Politicians
lead you to make more mistakes than any human invention in history with the
possible exceptions of handguns and tequila.
Prudence has come into question these days in investing. It is not just the fiscal cliff in the United States but also the various monetary cliffs in Europe that lead me to this observation. I heard from a reporter from Reuters over the weekend stating that I was wrong and that things were more settled in Europe because the ECB had mollified the market pressures. He lives in Brussels so I am not surprised with his viewpoint and I think he is correct in his remark except that market pressures are not nearly the whole story these days. It is like we are hiking in the Alps and the path is narrow and there are savage drop-offs to the left and to the right and we have been walking for some time now and are tired and the danger increases as our weariness grows.
My mechanic recently told me; "I couldn't repair your brakes, so I made your horn louder."
One might suppose, in America, that the danger of our plunging into the sea of adversity decreases if Romney is elected along with a Republican Congress because everyone will be on basically the same page. Obama in the White House and a Republican Congress could lead to all kinds of issues that could cause lock-up and political stalemate. It may be better in some circumstances to have a divided leadership but perhaps not in our present circumstances. We will all know the results of the election soon enough.
In Europe they are following their dreams. In Brussels they ask where they are going. In Berlin they tell you where they are going. They will all meet up with them eventually.
The prudence issue is a real one. It is quite difficult to be the prudent man given the road we are traversing. If we keep stumbling along and the central banks of the known world keep providing liquidity then there is some reason for the compression in the bond markets and for the state of the equity markets but if the European recession hits the American shores, as it appears that it is as denoted by recent corporate earnings, and if China finds itself mired in Beijing maple syrup and if Europe reaches a point of non-agreement and non-compromise then our circumstances will be drastically changed and I mean drastically. Central bank intervention is the only thing, in my opinion, that is holding the construct together and politics both in America and in Europe could cancel the blank checks as a result of the votes of the citizens in various countries.
Grant’s Rules 1-10 do not vary. “Preservation of Capital” must be the watchword in this market; in all markets. Any mistake made is now magnified by our very low interest rates so that any error is compounded by the ability to make back the loss. In America we are facing our national elections. In Europe we are facing a hardening of positions where the divisions between the North and the South, with France lining up with the Socialist South, are edging closer to some nation or another refusing to fund. The scheme of diversion can last only so long as real decisions with real consequences are about to be forced upon the Continent as funding must come or not come and as various nations do not want to use their citizen’s money to hand to other countries that have engaged in fiscally irresponsible strategies. I repeat, one more time, that we have entered the “Danger Zone” in my view where the investment tactics of today may not be suited for what is just ahead. The road has been long, the liquidity provided by the Central Banks and the lack of political consensus has caused delay after delay but soon, very soon, the Europeans are going to be forced to decide; fund or not to fund and then the “really big show” will get underway!
Prudence has come into question these days in investing. It is not just the fiscal cliff in the United States but also the various monetary cliffs in Europe that lead me to this observation. I heard from a reporter from Reuters over the weekend stating that I was wrong and that things were more settled in Europe because the ECB had mollified the market pressures. He lives in Brussels so I am not surprised with his viewpoint and I think he is correct in his remark except that market pressures are not nearly the whole story these days. It is like we are hiking in the Alps and the path is narrow and there are savage drop-offs to the left and to the right and we have been walking for some time now and are tired and the danger increases as our weariness grows.
My mechanic recently told me; "I couldn't repair your brakes, so I made your horn louder."
One might suppose, in America, that the danger of our plunging into the sea of adversity decreases if Romney is elected along with a Republican Congress because everyone will be on basically the same page. Obama in the White House and a Republican Congress could lead to all kinds of issues that could cause lock-up and political stalemate. It may be better in some circumstances to have a divided leadership but perhaps not in our present circumstances. We will all know the results of the election soon enough.
Everyone has a photographic memory, some just don't have film.In Europe we have gone nowhere. Yes, the ECB has presented their grand proclamation of unlimited money forever and ever and praise God and Hallelujah but the condition ties the horse to the cart and is inseparable according to Mr. Draghi. Yes, the markets have been soothed by his comments or perhaps it is just the fear of intervention that has driven both speculative and real money from the marketplace. Yet the European Union has gone nowhere in addressing the funding of Cyprus, of Spain, of Portugal and of Greece. With Athens it may get down to some day in November when they call Berlin and say, “Out of money, we are out of money and can’t pay our bills and now what?” Then we will have panic and chaos which may not square up with the next new, new Summit that will most assuredly save Europe as we are told for the zillionth time.
In Europe they are following their dreams. In Brussels they ask where they are going. In Berlin they tell you where they are going. They will all meet up with them eventually.
The prudence issue is a real one. It is quite difficult to be the prudent man given the road we are traversing. If we keep stumbling along and the central banks of the known world keep providing liquidity then there is some reason for the compression in the bond markets and for the state of the equity markets but if the European recession hits the American shores, as it appears that it is as denoted by recent corporate earnings, and if China finds itself mired in Beijing maple syrup and if Europe reaches a point of non-agreement and non-compromise then our circumstances will be drastically changed and I mean drastically. Central bank intervention is the only thing, in my opinion, that is holding the construct together and politics both in America and in Europe could cancel the blank checks as a result of the votes of the citizens in various countries.
Grant’s Rules 1-10 do not vary. “Preservation of Capital” must be the watchword in this market; in all markets. Any mistake made is now magnified by our very low interest rates so that any error is compounded by the ability to make back the loss. In America we are facing our national elections. In Europe we are facing a hardening of positions where the divisions between the North and the South, with France lining up with the Socialist South, are edging closer to some nation or another refusing to fund. The scheme of diversion can last only so long as real decisions with real consequences are about to be forced upon the Continent as funding must come or not come and as various nations do not want to use their citizen’s money to hand to other countries that have engaged in fiscally irresponsible strategies. I repeat, one more time, that we have entered the “Danger Zone” in my view where the investment tactics of today may not be suited for what is just ahead. The road has been long, the liquidity provided by the Central Banks and the lack of political consensus has caused delay after delay but soon, very soon, the Europeans are going to be forced to decide; fund or not to fund and then the “really big show” will get underway!
Sherlock and Watson are out camping. In the middle of the night, Sherlock wakes Watson up.
"Watson, please look up and tell me what you deduce."
"Well, my dear Holmes, I observe the awesome size of the universe, and the vast multitude of stars shining down on us. If we assume that even a small percentage have planets capable of supporting life, I deduce that somewhere out there, life must indeed exist."
"Watson you idiot, someone's stolen our tent!"
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