buy a 6/49 ticket twice a week, for 20 yrs.That costs you about $4k total of the approx. $1 million you earn. Assume a 5% risk-free rate of return, and the opportunity cost of that investment is $10.5k (i.e. it would have worth $6.5k if you’d invested the ticket costs instead.) Now, your chance of winning one jackpot is 2080/14 million; if we assume $4M as an average jackpot, that investment is worth about $650 (and that doesn’t include the smaller prizes; I’m too lazy to do all the arithmetic). So that entire investment costs you a little less than $10k. But, what happens to your net worth if you are lucky enough to win? You’d doubtless be worth many hundreds of times of what you’d be if you hadn’t bought the tickets. Now, this is not an argument to buy lottery tickets – it simply shows that elements that have strongly variable returns can have a huge effect on total return.
Practical: just in my life, there have been many severe discontinuities such as Nixon opening the gold window, the first oil shock, the Asian crisis of the 90’s, the dot-com bust, and of course, the latest fun we are having. Suppose, in 1995, you’d diversified across a portfolio of tech stocks. Some, like MS and AAPL are still around; some have disappeared completely, and others, like Nortel, are worth a fraction today of what they were worth in 2000. If you’d spent the time to do your homework and selected the winners, you’d have done OK; a diversified group performed worse.
Which leads me to, since you cited Buffett, my anecdotal evidence. Warren’s thoughts on diversification:
“At the meeting, Buffett stated the following on diversification:
Well, the less you know, the more stocks you have to own – because diversification is a protection against…ignorance. And if your only conviction is that equities over time are a good place to have your money, you probably ought to have at least 20 or thereabouts – I’m talking about stocks, not mutual funds which in turn own stocks themselves. But if you really analyze businesses so that you’re buying into a business and making a conscious decision about what you think the future of that business is – not just a general conviction about equities as a whole, but conviction about a specific business and the future of that business in the same way that you’d go out and buy a grocery store or a filling station in your own home town – then I really think that if you can find six or eight of those, well that’s plenty.
Our method is very simple. We just try to buy businesses with good to superb underlying economics, run by honest and able people and buy them at sensible prices. That’s all I’m trying to do.
But that means I have to understand the business. And that leaves out 90% of all businesses. By definition, there are all kinds of things I’m not going to understand – I don’t understand cocoa beans or all kinds of other things. But the only thing that counts is the pitch you swing at.
If you can find a universe of 50 companies where you think you may understand their business and then find half a dozen that look properly priced, that’s plenty. “
I’ll allow that Jim Rogers was talking his book a bit, but since he’s also worth several hundred million bucks, I’ll also allow he probably knows what he’s talking about.
Sorry about the length, Kate.
“BARING YOUR SOLES
TheStar.com | News | Liberate your sole, one foot at a time”
…-
“Three men shot at Toronto church dance”
(TORedStar)
a couple more polls not going quite the right way
CTV poll
Would you like to see a federal election this fall?
Yes 434 votes (33 %)
No 898 votes (67 %)
Total Votes: 1332
i guess canadians are out of step again.
[Star Poll]
thestar.com Poll
Should the middle class be eligible for legal aid?
Yes 290 80%
No 60 16%
Don’t know 12 3%
“because diversification is a protection against…ignorance”
and how many people would be best served by diversifying rather than being a lotto-winner type who is either very well-informed or very lucky?
I bet Mr. buffet has owned or did own life insurance, his house, his car and probably bonds and cash. For the vast majority of people – people with a net worth of say $1mm – more if they are closer to retirement less if they are younger – diversification is essential to avoid financial catastrophy. Sure, returns are lower but unlike rogers and buffet, those people cannot afford their investment to go kablooey.
And W.B. sure as hell doesn’t have all of his money in one sector of the economy like Roger’s is recommending.
