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Q & A:

May, 2009

Q: You say the dollar will be weaker. Against what?

Q: Chip–

In the February review you wrote that you were willing to bet that in five years the dollar will be significantly weaker than it is now.  Can you break it down further and speculate as to the appropriate comparisons?  For example, based on your precious metals forecast, you would probably say that it will be weaker relative to gold in that gold is likely to appreciate significantly in dollar terms.  But how about the euro?  The problems with some European financial institutions may be greater than our own (but the European Union has some built in safeguards against deficit spending).  The British pound sterling?  They are nationalizing financial institutions, printing money as well, correct?  Maybe the Canadian dollar.  Canada is a resource-rich country that is likely to do very well if you are correct in your thinking that oil may outperform precious metals over the next five years.  Should I buy long dated puts at 600 for the S&P 500?  Are copper futures beginning to forecast a recovery?

Can’t wait for the next issue.

A: I think the U.S. dollar will decline against most currencies, even against other countries that print as much as us, because we have one thing to lose that they don’t have–reserve currency status.  The more resistance (or natural barriers) a country has to printing money to resolve its problems, the better it might be.  Many Euro countries are much more sensitive to monetary inflation (even though they also have other problems, like the fact that the Euro is so new and could collapse).  I think resource rich countries could do well and also maybe Swiss Francs.

I think Dr. Copper might be premature on the recovery.  It could instead be an inflation harbinger.  I think there’s also a good chance that we could see the S&P below 600 during the next down leg.  Of course, the timing is uncertain.  I famously bought a bunch of S&P puts at a strike price of 1450 and they expired in March 2000 – OUT OF THE MONEY!!!  My thought process was right, but the timing was off.

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  • Article Review:

    September, 2011

    Going to the Johns–Mauldin and Hussman

    I’ve mentioned John Mauldin many times in the past and it’s time to do it again.  John publishes a free weekly letter that I never miss.  It requires registration, but I never receive junk mail as a result of having registered.  His latest letter, Preparing for a Credit Crisis, is reason enough to sign up.  In this latest missive, John gives us an up-to-the minute overview of the problems and costs facing Europe, the increasing likelihood of a U.S. (global) recession, the outlook for another 2008-style credit crisis and what the average investor might want to think about doing in the face of all of this. Read more…

  • Book Review:

    May, 2011

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    January, 2011

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“...an investor who proposes to ignore near-term market fluctuations needs great resources for safety and must not operate on so large a scale, if at all, with borrowed money. Finally, it is the long-term investor, he who promotes the public interest, who will in practice come in for the most criticism, wherever investment funds are managed by committee or boards or banks. For it is the essence of his behavior that he should be eccentric, unconventional and rash in the eyes of average opinion. If he is successful, that will only confirm the general belief in his rashness, and if in the short run he is unsuccessful, which is very likely, he will not receive much mercy. Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

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©2009 PlumbReport.com

The opinions as to portfolio allocation and specific investment vehicles contained herein are solely the opinions of the author and are not intended to be specific recommendations which would be suitable for every investor. The suitability of any specific investment or recommendation is dependent upon many subjective factors and characteristics of the individual investor including, but not limited to, particular investment objectives, risk tolerance, investment horizon or timeline, net worth, overall portfolio allocation and income needs. Specific investments may be suitable for some investors and yet unsuitable for others due to different needs and objectives. All readers should carefully consider their individual objectives and needs and should consult with their investment and financial advisor as to the suitability of any particular investment. The author specifically disclaims any liability or responsibility for any losses, which may result from any investment or allocation referenced herein.