Robotto

Did the Japanese Try to Dump $135 BILLION in US Bonds on the Black Market?

I'm Japanese and I've been following this news also. It's quite strange that nobody is talking about it. At first I thought they were Chinese or North Koreans, but after reading your post, I'm beginning to think that they may actually be Japanese. If so, this is some scary stuff. And, as you explained; it wouldn't make sense for them to be fake.

The Bears' Skepticism Is Getting Old

"You are of course absolutely correct, but you missed one trick, the most convincing argument for a sustained growth of the stock market is that the bears are getting so emotional."

It always makes me laugh when people argue like this online. Because it is nearly impossible to gauge people's emotions through written text, everyone ends up projecting and filling in whatever emotions they think their opponents are feeling. And most people think that their opponents are feeling more emotional than they are themselves, because cooler heads are supposed to be, well, cooler. I see this particularly common among men who love to pretend to be cool because of the cultural stereotype of how men are supposed to behave. The fact that written text cannot effectively communicate the level of emotion is conveniently used to project whatever emotion you want the other to feel, not realizing that the same can be done from the other side of the fence.

Gary Shilling: Say Goodbye to the Great Gatsby Era

The longer the span of your prediction, the easier it is to predict. Even if you are wrong at the moment, you just have to keep waiting. Sooner or later, you will be right in one sense or another. You use words like "collapse" or "crash" which normally have an implication of something happening rapidly, but this is a free country, you can interpret them however you want.

If I keep predicting a collapse or a boom, I'm sure it will happen sooner or later. It may happen quickly or it may happen over years. Either way, I'll be proven right.

What I don't like about these people who seem to bill themselves as some sort of oracles is that they don't admit when they are wrong. They are really loud when they are right, but they are silent or muted when they are wrong. Unless you are God, it's not possible to get it all right all the time. People who have a hard time admitting their mistakes have very little credibility for me.

Warren Buffet, for instance, is honest and up front when he is wrong.

Gary Shilling: Say Goodbye to the Great Gatsby Era

Peter,

Your book is called "Crash Proof". "Crash" does not happen over years. "Crash" is something that happens quickly. Your are supposed to protect your clients from the "crash", which happened last fall. So, you can't suddenly claim that your definition of "crash" is something that takes years.

Why Advertising Is Failing on the Internet

All this makes sense, but I think this article essentially states the obvious from a very rational and academic point of view. The author (a very rational person) relies a bit too much on his own experience and preferences to draw conclusions. This type of rational analysis doesn't convince me because much of how advertising works is irrational. It reminds me of a story I heard about the newspaper that the US army was distributing during the Vietnam war. (My memory of the details might be fuzzy.) At first, the army had no ads in it. Rationally speaking this makes perfect sense. Nobody is supposed to want to see ads, and these soldiers can't go shopping anyway. But oddly, they all missed advertising and requested that they be added.

Seduction is a game we play and enjoy in life. We have a love-and-hate relationship with it. So, we might say we hate ads when we think about it rationally, but when they are completely gone, we realize that we miss them because we all secretly love to be seduced.

So, my sense is that advertising is not going away any time soon, not on any mediums. What we are seeing is a massive musical chair where the power structure of the advertising industry is collapsing. We are in the middle of a "creative destruction". This does not mean that the industry as a whole will fail.

Another thing that this author fails to address is the needs on the advertisers side. The article is written strictly from the consumer's point of view. We all have a fundamental need to let other people know what we exist. Our resumes and business cards are a very basic form of advertising in this sense. This need is so great that many advertisers are willing to pay to advertise despite the fact that advertising doesn't make much rational sense.

So much of what we do socially are irrational and inefficient. I often get annoyed by how long it takes for people to leave a party because everyone has to say goodbye to everyone else. Most of us don't really enjoy this process and are itching to get out as fast as possible. But at the same time, we feel a bit hurt if someone leaves the party without saying goodbye to us. If we were all perfectly rational, we could establish a policy for the party that says, "No saying goodbye to anyone." If it's a policy that everyone follows, we don't need to feel hurt, and we can all get out very quickly. But are we so rational?

Advertising is a social dialogue much like saying goodbye at a party. We don't hate it as much as we think we do. And, so, we cannot analyze it with a rational and efficiency-based model. I do not believe that advertising on the Internet is failing. I think it will succeed fine.

Don't Ignore Bernanke's Bell

Unfortunately now we have to take Peter Schiff's words with a grain of salt. The "Crash" already happened back in last October and his book certainly did not "crash proof" his readers. The word "proof" means that you are protected from it, like water-proof and fire-proof. Although more is likely on the way, the "economic collapse" already happened, and if you listened to Schiff's advice in his book, you would not have "profited" from it; it's more likely that you lost a lot of money from it. The premise of his book was a miserable failure.

So, now Schiff's own career is at stake if the hyperinflation does not come soon. Anyone in his situation would be praying for hyperinflation. This does not mean that he is wrong, but he is certainly biased, and therefore less reliable as an objective source.

