[Money-matters] Money Matters Update Nov 7th 2008

Fri Nov 7 14:55:06 UTC 2008

Retail chains posted the worst October sales results in more than three
decades as consumers cut spending sharply, stunned by a financial crisis
that has derailed the U.S. economy. Korea lowers it interest rate. Ford and
GM post billions in losses. Jobs claims worst in decades. Pelosi wants
another stimulus plan. AIG insurers needs even more money. Hedge funds are
blowing up worldwide. Hundreds of companies are now going to the government
for free money. The FDIC is bailing out home owners on their own, outside of
the "bailout" package. State pension funds are collapsing. GMAC is leaning
toward default on its debt.

Marc's Notes:
Just go to PRUDENT BEAR.COM and check out the headlines. What you are seeing
is this:
For decades we borrowed (the world borrowed) trillions to buy new houses,
cars, tv's - you name. Everyone thought they deserved free health care, free
babysitting   pension plans, sick leave, granite tops, new cars, longer
vacations, houses for everyone and minimum wages for workers.

All of it was bought on borrowed money given to us by an illegal FEDERAL
RESERVE and an idiotic Congress who they themselves are paid off thru
lobbyists.
(The best government money can buy). What a system we have !
Well now, the bills have come due all at once and we cant pay. No one can
pay. All this debt has to either be forgiven or paid. If you go the route of
forgiveness, everyone goes bankrupt, and we have much misery. BUT THIS IS
WHAT SHOULD HAPPEN AND HAS TO HAPPEN. 
Or the Government can ignore centuries of economic history and try and
monetize  ( pay off) everyones debt for them. (Think bail out money ). 
Problem is, the Government trying to pay off everything is a road to certain
ruin. How do I know this? 

1) Its been tried throughout history and has NEVER WORKED. NEVER.
2) The money owed is too great even for them
3) You cannot print your way out of a debt problem CAUSED by printing.  You
must let it unwind on its own. 

Result of them trying? 
Collapse of the currency of the country attempting it. You are seeing
literally TRILLIONS of dollars (about 500 trillion we think) of debt and
leverage now unwinding. The chickens are coming up the walkway and there are
just too many of them. They are headed for the henhouse and WILL NOT BE
DENIED.
Madam Pelosis's bailout package is more of the same. Government bailout
money is more of the same. Lowering interest rates is more of the same.
Stopping foreclosures is more of the same. Creating a million jobs is more
of the same. ITS ALL TRYING TO FIX A DEBT PROBLEM WITH MORE DEBT.

Result?  Collapse of the currency of the country attempting it.

Whatever they try, IT WONT WORK.  I will say it again - " You aint seen
nuthin' yet".   

Markets:
The stock market said "Welcome to the party pal" to Obama's victory by
dropping its 1000 point gain in 2 days! And I bet you thought it was ok to
go back in the water didn't you. What did I tell you? 
Bear market rallies are designed to suck in all but the last few pennies.
The Wall Street cheerleaders have been telling you "Its time to buy".
Even Warren Buffet is telling you "Its time to buy". Bear markets fool even
the best!  Don't be fooled. We told you last spring retailers would get
slammed . Wham. Dismal sales and the worst is yet to come. 
We told you the bail out wont work and the markets will hammer all but the
very wise. Wham ! Just like I said.
What should you do.?
I have go to RED alert again. (that wasn't long!).
The recent market slide appears to be setting up another major crash
possibility. There is JUST NO GOOD NEWS to report, I am sorry to say.
Again, go to PRUDENTBEAR.COM and LOOK AT THE HEADLINES~ You tell me if you
see anything good in the headlines and make your own decision.
Expect more bad news and a possible major crash. Rallies will happen but
DON'T BE FOOLED. Use them to UNLOAD YOUR MUTUAL FUNDS and garbage stocks
that you are holding, hoping for a recovery. The most common mistake of
investors is to think its already down 30 % so I will miss the next rally
and all chance of getting my money back. THAT IS FATAL AND DEADLY THINKING
to your finances. 
A LOSS IS A LOSS, on paper or otherwise. If you think you have to hold on
for the next rally to get your money bank, that next rally that will be big
enough WILL NOT HAPPEN. 
But you WILL SELL. When you are down 70or 80 %, YOU WILL SELL. I guarantee
it. That's when everybody sells. 

Holdings:
Got gold? The only real money!  (Link below). SLV (silver is holding up
nicely in this latest onslaught.) Again we see a 50 % downside risk with a
300 % upside to 3000 % upside. Ditto with oil.  OPEC has our back on this
trade. Downside is 40 bucks to 30 bucks a barrel  meaning a 40 % downside
risk to 300 % or more upside potential. That's a great trade in these
horrible times. (Look at USO for this trade).
BEARX our contrary fund still going up. HOLD  and ADD for protection!
RRPIX- Our interest rate fund- now climbing with a weaker US dollar. ADD!  A
dollar crash will cause this fund to rise with interest rates.
CGMFX- We will sell now and half in December after the dividend. The manager
has changed his tune and I now disagree with him.
Dividend payers- Ok to add small amounts in the ENERGY trusts ( see dividend
payers list under "Energy")
Tankers- OCNF just payed a huge dividend.  In fact all the dividend payers
ARE STILL PAYING WITH NO CUTS! Makes holding them less painless in down
markets.
Ok to add SMALL amounts for the payments.
Foreign currencies and Swiss annuities- ADD- diversifies out of the US
dollar. The dollar is TOAST eventually. My fear is one day the US DOLLAR
starts down its slippery slope and never recovers. When that happens, most
will be wiped out, stocks and all.
BANK CDS and T Bill funds- Most of your money should be in these for now.
There will be a time that we will want OUT of these but the time is not now
as long as you hold the other items I have been mentioning in our shows. The
Wall Street journal posts the best bank CD rates every weekend. 

What to expect:
The fundamentals LOOK HORRIBLE. Expect a bounce from the 1000 point drop but
it is only technical. Why would the market rally considering all this dire
news?
The end of today could see another wipe out. Use rallies to add short
positions and contrary funds. Add physical gold and silver and continue to
accumulate for the day we may need it. (I hope that day never comes but I
prepare for it just in case). I am holding my retailer short bets and USO
and SLV longs (SHORTS  are betting the markets go down and LONGS means I am
betting these assets go UP.) 
Do NOT watch CNBC and get your financial news from them. I find almost
everything they say to be WRONG WRONG WRONG. I think now you see what I
mean.  Do NOT believe your "advisor" to stay in this market. After all, he
has been WRONG WRONG WRONG. Stick with those who have been RIGHT. And read
the signs being presented to you. The crisis is JUST BEGINNING.

Upcoming Show.
November 13th at noon

Consulting with me? Send me an email now. I am scheduling the latest go
around. If I have not contacted you, email me with your name , ph # .

All for now,
Marc

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