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Glen Bradford
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Glen Bradford MBA is a wealthy professional that enjoys distressed equity situations. In life, everyone makes stuff up, if you want to be rich, do not pay attention, make them pay. The absolute best you can do is give someone an opportunity and incentive to take it. Take upon yourself worth... More
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  • Projection: The Invisible Double Dip
     Yes, I’m saying that there will be a double dip. Yes, I am saying that it could be invisible. Confused? Great, I’ll try to explain. For starters, how do you price companies in a zero interest rate environment? Any takers? Me either.

    Those in charge are currently pursuing a expansionary fiscal policy. My advice is to bet along with the central bankers. Why? Well, they have an unlimited supply of money. Have you ever played the game, “What would you do with a million dollars?” Well, try playing that game with, “What would you do if you could print as much money as you wanted?” If you want to win, playing monopoly with the banker as an enemy is going to make winning an impossibility.

     The long term outlook for the dollar is quite bearish. The federal deficit is very large, and in my opinion is only going to get larger. This is something that we have to pay back. In the past, when countries get in over their head, as I think we have, instead of defaulting on their debt, they print more money and monetize the deficit by paying it back with dollars of lesser value.

    Basically, you have two options in order for the government to be able to pay off this debt. They can increase their revenues (taxes) or decrease their expenses. Both of these are not good for the US economy if the goal is growth. Anyway, the FED hasn’t really solved our problems, they’ve just postponed them.

    The Arm Wrestle/Death Trap? Here’s how it could work. If we have a weak economy, the FED seeks to make it stronger and prints more money and this drives down the value of the dollar. In a weak economy, the government tries to stimulate the economy by increasing its deficit. In a stronger economy, the government tries to raise taxes or cut expenses, all of which aren’t good for the economy, and theoretically tries to pay back the huge whopping debt. It’s at the point where governments can’t make interest payments when things hit the fan and debt ratings go down. Factor in my belief that cheap energy prices, which the US and the world have relied on for the 2.5% global GDP growth over the last 50 years, are going up and you begin to realize that monetization is an inevitability. Not if, but when.

    The good news is that there are things out there that are dumber to own that US dollars right now. Long dated US treasuries fit that description, especially when you factor in my belief that the actual inflation rate we are going to experience in the next decade is going to be several multiples of the discount rate that treasuries and bonds are priced at today.

    So, dollars have a supply that for the most part is infinite. Commodities have a fixed supply. In the long run, go for the commodities. In the short run, bet along with the FED, because they are in charge. If I did a terrible job of explaining what’s going on, try listening to Marc Faber or read his blog. http://marcfaberblog.blogspot.com/ For the most part, he’s right on. 



    Disclosure: No positions
    Tags: TBT, UUP, UDN
    Jun 09 8:37 PM | Link | Comment!
  • 10 Predictions for the 10 Years Starting ‘10

    Well. If I haven’t already, what I am about to do is potentially going to ruin my reputation in the short term. I can live with that.

    I wanted to give an updated summary about “What is going on in the world?” because the people on television won’t tell you, the people who write the newspapers won’t tell you, and the people who write magazines won’t tell you --- because they don’t know themselves. It is their job to create salable news, not make accurate predictions. As such, the average Joe is left twiddling his thumbs, making grand accusations like, “the market doesn’t make any sense.” I’m here to tell you that everything in its entirety makes complete sense, if you look at things from the right perspective. Sometimes that perspective is that you don’t know, but in order to get that far, you need to be able to discredit the mass media’s blind attempts at writing headlines that draw your attention instead of drawing the right conclusions.

    If you haven’t already, start thinking for yourself. Question my integrity. Question why you’re reading this. Question what you’re doing now. Ask yourself, “Is there a more valuable use of my time?”

    One of my biggest problems with school was that I was always told, “Glen, you don’t show any work!” I was even accused of cheating once, and asked to reproduce the answer in isolation just to prove I wasn’t copying down neighbors’ answers. Today’s no different. I’m just going to give you the answers. I’m the cliff notes of the business world. I’ve always had this great idea: “If I am consistently not wrong, more and more people will pay attention the more I say.” Here come the black swans.

    1.       1.Peak Oil production happened in 2004. We hit the global peak of daily supply of oil in 2004, as evidenced by price being the only thing that regulates demand and not additional supply coming online. My research suggests that those renegade Peak Oil theorists who are considered “crazy” right now are going to be “insightful genious” probably around 2012, but definitely by 2015. Go buy a poster at oilposter.org.

    2.       2.Global GDP contraction in real terms. The 2.5% annual real GDP growth as a globe that we’ve begun to feel entitled to is over. I think that most of this GDP growth is due to cheap fossil fuels economizing a lot of scalable and marginally innovative ideas. That said, the government could do a good job of understating inflation and the quality of life that $1 buys and inflate the currency in such a way that Nominal GDP growth outpaces their rate of inflation in the midterm.

    3.       3.Hyperinflation in the USA  (combined with below)

    4.       4.Monetizing the USA deficit. Right now, the inflation that we are going to experience is surely greater than the generally anticipated inflation as evidenced by bond prices. Sure, the stock markets are going to see new highs --- but not in terms of purchasing power. Before the inflation happens, discount your cash flows and you’ll find that a higher level of inflation makes your stocks worth less --- which is the case now. Yep, the market is overvalued. As much as I hate gold, and people that recommend owning gold, I will confess that it is going to outperform the dollar, the euro, and US treasuries this decade.

