The Temptations of Saint Warren

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LewisBuffett

Michael Steinhardt sounds off on Warren Buffett

What Is Behind The Numbers?

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With sentiment high and stocks in general having rallied for five years, be very careful about the financial numbers in your companies. A strong review of financial shenanigans is worth your time.

John Del Vecchio and Tom Jacobs, the authors of What’s Behind the Numbers?, are giving a presentation at the New York Society of Analysts. See sample chapter:WBTN_DelJacobs_samplechapter

Attendees will learn:

  1. How companies hide poor earnings quality
  2. Repeatable methods for uncovering what companies don’t tell you about their numbers
  3. Reliable formulas for determining when a stock will get hit

Whether you’re a number cruncher or just curious, you’ll greatly benefit from this seminar, given by two people who combine investment chops with crowd-pleasing stories. So what are you waiting for?

Date: January 13, 2014
Time: 6:30 – 8 pm
Place: NYSSA Conference Center
1540 Broadway, Suite 1010
(entrance on 45th Street)
New York, NY 10036
Price: Nonmember $55 ($10 surcharge for walk-ins)

Advance registration is encouraged in order to avoid the additional charge for walk-ins. Also, space is limited by the size of the room.

https://www.youtube.com/watch?v=G-YYwz9oSPM

The above video is worth viewing. Just remember that the authors do not understand the causes of inflation, but you will learn more about individual investor psychology. Jacobs provides plenty of excellent advice for individuals in terms of search and strategy. Go small and look for wholesale emotional selling.

If you don’t want to invest in stocks, then go here:

Templeton’s 16 Rules; Go Where the Outlook is MOST Miserable; Young Investors

TempletonSir John Templeton Quotes

“Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria.

  • The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
  • “An investor who has all the answers doesn’t even understand the questions.”
  • “Diversify. In stocks and bonds, as in much else, there is safety in numbers.”
  • “…success is a process of continually seeking answers to new questions.”
  • “People are always asking me where is the outlook good, but that’s the wrong question…. The right question is: Where is the outlook the most miserable?”
  • “Focus on value because most investors focus on outlooks and trends.”
  • “Sell when you find a much better bargain to replace what you are selling.”

Sixteen Rules: Sixteen Rules for Investment Success_Templeton

Where is the outlook the most miserable?jan2edgoldstbears

Gold and silver stocks (as well as gold/silver) certainly fit John M. Templeton’s criteria of a hated asset class. The current 2011 to 2014 bear is near the average in duration and price decline. The worst decline in gold stock history was the 1980 bear market with a 72% decline. So, one sign post is the past. (Gold index used: Barrons’ Gold Mining Index or BGMI)

But charts like the the gold index only tell you the past.BIG HUI

Gold-Silver-Technicals

As you would expect, sentiment follows price. Note the huge decline in Rydex precious metals assets compared to all other financial asset sectors of the market–5%. Even the 2008/09 crisis period had triple the percentage. Of course, public opinion is at near all-time lows.

jan2edrydexpms

Silver-Sentiment

As price quietly stops declining (for now?)

jan2edstocks

Another sign of bearish Western investor sentiment was the draining of gold from ETFs. Also, there were discounts of up to 8% to 10% in closed end funds such as CEF and GTU that hold gold and silver bullion–an asset with no credit liability! The gold mostly went to Asia.  Physical demand is high at these prices. I simply view gold as money that can’t be debased in a world of fiat currency wars.  That doesn’t mean the price of gold in US dollars can’t go lower in the near term–three to eighteen months. GLD history chart 010214

goldetf

Rising demand for physical gold but declining price, video:

 

http://news.goldseek.com/GoldSeek/1388758285.php

http://www.bloomberg.com/news/2013-12-31/gold-with-silver-heading-for-worst-decline-in-three-decades.html

http://jimrickards.blogspot.com/

SEARCH STRATEGY
All of the above, is one part of a search strategy–look for the biggest price declines with the highest negative (or lowest positive) sentiment. Study the past hundred or so years of the industry (Google: Mark J. Lundeen and gold shares). If you are going to buy precious metals equities or gold/silver 5% to 20% as part of a portfolio, I suggest a high-quality mutual fund like Tocqueville Gold fund (TGLDX) or an ETF like GDX, GDXJ. You are nicked 1% or more in annual fees with a mutual fund but you get the diversification. GDX and GDXJ include companies that may be financially over leveraged or of poorer quality, but you have a lower cost and wide diversification. If gold and silver rise significantly, then highly leveraged–operationally and financially–leveraged companies will vastly outperform higher quality large cap miners like Agnico-Eagle (AEM) for example. I prefer a basket of 15 or so hand-picked gold and silver miners with 1. management with skin in the game, 2. decent balance sheets, and 3. well-defined projects with low cash and capex costs (no explorers unless a prospect generator). My goal is to hold through the beginning of the NEXT bear market–perhaps two-to-five years away?

Finding a hated asset class and then finding financially strong companies is relatively easy with some diligence. The HARD PART is holding on through the wild gyrations of price and sentiment. Stomach and character over brains.

Teaching the Young About Investing

http://sprottglobal.com/thoughts/articles/who-is-teaching-the-young-about-investing/

John Del Vecchio and Tom Jacobs, the authors of What’s Behind the Numbers?,
are giving a presentation at the New York Society of Analysts. Attendees will learn:
How companies hide poor earnings quality
Repeatable methods for uncovering what companies don’t tell you about their numbers
Reliable formulas for determining when a stock will get hit
Whether you’re a number cruncher or just curious, you’ll greatly benefit from this seminar, given by two people who combine investment chops with crowd-pleasing stories. So what are you waiting for?

Date: January 13, 2014
Time: 6:30 – 8 pm
Place: NYSSA Conference Center
1540 Broadway, Suite 1010
(entrance on 45th Street)
New York, NY 10036
Price: Nonmember $55
($10 surcharge for walk-ins)

Advance registration is encouraged in order to avoid the additional charge for walk-ins. Also, space is limited by the size of the room.

You may not be able to keep your resolutions about losing weight or going to the gym, but with a successful portfolio, no one will really care. So start the new year right by attending the above seminar.

Thank you for your interest in What’s Behind the Numbers?. Please feel free to share this with your networks!

A True Contrarian: John M. Templeton


 

What is your investment approach? John Templeton, “I search for bargains.” “Buy at the point of maximum pessimism. Go where the outlook is the worst.”

The above video is worth viewing if you want to understand how important personality and values are for the type of investor you become. Templeton’s thrifty ways and contrary streak were embedded in his approach. He is seldom studied. Too bad. 

The Templeton Way A book synopsis

Templeton on Investor Attitude

Criticism is the fertilizer of learning. –John Templeton.

Hey, Joe!

 

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Hey Joe by Pining 4 the Fjords                                      December 23, 2013

This essay was inspired by a deceptively simple question: At what point will people decide they have had enough? By this, I mean at what point will a plurality of citizens look around them, examine their situation, and come to the realization that the present system is not working to their benefit and indeed, is likely working to their detriment?  Does the frog really sit in the pot while the heat is slowly turned up, content until the moment where it is too late and he cooks to death? Or does the frog in fact realize at some point that heat is on, he is getting extremely uncomfortable, and that he better jump if he wants to live?

Here’s why I wonder about this.

Just six short years ago, the median net worth of middle class US households was $120,000.  Today, it has fallen a whopping 45% to just $66,000 (http://www.nytimes.com/2013/09/19/business/americas-sinking-middle-class.html?_r=0).  The number of working-age Americans stuck in part-time employment has more than doubled during the last six years from four million to nine million, and this number is about to take another major leap upwards as Obamacare mandates incentivize companies to cut previously full-time worker to below 30 hours per week, above which the government now requires companies to provide coverage.

