Sigmund

The Shedlock-Schiff Affair: A Chronicle

If one has the turn in the market right, one can still lose mightily by not acting appropriately. Very few money managers have been able to protect their clients from the current correction. As noted above Grantham, Mauldin and Roach have been on point as to the economy and the market. Do they have clients that have lost money, they probably do. Preserving capital in a bear market is incredibly difficult and even more so if you are managing large sums of money. To the extent that some investors have placed money with a money manager and they have not closely followed the management of their funds, those folks are entitled to all the loss that can be achieve. It comes to this, you have to think for yourself. Investing is not calculus and statistics, it's arithemetic and common sense!

Gold Loses Its Shine

During periods of rampant increases in the monetary base, gold tends to increase in price. Thus, the market tends to view gold as a hedge against potential general price increases. Viewed another way, the market sees gold as vehicle to be used to preserve purchasing power. Other commodities and securities can be viewed the same way. As a commodity, gold uses are largely limited to electronics and jewelry. In the current situation it appears to me that every portfolio should have a large percentage dedictaed to investments that provide for the preservation of purchasing power. Price charts that are equilibrated in gold are very interesting. I would be inclined to track and velocity of the monetary base and the rate of change in excess reserves. The price declines that have been recently incurred are more a result of liquidations to delever. The process in force at this time is that of repairing balance sheets. So, it is my view that every safety deposit box should have an ingot.