George Gorski

Investment Strategy: Try to Catch a Falling Knife?

As I see it there are 3 steps to avoid a world depression. Retailers sell at 4 times the wholesale purchase price; 1/4 for the cost of the commodity, 1/4 for expense, 1/4 for profit, 1/4 for growth. The stock market is comprised of stock retailers, since quality stock prices are now between 1/4 to 1/3 of their 52 week highs, there is buying activity as of Friday Oct. 10, 2008. The financial sector bailouts will not turn this market around because the fundamental problem has not been fixed. Nor will devaluating all commodities help. The world will expect a lower price for US manufactured goods, if the price of their own commodities are lower. The main problem is the US trade deficit. Before the US dollar drops from the sky in the coming months, the US should be going back to the G7 or G20 conference table now and negotiating Balanced Trade Agreements with nations, for example, an equivalent value of GE goods traded for an equivalent value of crude oil. No surplus or deficit allowed. This would restrict the amount of trade to China, since they are reluctant to spend their surplus on US goods. The US should shop around for these Agreements to get the best bang for their products. I am suggesting world trade without the use of currencies, since the currency of many nations are suspect. This action may spur shortages and most definitely force domestic production and growth. That is why Pickens and Buffit are investing so heavily in the US energy and manufacturing sectors, they know where we are headed and they are going to profit from it. OPEC may finally get broken. The second step is the financal system getting back to basics, All new or renegotiated domestic individual loans should be based on the traditional 0.34 debt/total family income ratio. This should be enforced, any abuse higher should result in an immediate surrender of all family assets or fining the offending Financial Institution.
The third step involves new rules for stock market trading. No more than one stock trade flip per time frame, say per week. All stock trades to be taxed at 1/4% of the trade value without an allowable tax deduction. Also the allowance for 24-7 hour stock trading, 365 days per year. We are a global economy.