Speaking of Obamacare, its initial impact has been to raise premiums nationwide, amounting to a massive middle class tax-hike, while five and a half million people who used to have health coverage have now lost it.  When the employer mandates really kick in next year, some estimate that based on numbers provided by the Department of Health and Human Services, between 50 to 90 million additional Americans may lose their current coverage (http://hotair.com/archives/2013/10/31/did-hhs-estimate-that-93-million-americans-will-lose-their-insurance/).  Hope and change!

So play along with me here.  Pretend you are an average Joe.  Joe has just seen his net worth nearly halved in the last six years.  He just lost the health insurance that his employer used to provide, and because Joe has a spouse and kids he is suddenly looking at an additional 15% of his yearly salary to cover health insurance.  Joe didn’t expect or plan for this.  He starts doing the math and realizes that he already pays 1/3rd of what he earns in State, Federal, and various local taxes.  Now Joe suddenly has all these additional health care costs, real inflation is making everyday items like gas and clothing more expensive, and at this point, he doesn’t honestly know how he is going to pay the bills… assuming Joe is able to keep his job. In the past, Joe managed to set aside about five grand per year because he foregoes expensive vacations and always buys used cars, yet he has seen the real purchasing power of the money he set aside ten years ago decline by 30% over that time…  $1,500 of every $5,000 he managed to save has been confiscated via inflation and lower purchasing power.

But the futility of saving doesn’t really matter much to him right now, because not only is he not going to be able to save anything this year, he may have to start cannibalizing what savings he does have.  Joe starts to get scared because he just doesn’t know how he is going to make this work. He hasn’t done anything wrong, he is working harder than ever, yet he is drowning.

So how about it, Joe?  Still think the system works to your net benefit? Just how long are you going to keep taking this? How much more CAN you take?

bully gets slammed by fat kid

Joe may indeed be pissed.  He might be mad as hell and isn’t particularly inclined to take it anymore. But here’s the problem: chances are that Joe doesn’t even know who he should be mad at for this.  Depending on his previous voting history, he might blame one party or the other but he needs to understand that neither party is going to fix this thing under the present system.  He might want to blame general groups like “welfare queens” or “greedy corporations” but he needs to understand that ultimately they both feed from the same trough- him and his labor, through the inherent wealth confiscation of fiat creation over time.

Joe probably doesn’t quite understand the symbiosis between the Federal Reserve, big banks, and big government.  He knows he is being screwed by the system in some way, but he doesn’t really comprehend that it is fiat money creation that is both causing his current difficulties AND is strengthening and enabling the Leviathan powers beyond his control to screw him at every turn.  He doesn’t yet get it… but for the first time in his life, he might be ready to hear a few things and not dismiss them out of hand.

Maybe, if you see him this Christmas, you can gently direct Joe to Mike Maloney’s series on money http://hiddensecretsofmoney.com/. Maybe you can buy him a copy of The Creature from Jekyll Island.  Maybe you can just quietly talk about why these things are happening and how sound money acts as a check on both corporate AND governmental power, each of which is accrued at his expense. Who knows, maybe you can even sneak the word Liberty into the conversation.

Small things like this might just have a bigger impact than you can imagine. In his bestselling book The Tipping Point, author Malcolm Gladwell notes that social changes often take place with surprising ferocity, when an invisible but crucial point is reached that destabilizes the current paradigm.  Everyone takes the status quo for granted… right up until the moment that a critical mass of people (nowhere near a majority, just a sizeable percentage) shift their behavior.  Then a tipping point is reached and everything changes.

Gladwell notes three major factors that precipitate such tipping points.  First, he describes the “Stickiness Factor”, referring to the power of a simple slogan or idea that distills the movement into a memorable and instantly comprehensible core.  Additionally, he ascribes great importance to “The Power of Context”, outlining how such sweeping changes can take place only in an atmosphere fertile for change where people are receptive to new ideas or practices.