This “green shift” thing puts me in mind of the Boston Tea Party. Taxation without representation. We in the west have very little representation but a whole lot of taxation. I think it is time for the colonies to take action. Keep your powder dry.
good observation sysk.
the two western provinces of sask and alberta will pay 40% of the tax and wont get but 14% of the say in how its blown.
time to dump the texas tea, dump it in a pipeline and send all of it to the yanks.
FREE THE WEST
KevinB at July 26, 2008 9:12 AM Quotes Buffet*s advice . . .
** Our method is very simple. We just try to buy businesses with good to superb underlying economics, run by honest and able people and buy them at sensible prices. That’s all I’m trying to do. **
[ and hold them long term. ]
Seems simple enough, yet while you can pick a solid future gainer, numbers wise, the trick is getting honest managers.
Insider trading, options, bonuses, golden severence hand-shakes and a dozen other temptations can dilute investment returns.
They say mid-western ethics are the most trustworthy. Can you really trust the boys running the potash game? . . the wheat board?. . . The Canadian Western Bank?
My guess here is two out of three. = TG
Speaking of the tea party just rented the John Adams series on DVD. Part One Join or Die is pretty good. I also recommend very strongly the Pulitzer Prize-winning book by David McCullough on which it is based (John Adams).
Of course as Canadians we have some sympathy for the British who were trying to get the Americans to pay their share of the expenses of the French/ Indian frontier wars.
I have to say those New Englanders were tough, going by horseback in deepest winter to get from place to place, not to mention Abigail Adams who had child after child and was left to run the farm when Adams went off to France.
Of course the rebels were risking a lot – as was mentioned in the film National Treasure – if they were convicted of treasure they would have suffered horrible deaths (being drawn and quartered for instance).
Speaking of the tea party just rented the John Adams series on DVD. Part One Join or Die is pretty good. I also recommend very strongly the Pulitzer Prize-winning book by David McCullough on which it is based (John Adams).
Of course as Canadians we have some sympathy for the British who were trying to get the Americans to pay their share of the expenses of the French/ Indian frontier wars.
I have to say those New Englanders were tough, going by horseback in deepest winter to get from place to place, not to mention Abigail Adams who had child after child and was left to run the farm when Adams went off to France.
Of course the rebels were risking a lot – as was mentioned in the film National Treasure – if they were convicted of treason they would have suffered horrible deaths (being drawn and quartered for instance).
Att. Old Earth Believers: “A long time ago when the earth was young …-
“The Big Freeze”
“In Rice Lake, Wis., the temperature plunged to —60—and for two days dog owners had to push their reluctant pets outside to save their carpets.”
“the winter of 1976-77 is already one of the coldest since the U.S. began keeping weather statistics—and the worst may be yet to come. If February roars like January, this winter could be the coldest ever recorded for much of the U.S.—the great winter that millions of Americans will be telling their grandchildren about decades from now.”
http://tinyurl.com/68mypc (time)
Posted by: Gord Tulk at July 26, 2008 7:00 AM
** China lacks a key thing that Warren buffet and others look for : an enduring competitive advantage.**
Not sure I understand your meaning . . .
The steady honest worker is China*s ** enduring competitive advantage.**
They are really smart too. You should see their modern auto design advances, makes GM and Ford look stale.
tinyurl.com/5lcz6c
tinyurl.com/64mh9g
= TG
The Star and The Onion, separated at birth?
Cemetery workers strike puts focus on secrets of gravediggers’ trade.
http://www.thestar.com/News/GTA/article/467816
It’s a very complex procedure involving shovels and stuff.
Nicola: I bought that DVD & iam glad i did it is amazing, Did you activate the pop-ups on the dvd the history facts are something else.
On diversification, I’m with Buffet. Pick high quality securities that you can understand, and hold them long term. Keep short term cash in low-yield principal protected investments, with a bit held back from your long term portfolio, for opportunities.
Diversification is not the same thing as owning the whole market, also known as deworsification, where you get less than the market return (cost), with higher volatility.
