Mike Stathis

Industries to Avoid, Industries to Buy

Yes well Pax, as you can see I don't publish on Seeking Alpha much anymore...not because 99% of the readers and authors are clueless (although they are), but because Seeking Alpha censors me. When they do publish my pieces they deemphasize them so they won't get many reads. It's easy to see their tricks.

But the facts speak for themselves. The fact is that I'm in a much different league than the authors of SA and a completely different universe than most of the readers. I serve institutions. All of the other authors on SA and elsewhere herd sheep. I thought I could lead these sheep on the path towards investment wisdom, but it's a lost cause.

Swine Flu: Trade Smartly, Beware the Hype

CDC? WHO? You mean government agaencies? First of all, I spent 12 years in science and I'm more knowledgable than most who work for these agencies. Second of all, anyone who goes to wikipedia shouldn't read my articles. That source is for naive teenagers and is clearly slanted and manipulated. Where did you kids come from? Stock chat boards?

Only a fool cannot see that the government has escalated this flu hype for other reasons, perhaps as a test to see how they can control and fool the public; a test session for the near future.

Stay Clear of Traditional Asset Classes

Dogtownsurf, I tried to warn investors the market was going to sell off. Since the article was posted a month ago, the Dow is down by nearly 900 points. Yet, as you can see, rather than take my advice and sell, many of these people would rather take cheap shots at me. This gives you an idea about the general audience on Seeking Alpha and it is one reason why I don't even bother to waste my time posting here anymore. The other reason is due to the fact that SA censors articles. They will only post material that has daily trading implications, which prevents any commentary about bigger picture events or things expected down the road. In short, I have come to realize that SA caters to the same people who waste time watching Cramer and other trash on CNBC, and I want to distance myself as far from that trash as possible.

You are right on both accounts - I try to be conservative so as not to disappoint. I find my success rate on predictions is extremely high when I am conservative. Yet, to many I seem extreme. remarkable isn't it? And yes indeed - no one in the position to fix things is. Indeed, I am sure Volcker is puking in disgust as he watches Bernanke intentionally destroy the dollar, along with the opportunities Americans once claimed made this nation filled with hope. At least you have the California coast to enjoy - something the Fed cannot easily destroy.

Stay Clear of Traditional Asset Classes

Wrong Middle. Healthcare is NOT going up due to boomer demographics. Boomers have not even turned 65 yet. Boomer demographics over the next 20 years WILL make the problems worse, namely due to the crisis in chronic disease management, which already constitutes over 70% of all healthcare expenses. But right now the costs are due to the excessive profiteering by the healthcare mafia – HMOs, drug companies, device makers, etc. This is a fact.

How is it that the U.S. spends 18% of GDP on healthcare and has the highest rate of medical errors, 50 million without coverage, nearly 1 million medically-related bankruptcies each year, and a ranking of 37th by the WHO – yet, most of the rest of the world has healthcare expenditures ranging from 6-8% of GDP, with virtually no fraud, less waste, much fewer medical errors, and much better rankings? Answer: a healthcare "free-for-all" among the providers who focus on profits and often sacrafice quality care.

In fact, according to studies from John’s Hopkins (Dr. Starfield--google it), due to medical errors, physicians are now the #3 cause of death in America.

Industries to Avoid, Industries to Buy

Response to Simple Simon: Very well said! You get it Simon. And yes, for some reason I seemed to have made some people upset. All I was trying to do is relate some big picture trends to investment themes.

Industries to Avoid, Industries to Buy

Response to Economics Teacher: Your last response was much preferred. Although I disagree, at least you explained your views. It is appreciated. However, let me first say this; I agree with you about the auto industry in the '80s, but only in the early '80s. By the late '80s it had to have been clear to management that foreign imports would only increase. So yes, they were fighting the unions. I apologize if I did not make that clear.

As for trade, I certainly agree that it's good for all involved. However, the fact is that under our current economic system, America has entered a system of unfair trade with the rest of the world. As a result, the only beneficiaries are corporations and foreign workers. And we are seeing the results of this job transfer - no real wage growth since 1999, a weak dollar, and soaring inflation for basic necessities.