Finally and most crucially, he notes “The Power of the Few”.  It doesn’t take many to precipitate a tipping point, but those involved have special skills that Gladwell breaks into three categories. Connectors are people who thrive on social information and interpersonal relations, and they have a unique capacity for making connections between large numbers of people with complementary skills. Connectors function as the social equivalent of a computer hub- they always know a guy who knows a guy, and are great at putting people together.  Salesmen have the special knack for communicating a message and getting people to go along with them.  Charismatic and persuasive, they are powerful negotiators and have an indefinable knack for influencing people to agree with them.  Finally, Mavens are amazing repositories of information and knowledge.  They possess a deep understanding of issues and facts, and are exceptionally skilled at solving problems.

Here’s the deal: If the Great Keynesian Experiment really is in its death throes, if seventy years of malinvestment and easy money really are coming home to roost in a decrepit and dying system, then something is going to have to take its place.  Maybe the motto “Prepare Accordingly” might not just be solely applicable to gold and silver investing. Maybe we should be out there trying to plant some memes and prepare some intellectual battle space.  Maybe we should do our best to talk to a few folks, if we have the opportunity.  Maybe they’re ready to listen.

Hey, Joe.       http://www.tfmetalsreport.com/blog/5348/hey-joe

I am second: http://www.iamsecond.com/seconds/the-robertsons/

What do you think? Does anyone question why the economy is weakening (mortgage applications plummeting, anemic sub 1% real growth, etc.) while the stock market makes new highs (for now…). What might be the tipping point. Will the fiat currency system be replaced and by what?  How much do you think Joe can take?

A Great Individual Investor’s Investment Letter; A Reader’s Questions

NSA-Santa

A successful individual investor recaps 2013 (Must Read) David Collum_2013_year_in_review  

Note how few long-term decisions he made. Owning long-term bonds from 1980 to 1988, etc.  Buying precious metals in 2001 and STILL holding on through 2013–now that is long-term investing! 2013 was only his second losing year in several decades thanks to gold and silver being down 39% and 55% this year.

Video

A Reader’s Question

I have a couple of valuation questions that I have been wrestling with recently.  I would love to hear your take.

First, do you ever use a PE ratio for valuation?  I have always used a EV to EBIT or something ratio whether pre-tax or after-tax.  (I have an idea of the multiples that interest me in both cases.)  Sometimes I come across something that has a low PE but not so low EV/EBIT.  I think this is when the company has financial leverage and is paying an interest rate substantially below the earnings yield.  If it’s a high quality business and the leverage does not harm the company is it sometimes better to use a PE?
John Chew: No, I would use EV (enterprise value which includes net debt) rather than “P” or market cap because debt is part of the price that you pay. Also, look at the terms and conditions of the debt. Note the quality as well as the quantity of the debt. Bank debt is more onerous than say company-issued bonds. 
Also, if you are normalizing earnings, and current earnings are depressed and may be for a while, do you account for this in the valuation, perhaps as a liability?  Or is this an effort to be overly precise?  This quote from Jean-Marie Eveillard in The Value Investors suggests that the former method is overly precise because the future is uncertain:
  “There is no point asking about a company’s earnings outlook because if we are investing for the long-term, then short-term earnings never affect our intrinsic value calculation. Asking management about long-term plans is also pointless to me because the world changes. No one can predict what will happen, and so what is important for us as analysts is to discover the underlying strengths and weaknesses of the business ourselves.”
John Chew: You do not count this as a liability when you normalize earnings.  You look back over a long enough history 12 to 15 years (including the 2008/09 credit crisis) to sense what normal earnings are.  Part of normalizing earning would be assessing the competitive advantage of the business or the uniqueness of the assets.  For example, you should be able to have confidence in the earnings power of the assets owned by Compass Minerals (rock salt positioned near the Great Lakes giving a cost advantage). 
Finally, I want to share a quote from Dylan Grice that I recently found and thought you may find interesting:
Dylan Grice in the July 17, 2012, Popular Delusions
The power of a discounted cashflow model is that it allows us to achieve a value which is objective. With a model based on discounted future cashflow we can arrive at intrinsic value.
But is this correct? Can cash flows be objectively valued? Suppose I’m a fund manager worried that if I underperform the market over a twelve-month period I’ll be out of a job. What value would I attach to a boring business with dependable and robust cash flows, and therefore represents an excellent place to allocate preserve and grow my client’s capital over time but which, nevertheless, is unlikely to ‘perform’ over the next twelve months? The likelihood is that I will value such cash flows less than an investor who considers himself the custodian of his family’s wealth, who attached great importance to the protection of existing wealth for future generations, values permanence highly, and is largely uninterested in the next twelve months.
In other words, an institutional fund manager might apply a ‘higher discount rate’ to those same expected cash flows than the investor of family wealth. They arrive at different answers to the same problem. The same cash flows are being valued subjectively and there is no such thing as an objective or ‘intrinsic value’ embedded in the asset, even though it has cash flows.
John Chew: Well, I agree that investors have different discount rates. You need to use one that fits your situation.  We are discussing human beings making decisions under uncertainty or human action.  All value is subjective. To learn more go to: http://mises.org/austecon/chap4.asp
Thanks for the questions and to all a Happy, Healthy and Prosperous New Year in 2014

