Net Long the US Market! (Ultra-shorts and Guns and Ammo)
The Onion again provides insight through humor:
Before you read my Bearish diatribe, I wanted to tell you Fools a few things.
Being born with an American citizenship provides you with a standard of living higher then 90% of those on the planet and a Bill of Rights that is better then 98% of the planet. Americans have been “living the dream” created by the reserve currency status of the US dollar, a relatively low population density and an eroding Constitution and Bill of Rights. Regardless of the future, your health and citizenship are still the two best assets you have. To despair about the future is the wrong attitude for an American, it is better to prepare and thank the Lord for what you do have.
There will be some changes in the US, but the fact that you are reading this Blog makes me think you are well ahead of “Joe plumber” types. Also these times create opportunities of a lifetime for investors on the right side of the market.
FYI - Today, I will reach 14k points, a record here in Fooldom. I trade mainly on common sense and stomach pains. Watching, reading inept and corrupt liars on TV or in the corporate press makes my stomach hurt and I look to short the companies they pump etc….Or I just use some wisdom to WAG what is coming next.
As Fool’s alstry says “Don’t fear, prepare”
What American’s will need going forward: Food, Shelter, Guns and Ammo
As American “investors” scramble to enrich themselves by finding the next bubble. Fooldom already knows what the next bubble is, because I have written about for over a year. (Ref: Long SWHC, 17 Feb 09)
I am net long the US market after sitting mostly in cash for a month or so. I think the gun makers are going to be the next bubble as the literate and historically educated Americans stock pile. The historically dumb and illiterate will eventually follow. Again, go by you local gun store and ask about business or call and try and get into a gun class. Gun nuts can help me here. There is no deflation in guns or ammo, again go and see for yourself.
Americans should/could own 3-10 guns depending on family size and location at least 3000 rounds. So I expect guns and ammo sales will increase 4-20X in the next year or two.
At some point the politicians will restrict, nationalize, outlaw or tax the gun makers out of existence, IMO. So these gun stocks are similar to a Call Option and the risks are the same. To a “value investor”/ buy and holder I recommend buying physical guns and ammo. Yes, you need to buy a safe to hide these in also.
DO NOT BREAK THE LAW! AGAIN, DO NOT BREAK THE LAW! The first people to starve or be killed in a systemic breakdown are the people in jail. So going to jail, is the last place you want to be.
Meanwhile, the some new revelations are hitting the streets that will likely send the gun bubble to new highs:
1. With One Word, Bernanke Reveals Who Actually Runs the Country
Yesterday, in his appearance before Congress, Bernanke revealed with a single word who really runs the United States:
Senator Sanders: "Will you tell the American people to whom you lent $2.2 trillion of their dollars?"
Indeed, Bernanke and Treasury refuse to provide this information even confidentially and off-the-record to Congress. And the official overseer of the TARP bailout program can't even get the information of where all the bailout money is going.
With his single word "no", Bernanke revealed that Congress is impotent and out of the loop. In other words, Congress doesn't really run the country in the core area of business, finance and the economy. The financial giants and their servants at the Fed and Treasury do.
Indeed, Bernanke's testimony is related to - and as important as - the fact that the warmongers gave themselves dictatorial powers.
2. Law Professor: "We May Not Have Realized It At The Time, But In The Period From Late 2001-January 19, 2009, This Country Was A Dictatorship."
Scott Horton - a professor at Columbia Law School and writer for Harper's - says of the Bush administration memos authorizing torture, spying, indefinite detention without charge, the use of the military within the U.S. and the suspension of free speech and press rights:
We may not have realized it at the time, but in the period from late 2001-January 19, 2009, this country was a dictatorship. The constitutional rights we learned about in high school civics were suspended. That was thanks to secret memos crafted deep inside the Justice Department that effectively trashed the Constitution. What we know now is likely the least of it.
From a previous post:
3. What is Next?
It's fascinating to read the commentators in mainstream journals like The Financial Times and The Wall Street Journal all strenuously pretending that "the worst is over" (maybe... we hope... fingers crossed... hail Mary full of grace... et cetera). The cluelessness would be funny if it didn't involve a world-changing catastrophe. All nations that have reached the fork-and-spoon level of civilization are now engineering a vast network of cyber-cables that lead directly from their central bank computers to the Death Star that is hovering above world financial affairs like a giant cosmic vacuum cleaner, sucking up dollars, euros, zlotys, forints, krona, what-have-you. As fast as the keystrokes create currency-pixels, the little electron-denominated units of exchange are sucked out of the terrestrial economies into the black hole of money death. That's what the $700-billion bail-out (excuse me, "rescue plan") and all its associated ventures are about. What Now?