    5.       5.Emerging Economies economically outperform Developed Economies. The marginal value of a unit of energy to an emerging economy is just that much greater there than in the developed economy. Crazy Theorists claim that the emergence of these emerging economies is all part of a conspiracy called “The New World Order.” That’s a coincidence. That said, these up and coming economies that have less and want what we have have the competitive edge to level the playing field.

    6.       6.Bye bye USA Middle Class. It’s my belief that enough people blindly hold mutual funds that are about to lose their shirts, maybe their jobs, maybe more. The efficient market hypothesis, mutual funds, etfs, and all that high frequency trading is systematically creating a system that is even more susceptible to systematic risk and wider swings in volatility. Get ready, it’s not a surprise to me that fundamental indices are beating market cap weighted ones. This will persist, but in real terms, good luck making money in real terms by holding these kind of things for long periods of time (10 years+).

    7.       7.US Treasuries are going to lose investors money in real terms. My estimates suggest that for every one of today’s dollars you put into a 10 or 30 year US treasury, in terms of purchasing power, you’re likely to get less than $0.50 back.

    8.       8.The standard of living that we have in the western world today is unsustainable. Higher energy prices, a fiscal deficit that is forcing the FED to blow up its balance sheet, which lowers interest rates, which decreases the value of the dollar, which somehow is supposed to pay back that fiscal deficit at a later date …. Enough said. Entitlement programs are usually the first to fade.

    9.       9.The European Union has constituents that are not sustainable. The European Union works like a credit union, where everything works fine and dandy until you let people join who you can’t hold accountable, notably the PIIGS. So, what’s happening right now is they are putting the bad guys on life support to stabilize the area, and are then going to deleverage and move the bad guys out of their system slowly. That’s the plan anyway as I see it.

    10.   10.China’s Growth Rate of 10% is not sustainable. They are building lots of empty buildings. Everyone working as hard as they can is not necessarily progress.

    In 9th grade, I was accused of plagiarism once and given a failing grade for the course for summarizing references from various sources of information and then giving them credit for their information. The works cited was several pages. My number one strength is not my ability to come up with ideas myself. I’m just really good at learning how things work and figuring out who to listen to and who to ignore. Good news is that buying the same stocks as somebody else isn’t cheating, plagiarizing, or anything. If you do it right, you won’t lose money. I want to close with the ‘sparknotes’ of information that I think are worth checking out. Again, only do so if you’re interested in not losing money.

    http://marcfaberblog.blogspot.com/



    Disclosure: No Positions
    Tags: SPY, FXI, VGK
    Jun 09 8:33 PM | Link | 1 Comment
  • Roubini’s Forcast Half Complete

    When the New York Times labels a man as “Dr. Doom,” and my own personal forecasts yield significantly similar medium term forecasts, it’s worth illustrating how the media doesn’t value accuracy as much as it values salability. Nouriel Roubini, called “Dr. Doom” by some, gained his fame by preaching doom in the real estate market in 2006, 2 years before the collapse. Since then, his negativity has admittedly been overly negative. He felt that the US economy rebounding when I was calling a global bottom was too optimistic. I’m here to argue, that in the long run, he’s right. Economists have a tendency to be too far ahead of themselves --- sometimes they are born into their graves.

    One similarity between him and myself is that we invest in our ideas. He’s predicting doom, and he’s sitting mostly in cash. I was predicting US listed Chinese stocks were the best investment, and I was 100% invested in them. This is in contrast to the majority of market pundits that just talk about stuff they don’t own. My favorite is when you have people that talk as if they are credible, knowledgeable, and oversee their own allocations --- and are in reality diversified across diversified investments like mutual funds. Overdiversified people talking about singular stocks are not credible. In fact, it’s incredible that they have an audience that listens. The educational system of today’s society has limited our ability as a society to question the incentives of those we listen to, but that’s another story. What I am saying is that Roubini is someone that you should listen to and then you should think for yourself.

    Back in his heyday, he forecasted a housing bust and an oil shock. Both happened, against “all odds.” Suddenly, everyone wants to interview him all the time and hear his negative opinion on what’s going to happen. Why? Mostly because the market sentiment is negative, and wants to confirm their own bias.

    I’ve taken it upon myself to take a deeper look at both of these concepts he’s become famous for and apply it to recent developments. Basically, the Greece thing pales in comparison to the US sub-prime mortgage meltdown. The oil shock; well that… we really haven’t seen yet. Yes, I am saying that $143/barrel will be considered cheap in no less than 5 years. Am I forecasting a cRUDE awakening? Yes. The US is going to be transitioning to natural gas, thanks to lobbyists. Long run, hydrogen economy is likely --- or a different technology that I don't know of yet.

    Foreclosures are going to ramp up again in the 2nd half of the year, unless government programs push them further back. I'm set to make monstrous profits here. With interest rates at 0%, we pretty much are going to need to monetize the deficit. Hey, it will make us more competitive with a weaker dollar. The stronger the dollar is, the more Bernanke can print money. If housing prices have stabilized, it could be because the money supply has increased to meet the collapsing bubble.

    Fortunately, I’m so far ahead of this curve, that those who understand that chance favors the prepared can prepare themselves on the cheap. Buffett’s purchase of Burlington Northern, which at first glance makes him look off-base, makes him look brilliant to me, and others will see his brilliance within 5 years time.



    Disclosure: No positions.
    Tags: OIL, USO, UNG
    Jun 09 8:17 PM | Link | Comment!
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