 

The Go-Go Sixties in Investing

GO GO

The-Tulips-of-the-Sixties

the money gameThree other great books on the markets of the 60’s

super money

 

go go years

Why study the 1960’s, a period of time that preceded the great inflation of the 1970s?  Take a look below (self-explanatory):

M1

M1 Velocity

Fund Managers View On Risk Events

WOW!

20131211_bears_0

 

big

 

Screen shot 2013-10-23 at 11.47.36 AM

Case Study of the Bitcoin Bubble

bitcoin

Bitcoins are the product of socially naive programmers’ fantasies. They thought they could substitute algorithms for ethics, digits for legality, anonymity for custom, and dreams for responsibility. Ultimately, they thought they could substitute impersonalism for personalism. They were wrong. They merely launched a tulip mania.

If the advocates of crypotocurrency have a case for a free market social order, then they should advocate not buying Bitcoins until such an order exists. Money develops out of a social order. They have put the cart before the horse: a new monetary system before the institutional arrangements to support it. This was Mises’ argument regarding the regression theorem. A comprehensive monetary order that will replace the existing one is not going to be designed by obscure programmers. It will be the product of human action within a prevailing social and legal order.

The best article on Bitcoin–by far–from Gary North: http://www.garynorth.com/public/11866.cfm

Bitcoin is not money

Here is the problem in one sentence: a modern division of labor economy is very close to all or nothing. You cannot have a monetary system that does not apply across the board, yet still defend the concept of the division of labor through competitive pricing. You cannot have a currency that applies to illegal drugs, programming services, and almost nothing else, and expect that currency to replace the existing currency, which is a fiat money-based currency. There has to be a transition from the fiat-based currency, in which there are hundreds of billions of transactions a day worldwide, which in turn provides a comprehensive system of pricing and information feedback, in order for the present system of the division of labor to be maintained.

Any suggestion that Bitcoins can move from the modern system of integrated currencies, prices, and contracts, to get to an equally comprehensive system in which you could make a pencil, without the pricing system that is provided by the existing fiat money order, is simply utopian.
…..

Most of all, Mises argued, socialism has no means of pricing capital. There are no capital markets.

The same is true of the as-yet nonexistent Bitcoins economy. It cannot do without the pricing system provided by central banking. It cannot produce goods and services without converting Bitcoins’ digital fiat money into the banking system’s fiat money. You cannot produce real goods with virtual money.
You have no capital markets without the monetary system. Capital markets are all based on contract. Bitcoins are based on a rejection of contracts. Capital is based on responsible owbnership: public claims on assets, enforceable by law.

Bitcoins are based on a rejection of enforcement by law.

Bitcoins relate only to consumer goods, and hardly any. Yet even these cannot be delivered by sellers without selling Bitcoins and buying dollars to fulfill contracts. Sellers cannot replace sold assets unless they have bank money to buy them in the real world economy. This economy operates in terms of real money, which today is central bank money.

