One Night Stand or Long Term Plan?

Far from the maddening crowds, Mark and I sit here on the edge of a primitive rainforest, overlooking a coral reef thousands of miles from the nearest industrialized continent. Not a bad spot to ponder life, our investments, and of course our personal projects, one of which is the reason we are here.

savasi

Whilst consuming far too much scotch one evening, we threw around the subject of the equity markets. In the short term markets are making new highs. However, it’s obvious that they’re doing so within an economic backdrop that remains flaccid, at best. Recent corporate earnings reports attest to what we already know… each day that passes, the disconnect between underlying value and what the indices tell us widens.

This is not conjecture, but simply facts based on the data. Despite what Maria “I got this job because I’m hot and constantly bullish” Bartiromo might have us think.

Trading and Investing are like… apples and, eh… kangaroos. In a normal bull market both make money rather easily, despite the differences. However, in the unbelievably manipulated and farcical market of today, paying attention to one’s true temperament and skill set is going to become increasingly important.

If you’re a good trader the volatility and the resultant opportunities are incredible. I suspect that said opportunities will be with us for the foreseeable future, because as long as bureaucrats and banker’s whims dominate the markets the whipsaws will continue.

On the other hand, long term buy and hold investors in Western markets can no longer function as they once did. Like the aforementioned traders, long term investors will be increasingly subject to volatility caused by the macro monetary mayhem and chaos vomited forth by crazed central bankers.The difference for an investor is that in my opinion, mid to long-term forecasting is really useless.

Fundamentals matter no longer. Businesses increasingly live or die by the legislature and monetary policies. Ayn Rand is having a laugh fest from the grave!

I for one am left scratching my head when looking at Mr. Market nowadays.

So, back to paradise for a moment… As we sit here in what can only really be described as paradise, it’s somewhat easier to disconnect and attempt to think rationally about what we’re doing. Looking at the disconnect I just mentioned, I can’t in all honesty say that, “this here setup ain’t just a lil’ bit screwy.” But as I also said I can’t tell you that it won’t, or can’t, continue for quite some time.

In my article referring to the push up bra economy, I wrote that the quaint old days of evaluating a business based on silly metrics like revenues and profits are gone. All that matters is how fast Ben and his cronies throughout the rest of the world can hit CTRL P. As long as that happens even the turds will float to the top.

So, we must ask ourselves… do we want a one night stand, or are we wanting something more meaningful?

Like the one night stand versus the long term relationship, trading and investing are two different beasts. I’m choosing to continue to do what I’m comfortable with – invest for the long term. To that end I am accumulating precious metals, trying not to second guess the long term view, and practicing discipline, patience, and emotional control. Like a hormone crazed teenager, these are the things that every good investor needs.

Yep, we’re still beating the precious metals drum. Although we’ve been heckled a few times and even challenged by our close network to justify the thesis, we believe the bull market in precious metals remains intact, and what we recently experienced is merely a correction, albeit a painful, 8-sigma carnage correction.

We continue to see surging physical demand while the paper markets get whacked. Anomalies in the financial markets are becoming the norm. I submit that this is to be expected with so many natural market forces being actively manipulated.

Manipulation of the financial markets is akin to holding an airplane in the sky by way of thermodynamics and fuel. The entire amazing experience lasts only as long as there is sufficient fuel to keep the party going. In the case of our financial markets the fuel is being provided by central bankers endless money printing. But just like the jet fuel for the above mentioned airplane, there is a cost to providing it.

What then?

We believe that continuing to focus on unique, private equity deals in markets that are non-correlated to the West (the kind we get involved with in CPAN), holding substantial assets in precious metals and agriculture (real things), and also locating ourselves in a place where we can be self-sufficient, will allow us to continue sleeping well at night.

What are you doing to survive in this financial environment? Let us know in the “Speak Your Mind” section below.

– Chris

“Just because something isn’t a lie does not mean that it isn’t deceptive. A liar knows that he is a liar, but one who speaks mere portions of truth in order to deceive is a craftsman of destruction.” – Criss Jami

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Pete
Pete
9 years ago

First of all, that has got to be the sweetest horizon pool I have ever seen! Maria should be in there learning about REAL things and REAL men……

What am I doing to survive?

Pretty much betting on the natural outcome, by which I mean trading oh so cautiously while understanding that all the paper “brush” is going to suddenly ignite someday and that only some parts of the forest will remain standing……But that those who were able to sense the imminent fire and protect purchasing power will be able to come back in and buy REAL assets on the cheap. That, to me, is the open and closed case for owning PM’s outside of the banking system and in a jurisdiction that will allow you to convert back to whatever medium of exchange will allow shopping at the “fire sale”.

But that might be a long time coming so I feel you have to find locations, currencies and opportunities that have appreciation potential while paying out some yield. I like some of the Asian large caps and REITS for income with decent liquidity but I’m also finally executing on lengthy D/D efforts and committing capital to productive “foreign” real estate. This gives the “sleep at night” comfort because it can be a bolt-hole for the family if needed yet still yield something and likely increase in value.

The speculative percentage of the portfolio is already locked into a few frontier bets that may or may not succeed and find an exit. Everyone has to balance many personal factors when determining how many “home run swings” they can take……

Of course the core of my strategy is just being lucky enough to earn good income in a solid foreign currency while living outside the USSA and exercising the resultant tax minimization strategies. That will be difficult to retire from anytime soon because having regular, current income allows so much additional flexibility and security……

But Man Oh Man Does That Pool Look Inviting!