How can America expect to have fair trade with nations that manipulate their currency (China) with no ability to counteract (due to the control by WTO), nations whose corporations do not face the costs of EPA and OSHA standards, and whose governments cover the costs of the fastest growing expense in cororate America today - healthcare? U.S. companies simply cannot compete with this and that is precisely why millions of jobs have been sent overseas. As well, most large corporations have moved operations to Asia, taking jobs along with them.

Also note that America has been unintentionally transferring its innovation secrets to its trade partners. I won't go into the details here but as an example, India now produces F-16s under contract. This has catalyzed the growth of its own airline industry. You can check he Dallas Federal Reserve website for an excellent article on this topic.

And yes, I do fault the auto makers for jumping on the consumer finance bandwagon. In fact, I actually use that as a benchmark for companies that have achieved the limits of growth. When companies shift their focus from making cars to makig interest, I think that paints a dim picture for U.S. manufacturing. The fact that many large U.S. companies now have huge consumer finance divisions tells the story of the U.S. economy. And now we are seeing the effects of excess consumption.

Finally, I never claimed to be an "investment guru" and I'm certainly not perfect. I welcome all comments and criticisms. The only thing I ask is that people provide me with the same respect they deserve so we can all mutually exchange our ideas and viewpoints.

Industries to Avoid, Industries to Buy

Response to Bhakta: I agree – Washington is responsible for the current problems. I could also argue that our badly damaged free market system is responsible for many of our economic problems, but that does not mean that we should scrap it. Accountability is key, and right now very little exists. The government has a role in resolving many of the problems if voters demand it. They must be held accountable for their actions. But as it stands today, most Americans are kept in the dark with the help of the media so they really do not understand what is going on. All they see are higher prices and lower quality jobs. And when they listen to the radio or watch TV, they are told these problems are due to the democrats or republicans. In reality, the problems are due to both parties. Like it or not, the government will always be involved. We must accept this fact and focus on making sure their involvement is beneficial to Americans. That is their responsibility.

Response to Cicero: If you think I am advocating socialism then you have misinterpreted my article. Government involvement does not necessarily imply socialism. It’s not about WHETHER the government is or should be involved because they are. What is more important is to define their role and make sure they do what they are supposed, no more, no less. I agree that corruption is part of human nature. But that does not mean we cannot strive to minimize it. Arguably, the level of corruption seen today is unprecedented in U.S. history.

For those of you who have concluded that I am a socialist or liberal, you are way off base. I can only conclude that those who would label me as such do not understand the complexity of the problems in America. Once again, my work experience celebrates capitalism at its highest reach. I am an entrepreneur at heart and I have always been compensated via merit-based performance, which is consistent with capitalism at it purest form. Capitalism is the best system, but only if it is functional. That said, I urge you to reconsider my views because they come from someone who supports capitalism as the only path for America. But it has many problems that must be fixed.

Industries to Avoid, Industries to Buy

Response to keltorttruth: Actually, I am very far from being a liberal. All I want is for more equity in America. We have given the oil industry many chances to deliver. And all it has managed to do is deliver record profits. Meanwhile, OPEC nations now enjoy enormous trade surpluses due to oil export revenues. What are they doing with all of this cash lying around? They are buying up U.S. assets, mainly hard assets – real estate, factories, and banks. Combined with the effects of free trade, America is selling off its most vital assets in exchange for oil and consumer goods which used to be made in America. The current system isn’t getting the job done. There is a much better way. I am not so naïve as to think that blanket regulation would solve the problems. The government needs to be held more accountable. Clearly, we need to commit to a formidable alternative energy policy. Why is that you think Exxon refuses to invest a single penny into alternative energy? Because they have a monopoly. If you want to play the “liberal vs. republican” game that tells me you have let the media brainwash you. The fact is that both parties are essentially the same. America’s economic problems are not party-centric, they are Washington-centric. This is why Washington makes it extremely difficult for a third party candidate to run. They don't want anyone to spoil their party. It’s all about big money. And unless you are part of that boys club, you stand to suffer, along with the rest of us.