It’s really quite simple – diversifcation is only one principal you must follow. The other two are holding quality and giving it time. If you diversify with low quality, then you get nowhere. If you have a great quality, diversified portfolio, but don’t give it time to perform (ie-day traders and other speculators), then you will likely get hurt.
Personally, I hold high quality CANADIAN bank and insurance company stocks, with some other good businesses thrown in. I haven’t invested in the US market in years – too volatile and high priced, along with obvious currency risk (as $Cdn appreciates v.v. $US, you get hurt). IMO, much of the money made in the US market in the run up to the Grizzy Bear Market of 2000 – 2004, was due to $US appreciation against Canadian dollar.
The notion of trading commodities belies proper investment techniques. By its nature, it’s short term and speculative. The use of derivatives such as futures and options and dangerous, because they were designed to hedge risk.
BTW, what is risk anyway. Is it losing your money? Is is losing ground to inflation and taxation? Is it volatility? The answer is it’s all those things and some others too. If you buy a GIC at 2% yield and hold it for 30 years, many will say you bought a “low risk” investment. Hmm, highest taxation possible and the lowest yield, resulting in negative net real return (after taxes and inflation). Sounds mighty risky to me.
OTOH, a selective portfolio of 20 securities held for the long term, through bull and bear markets, likely will yield a handsome net real return; but this is considered “risky” by many. Why? Because few people understand true risk and how to manage it. Therefore most people should use a good advisor who makes you more money than you could after you pay them.
Diversification is important because not all quality companies stay that way. Witness Fanny Mae in the US, which was a favourite of value managers like Buffet and Larry Sarbit in Canada.
Few people have the skills and, more importantly, the discipline (fear and greed don’t belong in investment strategy) to make money long term.
Hint: go on a third party investment fund website, like Morningstar, find a fund with a manager (still there and staying) who has consistently (at least ten years) provided high returns with lower volatility, and take a look at their top ten holdings. That will give you some insight into what to hold in a particular space (ie-good quality dividend yielding stocks). If you think you have the discipline necessary (high unlikely), then give it a go.
Remember: risk and volatility are not the same thing at all. If you assume they are, then you don’t have the necessary skills to manage your own portfolio.
I was in the business for a number of years. I got smart and put all my clients into a particular Canadian dividend fund, which has never had a negative year (underperformed bulls**t market, but smoked TSX 60 the rest of the time). My clients made lots of money, and didn’t have to return profits when this or that bubble burst. For the foreseeable future, I would continue that approach, and tweak it as conditions change.
Frankly, if a company is not prepared to flow some of its profits to shareholders on a consistent basis, then I’m not interested in owning them.
TG:
China has what Japan had before it – cheap reasonably well-educated and motivated workers. As with Japan this competitive advantage will and actually already is on the wane as other countries including ones in Africa have the latter two characteristics and are significantly cheaper than China. But the biggest short to mid-term rival is India – with its cheaper, younger, english-speaking pop’n that is already a parliamentary democracy. Thus China’s competitive advantage is not “enduring”.
Another poll going horribly wrong at Toronto Sun.
Should Prime Minister Stephen Harper intervene and bring Omar Khadr back to Canada?
Yes 12% No 88%
Dion Talking with Canadians
Would you like to see an Election this Fall?
Yes 33% 1273 votes
No 67% 2636 votes
ctv.ca 07/26/08
Even Associated Press (AP) has admited it.
Perhaps the Vietnam Syndrome will finally be lifted off of America’s back. ‘Nam’ has been front and centre in the Hyppies’ play book for decades.
Communism – gone with the Wall.
Socialism – discredited.
Iraqi quagmire – drying up.
Global Warming religion – fading fast.
Extreem Political Correctness – out of style.
Oh well, still frisbees in the park 🙁
http://ap.google.com/article/ALeqM5jzxqARN0Huv38n5pgDfdBRwuoiZgD925HT7G0
“Having been labeled “deniers” for years, the sense that the end of this hoax is in sight brings no desire to forgive and forget.”
