Below is an article that I published in late August of 2008. This was right before the major plunge in prices in the stock markets of many countries including the US, UK, and Japan.
Note the date above in red. (Those who want to join that YahooGroup can access that message directly at this link: https://groups.yahoo.com/neo/groups/redpill_info/conversations/topics/491 ).
Now, before you read the article below, let’s review the FUTURE price action of a few stock markets (what happened just after I published the below warning). Note the comments in the images.
All three markets plunged soon, just as I had warned.
U.S. stocks plunged and then recovered in only a few years (alomst 4 years for a sustained recovery of the prior price levels). Note that the current risk, in my assessment, is currently much higher than in mid-2008. However, that also means that there are current opportunities that are also more historic than those of 2008.
Japanese stocks were not as resilient as stocks in the US. (That is, investors there were not as enthusiastic and did not drive up prices again as quickly or as far.)
Japanese stocks recovered in under 5 years, which contrasts with the stocks traded in England. Those stocks remain down about 80% from the 2008 starting point. In other words, $100,000 of cash stuffed under a mattress is still $100,000 of cash, while $100,000 invested in to those stocks would now be worth about $20,000.
Now, on to the article that I published on August 25th, 2008:
Stop Gambling: Quick!
Get Rich: Safely.
What is gambling? Gambling is investing in hope. Know the consequences of that and, if you are gambling, stop doing it now.
Gambling results in expensive surprises. Sometimes the hopes are false hopes and, in that case, as soon as people know that their hopes are false, they can stop quickly.
However, sometimes people do not know when they are investing in only hope. In other words, some people do not know they are gambling… until they are suddenly surprised. Before we provide you a safe alternative, here are some examples of predictable developments that surprised many gamblers:
From 2000 to 2002, many leading high tech companies plummeted in stock price: such as IBM, Microsoft, Apple, and Intel, as well as MCI, which filed the largest bankruptcy of any company in US history as of mid-2002.
From 2002 to 2008, the US Dollar fell by about 40% against other currencies, as measured by foreign exchange markets. Then, the dollar suddenly stopped falling and recovered in 2008, and this surprised many as well.
From 2005 to 2008, the US Housing Sector fell 70%, surprising many who first hoped falsely that housing would continue to do what it had done previously, and then hoped falsely that housing would resume what it had done in the past. Those hopes have been false, at least so far.
Real Estate, in what had been some of the most favorable markets in the US, such as Las Vegas and Phoenix, also fell 25% so far. Because of the extremely risky borrowing practices which have become common in US Real Estate markets, many of the purchasers of those homes never had 25% equity in their purchases, so, by investing in false hopes, they lost their entire down payment and still owed huge sums. Foreclosure rates for the US increased 57% from January 2007 to January 2008 (led by Maryland, up 430%, and Virginia, up 634%). Sub-prime lenders went bankrupt and industry leaders Countrywide, Fannie Mae, and Freddie Mac pursued government bail-outs to avoid bankruptcy. New government subsidies promise to lure even more hopeful gamblers into housing markets.
Many are still investing in only hope. In January 2008, Merrill Lynch projected a 25% decline by 2009 in US Real Estate prices for the entire nation on average, but the absence of making clear advance warnings limits the credibility of reactive projections [In contrast to sources like me who clearly and repeatedly published advance warnings of the real estate decline that began by 2005 in some regions like Phoenix, AZ]. Further, the National Association of Realtors, one of the groups that have the most to lose from a continuing decline in US Real Estate, projected that real estate prices would be flat (steady) in 2008. Based on their inaccuracy in prior years, they have even less credibility than Merrill Lynch.
So far in 2008, the NAR’s hopeful forecasts have continued to be false, as US Real Estate prices kept falling repeatedly. (Near the peak of the US Real Estate market, I extensively quoted a senior analyst from Wells Fargo bank, who was even more hopeful than the NAR, to expose the false hopefulness of his sweeping reassurances. On the sbect of advance warning and credibility, I first published a warning in early 2003 about the wave of instability coming to US Real Estate.)
[My quoting of him was in this 2005 article: http://www.financialsensearchive.com/fsu/editorials/2005/1217.html ]
[Above is my screenshot of his publication in late 2005. His dismissal of rising oil prices as insignificant was a sharp contrast to the comments I had published in 2004 (shown below):]
[The original host no longer has that article published at the original link, but it can be found on any internet archive such as “the wayback machine.” Back to my comments in August of 2008:]
In Japan in the 1990s, in a market that was not nearly as debt-addicted as in the US currently, real estate prices fell around 50% on average nationwide. The Japanese stock market did even worse, falling 80%.
In the early 1930s, stocks and real estate in the US performed even worse than in Japan in the 1990s. Before the 1990s and 1930s, there have been many other major corrections within individual markets, individual nations or even across most of the globe.
Yet, a dismissive contempt for history is common. Hope can be quite resilient amongst some gamblers, even if entirely false.
In contrast to those who vary their forecasts and investments based on clear, consistent patterns, many gamblers react to instability with panicked retreat into markets that they associate emotionally with safety- based on previous times and conditions which may no longer be present. Here are a few examples.