Industries to Avoid, Industries to Buy

Response to Economics Teacher: For you to make such a rash ascertain tells me you are of the school of traditional economic thought in America – the same school of thought that advocates the Federal Reserve’s destruction of our currency; the same school of thought that believes that a 2-decade plus period of overconsumption is somehow good for the U.S. economy; the same school of thought that promised free trade would bring better jobs to Americans. Look at the effects of this reckless economic policy. America is mortgaging off its wealth to foreign nations. And the weakness of the dollar is a reflection of this reality. Finally, my investment track record speaks for itself. Back in 2006, when virtually every U.S. economist glamorized the strength of the economy, I uncovered the realities of the illusion created by Greenspan and predicted the events we see today. I also provided numerous investment ideas such as shorting the mortgage, homebuilder, bank stocks, buying gold, oil, etc. I suppose you think GDP, inflation, and employment numbers, as reported, are not manipulated. Finally, if economists really understand the things that enable one to provide valuable investment advice, why is it that I have never heard of an economist who has become wealthy from investing? With all due respect, if in fact you possess a superior understanding of the topics you mention that are critical for investments, perhaps you should exchange your teaching career for an advisory role with a hedge fund.

Stay Clear of Traditional Asset Classes

In response to fredlee....I appreciate your comments, and I agree with most of what you said - in all 3 of your comments...Except the part about me being naive about the effect of lobbyists on the healthcare industry. My core technological expertise is healthcare. Understand that I was limited to what I could mention about it without distracting too much. As you can see, my article was quite long as it is.

The problems with healthcare are numerous; so much in fact that most people think they realize what the problems are, yet they overlook so many others. Without addressing all of the core problems, can't possibly understand potential solutions. But certainly, the healthcare lobbyists - the largest most powerful lobbyists groups in Washington - have a big role in the healthcare crisis; namely, making sure that Washington stays away from price controls. And cost containment is perhaps the biggest problem in healthcare because high costs limit access which prevents more from having coverage, which increases the number of medical bankruptcies. You point about eating healthy is well taken and I completely agree. The food industry must be held more accountable for poisoning the food supply.

That said, I feel that I do understand the full complexity of the problems that have created a healthcare crisis. And am currently working on what I hope to be a groundbreaking book, geared for investors that introduces telemedicine as part of the solution. Perhaps in the future I will address healthcare as it relates to investments.

As far as investing in physical gold, while I do see value in that approach, I did not feel it was relevant to most readers of Seeking Alpha since the site appears to be geared for stock market investors. I guess I was wrong!

buying and holding the physical gold has both advantages and disadvantages. First, you have to worry about storing it in a safe place or else you will have to pay to have it stored. Second, you won't be able to take advantage of the tremendous volatility swings. If you are a good trader you can make alot of money trading it. Finally, it is not nearly as liquid as gold ETFs and you have to pay a spread to buy and sell it.

HOWEVER, the great thing about holding physical gold is that it prevents one from trading it. Even the best traders can get shut out after failing to get back in right before a huge rally. And it could soar from there. In addition, trading it will create a big tax liability which some won't be prepared to meet without hardship.

Finally, you should understand that the gold ETFs are supposed to be buying the physical gold in accordance with demand for the ETF. So buying the physical gold yourself won't increase the price due to a supply-demand imbalance.

HOWVER, no one really knows for certain whether or not the ETFs really hold all the gold they claim since the audits only check for paperwork.

In conclusion, for some, holding physical gold is the best way to go. For others, managing a gold position in ETFs is preferred. As for silver, I actually think it has more upside at current levels than gold. But I think it will heat up later. Right now, gold is on fire due to the banking crisis.

For those of you who feel I've understated the potential disaster, you should know that I try to make conservative forecasts. For everyone else, I appreciate your comments and feedback, especially the generous compliments.

Stay Clear of Traditional Asset Classes

Magman, just so there is no confusion, SKF is an Ultrashort Financial EFT. Hence, to take a short posture in financials, one would buy (not short) it.

As for the treatment options to avert this potential economic catastrophe, Washington must restructure free trade and healthcare, America's biggest problems. To enable this, voters must demand an end to lobbyists donations. As long as money flows from corporations to Washington, America will be controlled by corporate America and working-class Americans will suffer.