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How To Position Yourself Now

Components of a good investing plan
Friday, June 13, 2014, 1:13 AM

Executive Summary

  • Planning determinants for:
    1. Precious Metals
      • Bullion: physical
      • Bullion: stored & tradable
      • Miners
    2. Stocks & bonds
      • Remaining long
      • Strategies for shorting
    3. Real Estate
    4. Debt Management
    5. Income Security
    6. Local Investing
    7. Personal Preparations
    8. Community Preparations

If you have not yet read The Good News In All The Bad Data, available free to all readers, please click here to read it first.

Though we strongly advise in Part 1 to move to cash, it's essential to remember that this is largely a transitional maneuver. The goal is to keep your powder dry during the coming deflationary storm, and then deploy it in as intelligently and timely a manner as possible when your dollars can buy quality assets at excellent discounts. In this Part 2, we walk you through the principal components for building your investing action plan for both in advance of, and when, that time arrives.

Also, we understand that for reasons of options and attitude, simply moving your portfolio 100% into cash is unpalatable or unrealistic for a number of people. Some of you will want to, perhaps even need to, have a percentage of your capital remain in the financial markets for the foreseeable future. So we discuss both long and short strategies for you to evaluate and pick whichever best suits your personal situation.

It's important to understand that the solution set contained below is a superset for your consideration and not a one-size-fits-all recipe (i.e. do NOT take it as personal investment advice!). As strongly urged in Part 1, its best use is as a structured guide for you and your financial adviser to use together in discussing and developing an investment plan customized to your goals, needs and risk tolerance.

Suffice it to say, everything discussed in this report (even the % cash component mentioned in Part 1) should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good...

Precious Metals

One of the biggest mysteries that continues to perplex Chris and me is: Why is central bank liquidity creating price bubbles in every asset class EXCEPT the one you would expect it to most?

Here we have everything from Facebook stock to Las Vegas houses to junk bonds to Beats headphones catching bids at insane prices. As Chris discussed last week with economist Steen Jakobsen, the data for stocks over the past year shows that the worse the balance sheet, the better a company's stock performance has been.

Why is everything down to pure crap being lifted by the giant pool of money sloshing around the planet, but prices for gold and silver -- arguably the highest-grade assets to own -- are so badly languishing?

I won't rehash all of our speculations for why, as there are dozens of recent articles on this site speculating on the topic. But as this year's mega-report on gold drives home, the actual fundamentals for owning precious metals not only remain intact, but they are expanding materially each year. 

Well, the good news here is that the precious metals market is the one place you don't have to wait for the "buy at pennies on the dollar" experience. It's here now.

Prices are not only far below what the fundamentals justify, but... » Read more

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Off the Cuff: Slippage

Centralized control is losing its grasp
Thursday, June 12, 2014, 11:26 AM

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • Voter Revolt
    • Eric Cantor's loss suggests populace is getting fed up 
  • Iraq Gets Worse
    • Now a failed operation of two Presidencies
  • Manic Markets
    • Priced for 0% risk
  • Hazardous Housing Market
    • Already nosing over?
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The Trouble with Numbers

Our 'good' data worsens the closer we look
Tuesday, June 10, 2014, 12:06 PM

According to the ever-strident popular press, the world is in recovery. The stock market says so, the bond market says so, and the politicians and monetary bureaucrats all say so.

The only trouble is the central banks continue to flood the world with liquidity, something they shouldn't need to be doing if a true recovery were really upon us. » Read more

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Off the Cuff: Boring, Frustrating Markets

Even the movie 'Groundhog Day' had an end
Friday, June 6, 2014, 11:50 AM

In this week's Off the Cuff podcast, Chris and Adam discuss:

  • Investing In Farmland
    • There are attractive alternatives to Wall Street
  • Boring, Frustrating Markets
    • No volume, no volatility, no sense
  • Downside Risk
    • We're closer to the correction than we've been over the past 5 years
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The European Neutron Bomb Has Dropped

Central banks have gone insane!
Thursday, June 5, 2014, 11:25 AM

For anybody drinking the economic recovery Kool-Aid, today's historically unprecedented experiment by the European Central Bank (ECB) to impose negative bank interest rates should be like a bitter squeeze of fresh lemon on the tongue.

If things are so rosy then why exactly are such desperate measures necessary? » Read more

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Get Ready For Falling Home Prices

Don't be as vulnerable as you were in 2008
Tuesday, June 3, 2014, 1:15 AM

Executive Summary

  • The new drivers of the current housing price cycle
  • Why investment capital, not normal household formation, has become primary for pricing
  • What the implications of an investment-driven housing market are
  • Why prices will fall & what homeowners (residents & investors) can do now

If you have not yet read The US Housing Market's Darkening Data, available free to all readers, please click here to read it first.

The The New Drivers of The Current Housing Cycle

1. Cash

First, we are currently seeing something in residential real estate markets that has not occurred in our lifetimes – the magnitude of all-cash offers. 40-50% of residential real estate purchases have been for cash in recent years. This phenomenon has no precedent in recent economic history. Why is this happening?  We need to remember that a primary goal of the Federal Reserve in setting short term interest rates near 0% was to induce investors to buy “risk assets” – think real estate and common stocks.  By eliminating rate of return in safe securities such as Treasury bonds, CD’s, etc., the Fed essentially forced formerly conservative investors to purchase higher risk assets in order to get any acceptable rate of return.

In good part, the all-cash offers are coming from investor’s intent on buying to rent. Intent on obtaining an acceptable cash on cash rate of return as yield can no longer be found in safer investments. This crosses the boundaries between investors in the asset accumulation phase of life and retirees starved for yield, draining formerly CD-centric bank accounts in order to purchase income-producing rental properties... » Read more

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Off the Cuff: The Biggest Bubble

a.k.a.: Life as we now know it
Thursday, May 29, 2014, 11:31 PM

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • The Beginning of the End of the Eurozone?
    • The disgruntled citizenry is voting its mind
  • Mal-investment Everywhere
    • But the bond market is likely to crack first
  • No Exit
    • After 5+ years, the Fed is as stuck as ever
  • The Biggest Bubble
    • A.k.a: Life as we know it
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Farther and Farther We Go

We've been down this sort of rabbit hole before
Tuesday, May 27, 2014, 7:20 PM

Anything and everything necessary to preserve the illusion that such a system is equitable and sustainable (when it is very much neither) is being and will be tried. Anything to continue to growth for as long as possible.

But obviously, we cannot continue to exponentially grow our claims on a finite planet without things breaking down somewhere along the line. I submit to you that, indeed,  they are breaking down today. » Read more

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Off the Cuff: Europe Is A "Train Crash In The Making"

The risks have only grown much worse since 2008
Friday, May 23, 2014, 12:57 PM

In this week's Off the Cuff podcast, Chris and Alasdair discuss:

  • The Insane UK Housing Bubble
    • Courtesy of central bank-driven low rates & hot money
  • EU Banks Are As Vulnerable As Ever
    • None of the issues from 2008 have been resolved
  • The Coming EU Energy Drought
    • Worsened by Russia's new gas deal with China
  • The Lack of Churchills
    • Strong leaders are needed, but nowhere in sight
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Central Bankers Acting Badly

Blowing bubbles blindly
Monday, May 19, 2014, 5:42 PM

One of the enduring mysteries about humans is their often startling ability to fail to learn from experience.

This is especially obvious when people are operating in groups; and never more certain than when we are talking about a bureaucratic, sclerotic institution. » Read more