The Bubble of Uncertainty Is About to Burst

One of the things that I love about this site is that it's very easy to see a list of everything each author wrote. By looking at the track record, you can decide how much salt should be taken with each new article. Just as a sample of what this author said in the past, back on Oct-10 last year, he said:

"At a time when a seasoned market veteran should be preaching the benefits of diversification and patience to overcome the tough times, this guy sounded more like a rookie -- telling everyone to sell out after the S&P 500 had already dropped 30% for the year."

He then called for Jim Cramer's suspension. Now he says above: "The days of buy and hold are over," and even writing a little booklet about it, now that criticizing "Buy and Hope" is a popular phenomenon.

On Sep-18, he declared that we'd have a sustainable market rally soon because Paulson did everything perfectly.

When an author declares silly statements like these, it is hard not to fall into a downward spiral of rationalizations. The author becomes biased because saving his ego and reputation becomes the first priority. His perception of the reality gets distorted in desperation.

Obama's Speech Struck the Right Tone

I read somewhere that in the history of the American presidency, those whose power came primarily from being popular (as W was at first) didn't actually accomplish much. Hopefully this is not the case with Obama.

Five Reasons for Yesterday's Market Rally (or Not)

How about the expectation of something positive coming out of Obama's speech to Congress?

S&P 500: Three Possible Scenarios

At first, I thought the author was trying to be funny with the title of this article. After all, the market could only go up, down, or stay flat; there are no other logical possibilities.

Bullish Sentiment: The Decline Continues

What is interesting about this is not the bulls or the bears, but the neutrals. If you draw the trend-lines for all three, both bulls and bears are declining, and the neutrals are going up. This means, overall, we just are getting increasingly uncertain.

Peter Schiff Answers His Critics

Consider Schiff's general approach:

"In general the goals of my clients are to get out of the dollar and hedge against inflation."

Then consider this particular client:

"In addition, consider that 70% of the account in question happens to be invested in mining and energy stocks."

He talks about this client as if this is the client's own problem, but if you really listen to his general advice above, investing heavily in mining and energy stocks is the right thing to do. In other words, this particular investor was a very good student of his, and if Schiff's prediction about inflation and the US dollar had played out, Schiff would have been using this type of client as the best example of his strategy. In other words, the horrible loss of this particular client reflects very well Schiff's general vision. And, many fund managers have done much better than this, despite the fact that they all have lost money.

The "Crash" caused deflation, not inflation. The "Crash" caused the dollar to appreciate, not depreciate. So, if you had listened to his advice, you would have done very badly. There was nothing "Crash Proof" about his investment advice.

Schiff was indeed right about the fact that the crash was coming, but he was wrong about how to become "crash proof". If any Icelandic investors had listened to his advice, they would have been "crash proof", or even profited from the collapse as Schiff's book suggests. What Schiff thought would happen in the US was the scenario that is occurring in Iceland. I myself thought the same, and I was proven wrong. So, it's about time Schiff too should admit that he was wrong about how the crash would play out. He did not "crash proof" his clients; the exact opposite happened.

Peter Schiff Answers His Critics

When we say "fire proof", it means that we don't get burnt. The word "proof" is used to mean we are protected from something. Peter Schiff did not deliver what he promised. His investors were not protected from the crash. So he failed. There are fund managers who performed better than he did even though they did not predict the crash. In the end, what's more important?

There is a big difference between a book about how to recover from your injuries after a car crash and a book about how to avoid a car crash. Schiff was claiming that he can protect you from the crash, but he clearly failed on that.

The Bull Run Begins This Week

"No Gloom here. Only Good News."

Perhaps the market is not shrugging off bad news. Maybe they are just ignoring them like this author is. If that's what the market is doing, I would be very scared. This article sounds so desperate that it made me feel more scared than I was feeling before. When people start willfully ignoring bad news, you know things are really bad.

America: Is This the End of an Era?

Coming from Japan, I can also confirm that the Americans are more efficient and harder working than the Japanese. The Japanese may work longer hours, but not harder or more efficiently. They only care about appearing to work hard.

BUT, the Americans are also more diverse, and you tend to believe that the small world within the US that you are familiar with is what "America" is. For instance, if your experience of "America" is working in New York City as a banker, it no way represents what America really is. I would imagine that the top half of the American population is indeed the hardest working and most efficient people on earth. The bottom half, however, is a completely different story. As another poster has said above, there are many Americans who can't even read. In Japan, that would be hard to find. So, overall, I doubt that there is much difference between the productivity of Americans as compared to the rest of the advanced world.

What is ironic is that those "efficient" people would not be so nationalistic as to stay in this country when the ship starts sinking. Unlike the Japanese businessmen, the Americans are very quick to leave their employers as soon as they find better ones. They have no loyalty to the companies they work for, and the companies have none to their employees. The employees (especially in Wall Street) don't care what happens to the company after they leave. That's part of the American efficiency. This means that many of these efficient and talented people will quickly leave this country also. Nationalism is an inefficient sentiment in the market which can only lead to things like protectionism.

So, it is quite ironic to be expressing a sense of patriotism and at the same time singing praises of the American efficiency, for the latter would only help destroy the former.