“Let me put the question another way. If it’s a short summer, filled with lots of rain, with a spate of colder weather before Labor Day, everyone who makes a living at Jersey’s famed shore knows that their economy has been affected by “climate change.” That’s because the climate or, more specifically, the weather changes all the time.”
…-
“Ceaseless Hot Air and Wasted Dollars
There is a point at which one’s contempt for the environmentalists and their allies is irredeemable. There is no longer the usual excuse that’s there’s room for argument or discussion regarding global warming. Having been labeled “deniers” for years, the sense that the end of this hoax is in sight brings no desire to forgive and forget.
Recently, Dr. Roy Spencer, an atmospheric scientist who formerly worked for NASA, testified before a Senate committee. Free now to speak without the impediments of bureaucratic oversight, Dr. Spencer told the committee, “I am pleased to deliver good news from the front lines of climate change research.”
http://www.climatechangefraud.com/content/view/1786/218/
“Penn & Teller Expose Socialist Roots To Environmental Hysteria
In 2003, Showtime’s Penn & Teller program with a name not appropriate above the fold — unless, of course, you’re a member of the Netroots! — marvelously exposed what’s behind the global warming and environmental hysteria in America today.
The videos have just come available on YouTube.
In part one (embedded right), the comedy team accurately depicted environmentalists as political and social activists who use green rhetoric to “cloak agendas that actually have more to do with anti-corporatism, anti-globalization, anti-business, and very little to do with science and ecology.”
Exactly. Parts two and three are embedded below the fold with a warning that these videos contain mild vulgarity. Actually, it’s typically one word that most shouldn’t find too offensive for it properly characterizes what’s behind all this nonsense:”
http://tinyurl.com/6kz2p3 (newsbusters)
Michael Coren:
Hundreds of e-mails arrived, of course. Most in my favour, but many against, which is all a healthy indication of democracy and free speech. One, however, was particularly interesting, in that it was sent by someone who is paid by our tax dollars to be objective and balanced.
“You were kidding, right? No matter. That material is about as funny as a good old-fashioned waterboarding joke. Disgraceful.” Richard Goddard goddardr@cbc.ca. o (+001) 416-205-5950 f (+001) 416-205-5731. Q on CBC Radio ONE. Canada Qs up: Afternoons 2 – 3:30, Evenings 10 – 11. Shipping Address: Office 2H109-D, Canadian Broadcasting Centre, 205 Wellington St. W., Toronto, Ont. M5V 3G7.”
http://www.torontosun.com/Comment/2008/07/26/6270131-sun.html
The CBC is in bed with jihadists. Shameful. Fire all of them too.
“Based on partial truths, they’re all the more dangerous for appealing not only to the worst but to the best side of our nature.”
“Liberalism: Its own worst enemy
George Jonas, National Post
Robert Kagan’s fine study, The Return Of History And The End Of Dreams, had me persuaded before I turned a page. I’ve never been a dreamer, and had reservations about the significance of the Soviet Union’s collapse even during the euphoric days of “the end of history.” It was unlikely, I wrote in 1994, that the defeat of Nazism and communism would signal the end of the totalitarian impulse in human beings.
Fascism and communism didn’t come to us from Mars. As they hadn’t been imposed on humanity by extraterrestrial forces, they had to have been created by an impulse inherent in human beings. This being so, I wrote, we couldn’t expect their demise to provide us with more than temporary relief.”
http://tinyurl.com/6kzocq
“Turning Toronto into a nanny state
Allison Hanes, National Post”
http://tinyurl.com/6jy4cw
…-
Nanny,
Nanny,
The sun shines east, the sun shines west,
I know where the sun shines best–
Nanny,
My little nanny,
My heartstrings are tangled around Albananny.
I’m comin’,
Sorry that I made you wait.
I’m comin’,
Hope and trust that I’m not late, oh oh oh
Nanny,
My little Nanny,
I’d walk a million miles
For one of your smiles,
My Nanny! Oh oh oh…
(SPOKEN) Nanny…
My little Nanny.