Bitcoins represent zero threat to the central banks. Bitcoins are used by most owners as ways to make money: to buy more dollars than they paid. It is just another investment asset — one based initially on a complete fantasy, namely, that Bitcoins will somehow remove people from central banking.
Bitcoins are valued in terms of dollars. The mania is fueled by their rising dollar-denominated price. They provide an investment medium for high-risk speculators. They are nothing more than a way to get into a tiny market, and then ride the wave up, as more people get into it. There is no payoff in terms of the economic value of autonomous Bitcoins that are held only because they will serve as an alternative currency. They are held as a way to make money by selling to the greater fools, who will pay real money — dollars — for them.
It’s tulip bulb market. It rests entirely on getting back into the dollar economy.
Bitcoins will have no impact at all on the monetary base. They will have no impact on the capita; markets.

Capital is valued in terms of central bank money. Bitcoins will not change this, for they cannot reduce the size of the monetary base. They do not pull money out of the fractional reserve banking system. The quantity of real money is in no way affected. The investors remain in the central bank economy, in which capital is priced. Capital is not priced in terms of Bitcoins.

This is why Bitcoins’ economy today cannot produce even a broken pencil. It is giving Bitcoins far too much credit to say that they can produce a broken pencil. There is almost no division of labor based on stand-alone units of Bitcoins. To move to Bitcoins’ realm of virtual money for real products, other than maybe programming services, is a fantasy.

“I, Broken Pencil”: An Economic Analysis of Bitcoins
Gary North – December 06, 2013
To understand Bitcoins, return to the basics. . . . keep reading

And I, Pencil http://www.econlib.org/library/Essays/rdPncl1.html

More articles:

Bitcoin-CMRE

Questions About Bitcoin By Staff Report – December 09, 2013

Bitcoins: A Fully-Compliant Currency The Government Can Love … All of bitcoin’s benefits to the establishment revolve around its blockchain. In simple terms, a blockchain is a registry of all transactions carried out in bitcoins. Thus is resolved the problem of double-spending one particular bitcoin: It can’t be done (at least in theory) due to the blockchain. But the blockchain is in fact a register – a trail – of bitcoins. So it’s a relative cinch to piece together each and every transaction of any particular wallet in the bitcoin universe. And since exchanges need detailed personal information about a bitcoin user in order to comply with money-laundering laws before issuing a new user with a wallet, the government or other interested parties could determine what any one particular person has been doing in the bitcoin marketplace. – Blacklisted News/Gonzalo Lira

Dominant Social Theme: Are you ethical? Okay, then go live in a “green” hut and give government every cent you’ve got so the bureaucrats can reintroduce feudalism.

Free-Market Analysis: Let’s start with bitcoin. Then comes a bigger announcement … We’ve been skeptical of bitcoin for years. The smug techno-geekness of bitcoin’s backers irritated us, especially when we realized what they were supporting – a system that keeps track digitally of every single transaction ever made on the Internet.

You can see above that Gonzalo Lira has figured it out, as well. Those who blithely defend bitcoin without fully evaluating both the pros and cons of its technological stance are doing the freedom movement a, well … disservice, in our humble opinion, and apparently Lira’s, too.

That makes at least two of us against the rest of the libertarian world that is still a good deal enamored of this monetary marvel. Of course, it doesn’t hurt that bitcoin has recently hovered around US$1,000 a coin, a price that has sent people scurrying to garbage heaps to try to dig up old bitcoins now worth millions in aggregate.

One of these stories received wide attention recently. A fellow supposedly discarded an electronic cache of bitcoins years ago and then decided to search a dump to see if the coins were still there. This story – and we have our doubts about it – was all over the mainstream media, which is not a good sign.

Does anyone really believe that if bitcoin was a subversive, government-altering currency the mainstream media would be covering it so closely, or The Bernank would be issuing positive-sounding statements about it?

