Tuesday, December 30, 2008

The real storm still brews

It's time like now that I am eternally grateful that I am Canadian. Not that I have anything against Americans - you guys are nice every time we visit - but what it comes down to is that I am being paid in Canadian dollars. And that is the core theme of this post. Currency, and how massive shifts in mentality toward their fundamentals will completely alter the face of the USD.

When I say shift in mentality I mean that the fundamentals have always been there but they are now coming to surface as the problem escalates further down the slippery slope.

All I have to say for the next few years (probably decade, truth be told) is that if you are American the smartest thing you can do with your money is invest outside of your own country's companies and anything to do with either credit or currency.

Better yet, think of what happened this year: One of the core reasons for the massive crash in all things investment (except treasury values, which I will discuss shortly) is because the majority of "profits" were unrealized and even worse based on intangible "assets".

By this I mean things like the default-swap derivatives market, used to package large blocks of debt and sell them off to the rest of the world. People are finally realizing that collusion between rating agencies and creditors to shore up the security rating on these packages, coupled with a negative savings rate for the individuals this debt attached to, unattainable living standards, and debt-to-consumption practices (leaving a grossly over-inflated asset to back the paper, or even worse - nothing!) has created a giant black hole for investment money.

No wonder they are currently priced at $.15 on the dollar. The market has finally decided what they are really worth.

But I digress. The point to be made is that the future of investing for superior, even astronomical (I love that word) gains, is in things that are actually worth money. Hard assets. Not only hard assets, but hard assets that people WANT and need.

These are things that are the spine and legs of the product cycle. Things that are used to make products, which are then sold to users the world over. Unfortunately, the US economy is currently only 20% based in hard assets and 70% based in consumer spending. This paints a very ugly picture for the future.

But I am not a perma-bear or anything ridiculous like that. On the contrary I believe that there is always money to be made if you know where to put it. A combination of fundamental valuations (using a true realism and none of the crap traditional analysts with biased and profitable perspectives use in their predictions) and technical analysis can dig out rare gems of opportunity and further provide you with good entry positions to maximize gains by additional double digits!

I am bullish as always on stocks. The only catch is that they not only must be the right companies with the right products, but they also must have excellent management, shareholder loyalties, and be naturally hedged against a rapid decline in the value of our purchasing power.

Which brings me to what I have recently discovered and will call "the ultimate buying opportunity between now and whenever the hell it is when you decide to quit the rat race".

Bold claim, no?

Why yes, thank you.

For Americans it is even more ultimate that a Canuck like myself.

But why, you ask? And besides, EVERYONE is saying they have found the ultimate buying opportunity of a lifetime!

Yes, everyone is saying that right now. But there is a catch. You have to PAY all of these people to find out what this information is. Usually a pretty hefty sum, plus they somehow have to manage your money for you for even more money in order to truly take advantage fo this incredible buying opportunity.

From me to you, a late Christmas gift. This information is free for any and all who wish to use it. My hope is that I might be able to save even one person from the tragedy that will soon befall America's citizens.

Ugh, too gloomy. We're talking about making a lot of money here. This should be cheery stuff.

So, what is the ultimate buying opportunity between now and the whenever the hell you decide to leave the rate race? I already spoiled it at the beginning. It is those hard assets that are going to be appreciating so sweetly in value as the rest of the smoke and mirrors investment vehicles fade away and more leverage is wound out.

Meanwhile money is being printed by central banks and blown about like a blizzard, further debasing the currency. In my next post (which should be up within the next hour) I will lay out the first leg of the scenario.

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