The sun shines east– the sun shines west–
(H/T Al Jolson)
More Warren Buffet fear and greed investment advice:
“Sell when others are greedy and buy when others are fearful.”
And;
When others are walking, you run.
When others are running, you walk.
The opposite of the prime-time financial “experts” advice.
“about 40 computer models” Fur Sale. Used and abused.
Buy Lo; sell high. Dont’ be “capriciousness” like Old Ma Nature. This is a No Risk Event. Stake your credibility.
Buffet after auction. Free.
How much do ya bid, er, put?
…-
“Wettest summer in over 108 years”
“So what happened to that hot, dry summer Environment Canada promised us?
Well, according to Kimbell, there’s no real part of North America to blame for swamping eastern Ontario, nor are we experiencing the El Nino or El Nina effect.
It’s just the capriciousness of Mother Nature that ruined those picnics and river cruises.
“The answer is that there has been a series of upper disturbances that have moved over eastern Ontario since June,” said Kimbell.
You can’t blame climate change, either.
While Kimbell said some climatologist do link severe or “high-impact” weather to climate change, he’s not among them.
“You can never say that a certain event is attributable to climate change,” said Kimbell.
As for the forecast itself, he stressed the three-month look-ahead is always a bit of a guessing game.
Climatologists run about 40 computer models based on a long list of variables and look for trends, which this year pointed to hot and dry.
Kimbell it’s “not a surprise” the precipitation side hasn’t panned out – the mean Brockville-area temperature, he noted, has been slightly above normal.
The mean daily temperature at the treatment plant this month has been 20.9 Celsius, compared the 20.8 C average, although the average daytime high this month of 25.2 C is lagging a bit under the 25.5 C average.
“We in the business know that our seasonal predictions, we don’t take a lot of stock in it. … The consumers want the information, but I’m not going to stake my credibility on a three-month forecast the same way I’ll stake my credibility on a one- or two- or three-day forecast,” said Kimbell.”
http://recorder.ca/ArticleDisplay.aspx?e=1131905
MSM concedes victory to POTUS George Bush.
MSM defeated by POTUS George Bush.
God Bless George Bush.
God Bless America.
…-
“Analysis: US now winning Iraq war that seemed lost
By ROBERT BURNS and ROBERT H. REID – 3 hours ago
BAGHDAD (AP) — The United States is now winning the war that two years ago seemed lost.”
“EDITOR’S NOTE _ Robert Burns is AP’s chief military reporter, and Robert Reid is AP’s chief of bureau in Baghdad. Reid has covered the war from his post in Iraq since the U.S. invasion in March 2003. Burns, based in Washington, has made 21 reporting trips to Iraq; on his latest during July, Burns spent nearly three weeks in central and northern Iraq, observing military operations and interviewing both U.S. and Iraqi officers.”
http://tinyurl.com/5ak4s7
Some responses to comments above:
rockyt: Buffet’s remark was a cleaned-up version of Baron Rothschild’s famous “The time to buy is when blood is running in the streets”.
Commodities: First, of course Buffet, Rogers, and everyone with an ounce of common sense has life insurance and some cash (not necessarily bonds; at 4% yields at the long end, I’m getting negative real returns) – that’s financial planning 101. I’m sure if you went to Jimmy Rogers and asked if he meant “should I get rid of my insurance and cash, and put everything into commodities?”, he’d look at you like you had three heads, or worse, were Stephane Dion. We were discussing what to do with the investment portion of a portfolio.
Now, someone much wiser than I once said “Asset allocation, not stock picking, is the key to making money.” So I look at my investment decisions from a macro perspective first, to identify where I want to allocate things. What’s going on in the world, from a global political and economic view? Then I decide where I think the world is moving, what the potential risks are, and make my decisions, again at a macro level, trying to decide whether I want to be in equities, bonds, or cash, and in what sectors in each (e.g bonds: do I want T-Bills, short term, or long term?). Then I try to decide how I want to allocate the portfolio and move on from there.