  • One of the main sources of bitcoin’s super-secret protection is DARPA’s TOR facility. It always struck us as a bit odd that bitcoin users were depending on a military protocol for their protection – especially Silk Road.
  • Then there’s the initial bitcoin Creation Myth. This has to do with an inscrutable Japanese techno-genius dropping bitcoin rules into the ether where they were gradually discovered and applied by a growing number of enamored acolytes.
  • The blockchain has always bothered us because what is indecipherable now may not be in a decade. Who knows how technology changes anonymity over time? We did find out that doyenne of alternative currencies, UNESCO”s Margrit Kennedy, has been preaching LETS trading systems that are backed enthusiastically by her former UN employer – probably because they also demand a general ledger. This is most helpful, of course, when the government wants to investigate for non-payment of taxes, etc.
  • It always seemed to us – throughout this ongoing bitcoin mania – that gold and silver were perfectly good alternatives to a wretchedly complex digital system. Granted, they are not directly as fungible as bitcoin, but they’ve been around for millennia. That’s more than bitcoin’s few years.

For all these reasons, we had reservations, which continue today, about bitcoin. Is it a system developed and placed on the Internet to anticipate the expansion of REAL alternative, digital currencies? Is it a kind of Trojan Horse, meant to provide the banking industry with a way to nullify a potential challenge – and regulate it – before something else comes along that is more challenging?

These may sound kind of hypothetical, but this iteration of The Daily Bell has certainly tried to speak to the expansion of alternative investing by setting some specific criteria. One powerful criterion would be “ethical” – as has been mentioned in past articles – and involves picking and choosing investments based on their ability to support freedom and free markets.

Bitcoin may offer profitability, but perhaps there is a “cost” attached that might – just might – involve a reduction of personal and monetary freedom in the long term. Does this sound counterintuitive? Perhaps so. But despite its success, High Alert Capital has not recommended it or taken a position in it thus far and probably won’t in the near future.

 

Bitcoins: The Road to Investment Hell Is Paved With Good Intentions.
Gary North – December 03, 2013
Look at the market, not at programmers’ justifications of the technology. . . . keep reading

 

Bitcoins: The Second Biggest Ponzi Scheme in History
Gary North – November 29, 2013
What goes up will come down. . . . keep readingUpdate:http://www.zerohedge.com/news/2013-12-07/bitcoin-crashes-loses-half-its-value-two-days50% sell off (Dec. 8, 2013)   Who knew? 

WHY MOST PEOPLE WILL NEVER GET OUT OF BITCOIN WITHOUT MAJOR LOSSES

There may be some Bitcoin traders who think they will be able to pick the top in the Bitcoin market and then get out. It will never happen that way.Here’s why: The market will “train” such traders to stay in the market. Over the weekend, Bitcoin plunged by more than $300. It is now climbing back up. This is not the first huge plunge from which Bitcoin has recovered. There have been several others and it is typical of speculative stocks/investments. I have seen this pattern occur many,many times. Without getting into the long technical explanation as to why these plunges occur during an ongoing bull market, suffice to say that it trains traders to hold on during dips and buy even more. The problem with this is that it will be impossible for traders to differentiate between the final real plunge that starts the bear market and a short-term bull market plunge. The trader will end up being in at the top. He will wait for the price to climb back so that he is “even” but it never will.

On cue, we have Bitcoin junkies proving my point. Honey Badger comments at my post, Bitcoin Crash on News Major Chinese Web Site Has Stopped Accepting Bitcoin :

Yes, we go through one of these “crashes” every few months or so only to rise to a higher level soon after. I’ve been through a half-dozen of these already. What’s nice is I get to pick up cheap coins on the pullbacks.

And Mises-hater Max Keiser leads his merry band of groupies over the cliff:

Selling All My Gold (Not!)

Fisher on Gold

Anyone care to receive a prize? What is the fatal flaw(s) in the above presentation? Another case study in why you must IGNORE the pundits and Wall Street. What proof can you provide that the above video is nonsense?

If you don’t answer the question, then you will end up like this guy: http://youtu.be/qPGUM5PZWEw 

or………….