I told you so!

Nelson Ha Ha!Dear Assholes,

For all the people that left comments telling me how dumb an investment gold is, I told you so. Even I didn’t think the shit was going to start hitting the fan this quickly but it is. This is the beginning of the end. Even a nine year old boy “gets it” better than you dumbass nonbelievers in the crisis still to come.

There are some real game changers, some key linchpins if you will, that are allowing the United States of Ponzi to keep the game going but their scheme is just hanging by a thread. The end of the US Dollar as a reserve currency is going to be one of the final shoes to drop but some countries are already calling for that and China and Russia already made a deal to trade oil without using the dollar. Obviously, I don’t need to tell you that this credit rating downgrade is super bad news even if it’s only symbolic. All the non-retarded people that have not been living on Mars for the last ten years saw this coming a long time ago! What else? Social unrest. I seem to be noticing a lot more articles about mobs, beatings, organized group theft, etc. not to mention the rise of “tent cities”. All the hallmarks for a rapidly failing social structure.

Has anybody looked at the price of gold lately? Just since I wrote the article on gold July 18th the price has risen more than $60 per ounce and in the last month it’s risen over $120 per ounce. A nearly 8% return for a month isn’t too shabby especially if your alternative was the US dollar which is of course continuing to fall in value. How ironic that this is all happening so quickly after I made a plea to the last of you that somehow missed the memo on precious metals but are still smart enough to “get it”.

Who knows what’s going to happen next in the short term? My wild guess is that this coming week is going to be a bloodbath on Wall Street. This will precipitate QE3. We will get at least one more phony boom cycle. There may be some buying opportunities for all those things I recommended in the gold article or there may not. Who knows? I can foresee the medium to long term clear as day but I have no idea what will happen short term and neither does anybody else. Somebody will be right but this is just the Wall Street casino. Even Vegas has some winners. Unless you have inside information there are never any guaranteed short term plays. The reason nobody really knows is that the market is crazy, totally irrational and many of the people playing in it are total retards. If you read The Big Short by Michael Lewis you will be appalled by how mind-numbingly stupid some of these super rich buttfucks are on Wall Street.

Warren Buffet’s depiction of Benjamin Graham’s “Mr. Market” your totally insane manic depressive friend is spot on. He wrote about this in one of his shareholder newsletters in 1987 many years before he became a liberal douchebag and it is definitely worth a read if you haven’t read it yet:

Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he
will name a very low price, since he is terrified that you will unload your interest on him.

Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

Ben’s Mr. Market allegory may seem out-of-date in today’s investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising “Take two aspirins”?

The value of market esoterica to the consumer of investment advice is a different story. In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace. In my own efforts to stay insulated, I have found it highly useful to keep Ben’s Mr. Market concept firmly in mind.

He is exactly right and this is really the only type of investing strategy the little guys should take. Although I might add to Mr. Market’s description that he also suffers from mild to severe mental retardation as well. It’s a different ball game if you’re part of the corrupt house and you can move and manipulate the markets yourselves.

Charlie and I are thinking of hitting up the old Wall St. Casino on Monday just because we will be sitting on a beach in the super cheap Phillippines and we know this is gambling and not an investment. Our proposed move is to get some cheap puts on SPDR – we think the market still has some carnage left this week… Anything could happen though.

The long term outlook is described in detail in “Now is the time to move abroad” and “Gold and other investments for the Single Dude“.

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