For example, in early 2002, when the Afghan war started, I figured oil at $20-$30/bbl couldn’t last. I also looked at the US trade and fiscal deficit projections, and figured gold at US$250/oz couldn’t last either. I thought the C$ was bound to appreciate against the US$, since our financials were in much better shape. So, I moved virtually all our US$ holdings (mostly bonds) back into the C$. And I put my equities into oil & gas and gold, and the rest into a mix of T-Bills, and high rated Gov of Cda and Prov short term (2-5 yr) bonds.
Now, as TG points out, “How can you tell which the great companies are?”. Unlike Buffet and Munger, I don’t get invited to dine at corp HQ’s, and grill the CxO’s over what’s what. At the time, there were few ETF’s available, so I could either try to pick stocks myself, or try to find a good mutual fund. As Shamrock suggests, I went to a number of sites like Morningstar, found a few funds that had shown reasonable performance in the oil & gas and precious metal sectors, and invested in those. Yes, I gave up a few points in performance over picking stocks myself, but as Gord points out, as far as the details go, I am ignorant, and that’s where I am willing to diversify.
Now to commodities. Demand for food has already exploded (rising incomes in China/India), and costs have also gone up, thanks to idiotic decisions like corn ethanol. The petrochem feedstocks to make un-natural fibres have gone up in stocks, so natural fibres had to go up (cotton has more than doubled in the last few years, e.g.). Industrial metals, like copper, zinc, etc. have all gone up 3-fold or more. And the macro trends that are pushing up those prices don’t seem likely to change soon.
Unfortunately, I still don’t know of an effective way to own these. We don’t have the ETF’s in Canada. Commodity futures are important, especially as hedges (Southwest Airlines recently reported their 69th consecutive quarterly profit, which they attribute in part to their active oil hedging program, so they are less affected by rising oil prices than anyone else. And, as the C$ fell during the 90’s, I remember the CFO of the Blue Jays moaning that they got their revenues in C$ and had to pay salaries and other expenses in US$, and wondering to myself why the prat hadn’t hedged some of the exposure). And the image of a prairie farmer on his tractor with a radio glued to his ear listening to futures prices was a cliche even when I was a boy. But I agree with Shamrock that trying to trade them is too risky and dangerous. I used to sell phone systems to trading floors (turrets), and watching these guys, who simply had to push a button and be connected with any of 120 people, all the while watching 3 or 4 computer screens, I wondered how anyone sitting at a home with a computer and an Internet connection thought they could beat these pros.
But I’ll bet Jimmy Rogers doesn’t suffer that disadvantage, and he has such a track record, he probably attracts the best trading talent. So he’s convinced that 1) commodities will outperform stocks and bonds, 2) he has the expertise, talents, and platforms to compete, and 3) he has enough salted away already he can afford to take risk. Why wouldn’t he put everything he’s got into commodities? And the people who can afford to spend 4 days in Vancouver at $1,000 just for the seminar registration (forget the hotel, air, etc.) are probably not your average Joe either. So, in his circumstances, to that audience, the advice was probably sound.
The best advice I’ve heard on how people who don’t have a lot to invest can get in the game is to invest in the suppliers (as they said, the way to make money in the gold rush wasn’t to mine gold, it was to sell picks). Deere tractors, Monsanto seeds, etc. (I wish I’d bought Potash at 80, 100, 120, 140, 160, etc.!)
Kevin B,
Good thought lines there. Insights bound to enhance the potential wealth of some SDA readers. = TG
Don’t tell Tom Jones, but another journalist throws his panties on stage to Obama.
http://www.thestar.com/comment/article/467740
BTW, is it true Obama will be the starting quarterback for the Green Bay Packers and the New England Patriots this season?
He was also going to start for the Cowboys and the Colts, but figures he might be a little busy with the whole President of the United States gig.
He’s never thrown an interception you know!