no kidding. I’ve heard this: ” “don’t fight the fed they are too big””, and, even: “and its a World-Wide coordinated intervention”…”any time now this puppy will reflate….”

ya gotta love “Central Casting”, never w/o a new Script, and always with new rubes to trot out to deliver the palaver..

People, if they want to do themselves a Holiday-season favor, should pay attention to what you’re delineating..and, for extra gifts, they should fade those fading Steve Barry, and keep an ear open to AT.

We have been having the inflation/deflation debate for quite some time and I thought that we would settle it with a Jim Rogers interview that was done recently on Bloomberg. I have attached it to the bottom of this post. Of note, Mr. Rogers says that at NO TIME IN HISTORY HAVE WE HAD ALL CENTRAL BANKS PRINTING SO MUCH MONEY AND HISTORY SHOWS US THAT IT WILL LEAD TO HIGHER PRICES. He talks about how low many of the commodities are and that is even unadjusted for inflation. He used the term forced liquidation several times during the interview (we only have one part posted here). I have said that we are going to see much higher prices because when this all settles out we are going to see that the forced liquidation has caused prices to over correct. The over correction will cause demand to heat up faster than normal—and the rest will be history. Mr. Rogers believes that the dollar rally has been because of so many positions being unwound. He didn’t seem to be buying into the “dollar is stronger simply because we are in better shape than everybody else” theory—even though he did say that some of the European countries are in really bad shape. He does say that a lot of other countries are feeling the ramifications of dealing with our companies. So we are having an impact, but it is in a negative way from our companies slowing down—not in a positive way because we are still so superior.

I had planned a longer post, but I will leave it at this—watch the video and you decide!!!!
Visit http://www.stockshotz.blogspot.com to watch the video

Just heard two things on Bloomberg that would make interesting threads for Barry.

1) Tudor hedge fund splitting into two funds…akin to “good fund” bad fund”.

2) Despite massive losses this year, mutual fund investors will be hit in some cases with large cap gains bills as funds sold long-term winners. Mark my words…that will sour a lot of people and they will liquidate.

I’m not particularly bullish. I see the S&P dropping below 700 next year.

The following provides data up to the end of 2007:

http://www.comstockfunds.org/files/NLPP00000/304.pdf

* * * *

The following provides a graph of the ratio of credit to GDP for several countries

http://www.highyieldblog.com/2008/10/credit-to-gdp.html

My first thought on seeing this chart at a different website was “Why doesn’t this guy compare NASDAQ with XLF since this is a financial crash?” It seems like NASDAQ dropped about 78% back then and XLF dropped about 77% from top to bottom as of last Thursday, so it seems like this crash has finally bottomed out. I will rule out any depression-like scenario (-89%!!!) since the Fed has made it clear that it’s not going to let that happen with it’s bailout of Citi last Monday. Since it has vastly bigger pockets than any of us, why fight against it? I got out of my shorting game and put all my cash into FAS last Thursday when every media outlet was getting hysterical about the Citi and my non-investment friends were telling me to close my account with the Citi. Will just endure some minor see-saw game for next month or two and enjoy the rocket ride to S&P 1200. Just doesn’t see much down side from here. Also, when I see so many geniuses snickering about Warren Buffet, I know it’s time to go long.

Since I’m relatively new to the investment game, I was wondering how to invest wisely for next 5 to 10 years of economic downtime (this is my first time facing something like this) once I take out my profit with my current bet. Found this excellent advice while surfing through the internet. I would like to share with you since I got so much out of this site. Agree with the gentleman, this year and next couple of years are going to be remembered as the best time to spend, spend, and spend like a sex hungry guy in a whore house. Time to charge up big time!

JasonC (SeekingAlpha)

Thu Nov 6th 16:32 PM | Rating: 0 0
Commented on:
Don’t Follow the Wall Street Crowd – Prepare for Market Rollover
“The real question is, medium term, where to put money?”

It is a deflation and spreads have already widened. So you should be putting money in long term corporate bonds, and a few other similar asset classes. The principle. Then as the coupons come in, use them to average in to common stock positions, to exploit the low prices on offer. Gradually, there is no great rush.

Finance corporates can be bought today with 10 to 30 year terms and double digits rates. Diversify by also having a 10-20% position in TIPS (yielding over 3% plus inflation adjustment), likewise in GMNAs (6%, both with no credit risk), and in floating rate bonds or preferreds (those can be bought today to yield 8% and up, and will return double short rates forever if they remain solvant). Keep a moderate position in insured CDs but don’t hoard there.

The name of the game is simply to lend money when no one else will. Pick the credits, and go long on the terms, because spreads will tighten once this passes. Avoid “core” bond funds that right now will be stuffed full of short term treasuries bought by timid managers trying to get slightly less killed than the index.

If you are adventuresome, you can include small positions in loan participation funds, junk bond funds, and equity REITs or REIT funds, and distressed mortgage debt. All of which could get killed, still, so these are 5% positions at most. Only even look at them if you see 15-20% yields on offer – it will take half that figure to cover the loan losses.

Now, when you get coupons from all of the above, invest them in distressed equities. You don’t want to be defensive, don’t go looking for short term trades or try to hide in consumer non-cyclicals and health care etc. Let the mutual fund manager herd do all that. Instead buy financials, buy real estate related names, buy materials, buy retailers, the stuff smashed to heck and gone. Just don’t invest any principal in them. Only your interest!

This will average you in to a 50-50 stock vs. bond position on the right 5 year time scale. Don’t worry about inflation. One, there isn’t going to be any for a short spell. Two, if there is, it will cause spreads to recover, your first stock purchases likewise. And three, because your TIPS and floating rate positions will benefit. Four, because you own a house (you do own a house, right?), and that is all the inflation bet exposure you require.

This is one of the best investing climates you will see in your lifetime. But that doesn’t mean gun risk and jump in frantically, expecting it all to go straight up starting tomorrow. It won’t, and you don’t need it to, or even want it to, really. The longer prices stay cheap, the more stock you can buy with someone else’s money (interest received, not borrowings).

As for how to buy bonds, you can get a pro to manage a bond portfolio for you by investing in an open end mutual fund like Loomis Sayles. Many bond managers have fled risk into treasuries or agencies in the recent slide, not where you want to be. Instead the sweet spot is A rated or BBB rated corporates, and LS is a well managed fund aiming there.