To switch metaphors, let's say that we are witnessing the two stages of a tsunami. The current disappearance of wealth in the form of debts repudiated, bets welshed on, contracts canceled, and Lehman Brothers-style sob stories played out is like the withdrawal of the sea. The poor curious little monkey-humans stand on the beach transfixed by the strangeness of the event as the water recedes and the sea floor is exposed and all kinds of exotic creatures are seen thrashing in the mud, while the skeletons of historic wrecks are exposed to view, and a great stench of organic decay wafts toward the strand. Then comes the second stage, the tidal wave itself -- which in this case will be horrific monetary inflation -- roaring back over the mud flats toward the land mass, crashing over the beach, and ripping apart all the hotels and houses and infrastructure there while it drowns the poor curious monkey-humans who were too enthralled by the weird spectacle to make for higher ground. The killer tidal wave washes away all the things they have labored to build for decades, all their poignant little effects and chattels, and the survivors are left keening amidst the wreckage as the sea once again returns to normal in its eternal cradle.
So, that's what I think we will get: an interval of deflationary depression followed by a destructive wave of inflation that will wipe out both constructed debt and constructed savings, scraping the financial landscape clean. There's no question that stage one is underway. But we can be sure the giant wave of money recklessly loaned into existence in just a few weeks time will wash back through the global economy leaving a swath of destruction.
And then what? The societies of the world will be faced with the task of rebuilding systems of fruitful activity, i.e., real economies based on productive behavior rather than the smoke-and-mirrors of Frankenstein-finance con games. In fact, excuse me while I switch metaphors again, because the Frankenstein story -- the New Prometheus -- is yet another apt narrative to inform us what we have done. We have "played" with financial fire and brought to life a monster now bent on killing us. One question that this metaphor-narrative raises is: when will the angry peasant mob storm the castle with their flaming brands and cries for blood from the makers of this monster? Rather soon, I think. Perhaps, in some countries (maybe the USA, if we're lucky), this will take the more orderly form of systematic prosecutions, bringing to justice persons who perpetrated swindles involving the alphabet soup of investment "products" that have gone bad in so many accounts (and ruined so many individuals, institutions, and governments). I think it has already begun with the inquisitors summoning the shifty Dick Fuld of Lehman Brothers -- but there are hundreds of other characters like him out there, who scored untold millions of dollars in activities that were simply grand swindles. I wouldn't be surprised if, eventually, Treasury Secretary Hank Paulson found himself in the dock to answer how come, when he ran Goldman Sachs, there was a special unit in the company dedicated to short-selling the very mortgage-backed securities that another unit in the company was so busy pawning off to every pension fund on God's green earth.
Apart from orderly prosecutions (which can certainly turn harsh and cruel), there is the possibility of sociopolitical upheaval -- revolution, violence, civil war, war between nations, the whole menu of monkey-human mischief that afflicts mankind. We are not necessarily immune to it here in the USA, despite our cherished notion of exceptionalism, which would have us inoculated against all the common vicissitudes of history.
Financial Ninja has some Really Scary Charts here:
I am aligned with the US favorite Jewish Persian Noureil Roubini here:
I am still betting on deflation unless there is a greater war. Intrade has odds at 30% for a greater war.
A U shaped or L shaped recession.
If you think the US market is bad or has seen the bottom look at the rest of the world: Many world stock markets now off 50% or more from peaks
Los Angeles Times 24 Oct 08
Markets down more than 70%:
Vietnam (-70.5%), Peru (-73.2%), Ireland (-73.4%), Russia (-73.9%), Iceland (-88.7%).
Markets down between 60% and 70%:
Hong Kong (-60.1%), Poland (-62.6%), China (-69.8%).
Markets down between 50% and 60%:
South Korea (-54.5%), Italy (-55.2%), Egypt (-56.9%), Brazil (-57.2%), Japan (-58.1%), Singapore (-58.2%), Turkey (-58.5%), India (-58.3%).
Markets down between 40% and 50%:
Great Britain (-42.3%), Australia (-43.3%), U.S.-S&P 500 (-44.0%), Spain (-46.4%), Germany (-47.0%), Mexico (-48.3%).
FYI - Gleen Beck this Week on Guns
Gun Control Reduces Crime