The flood of panicking investors from Japanese real estate and technology stocks is in fact a major catalyst of the boom in the US from the early 1990s, which many hopeful investors perceived as safer than Japanese investments. After US technology stocks plummeted starting in 2000, lenders and regulators lured even more panicking US stock market investors into US Real Estate, which many hopeful investors perceived as safer than US stocks. Starting in late 2000, another market began to surge that many hopeful gamblers focused on obsessively: the precious metals of gold and silver. As usual, their latest hope was perceived to be safer than almost any other investment.
Unfortunately for them, in several weeks in 2008, silver fell 43%. It fell 19% in a single day. From 1980 to 2000, silver prices fell about 90%, or, after adjusting for inflation, about 95%.
How is it possible that after two decades of clear instability and huge declines, markets like gold and silver would be associated with stability? As I mentioned near the beginning, some people do not know when they are investing in only hope- until they are suddenly surprised, even very repeatedly and very expensively. Some people do not know that they have been gambling on real estate, stocks, metals, or even currencies.
Yes, even currencies can lose value quite suddenly. At any given time, some currencies are more stable than others.
At any given time, some investments are more reliable than others. Not only can a competent analyst identify which investments are most reliable at any given time, but exactly how reliable they are as time goes on. Some will become more reliable and some less reliable, some quickly and some slowly.
When you know that you do not know what is safest- or even how to tell- that is valuable to know. You are ready to stop gambling on hopes that may be false.
You may be ready to invest in clear, consistent patterns. I will share with you one of the most obvious patterns below. For now though, you may not be ready for anything but more panicked paralysis and expensive surprises that, you might hope, will eventually wake you to the huge difference it makes to your freedom between investing in mere hope and investing in clear, consistent patterns.
By safely investing in clear, consistent patterns, you would be enriched by the hopeful gambling masses. For example, when silver and gold fell dramatically in August 2008 or May 2006, hopeful gamblers suffered expensive surprises while patient investors- by focusing on safe, clear, predictable patterns- made huge gains from those same drops. As the US Housing sector fell 70% from mid-2005 to 2008, patient investors profited from the same trend. As the US Dollar Index fell 40% from 2002 to 2008, patient investors leveraged the same wave for huge gains.
By now, you get the picture. There is a difference between the hopeful gamblers who eventually panic and the patient investors who focus on clear, consistent, predictable patterns. The difference is in the focus and in the results.
Stop Gambling: Quick!
Get Rich: Safely.
Profiting from sharp, preditable drops is only part of our method, though. We also invest in leading markets that the mainstream gamblers either complain about or simply ignore:
Oil: +1350% since 1999. Many people are complaining about rising fuel prices. The ones complaining probably did not profit from the huge, predictable increases, nor at least budget for them. They hoped- unconsciously- that fuel prices would stay as low as they were.
HUI (the top-performing US stock sector): also rose 1350%, but in under 8 years as of early 2008.
US Treasury Bonds: up nearly 100% since 1999.
So, here is the opportunity. First, you can keep hoping that you are not gambling and then complain when you are again expensively surprised to find out that you have been. Or, you can be grateful to know that investing in hope is only gambling, then stop that right now and begin to invest safely and patiently.
We can alert you to what is safe and what is destabilizing- even in advance of the destabilizing. If you wish, you can even profit from the imprudence of the mainstream gamblers. At a minimum, you can be safe from investing in their false hopes, and instead invest safely in clear, consistent patterns.
As promised, here is the most obvious pattern in the world of investing today, and, though most mainstream gamblers know about it, they have done nothing to adjust to the predictable results of this pattern: the baby boom. Worldwide, you probably know already that there was a huge increase in population starting in the mid- 1940s. Those people are reaching retirement age- again, worldwide- which means that as they retire, they are no longer earning wages from employment, no longer spending money on their careers and daily work routines as they have been, no longer qualifying for huge credit lines since their earnings will be plummeting, no longer pouring part of their earnings into pensions (or taxes), but now beginning to spend more on services like health care and, perhaps most importantly, rather than spend money they earn by working, they get money to afford their decreasing living expenses by selling assets- including cashing in their retirement investments, their pensions, their real estate, their precious metals, and so on.
There are many other obvious trends in the world of investing today, such as the ballooning trade deficit in the US or the blossoming of the middle class in the two most populated countries in the world: China and India. Even in the US, students from those Asian countries (India and China, amongst others) far outperform their classmates of non-Asian descent on average. From the fields of computer science to engineering to medicine and law, the future is being led by more and more Asians, many of whom do not even return to live in the nations where they or their parents were born.
In 1996, the author of the Megatrends series published that people of Chinese descent excluding those who live in Chinahave more economic influence (wealth) than the entire populations of any single country in the world, except for Japan or the United States. How did these “overseas Chinese” do that, considering the tremendous persecution they suffered in many of the places they went? Perhaps they witnessed the mainstream gambling of the hopeful masses and chose to instead invest safely and patiently in clear, consistent, predictable patterns.
Stop Gambling: Quick! Get Rich: Safely.
If you are interested in clarity, profit, and sanity in the midst of naive hysterias, then contact J.R. now. If you wish, you can post a comment to this article and I will keep it private if you state “DO NOT PUBLISH THIS.”
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