I read this book on the plane the other day and it was a quick and interesting read, written mainly by the creator of bubble site itulip.com
He posits that there's been five connected bubbles driving the economy the past 25 years, which are now popping one by one
1) Housing
2) Stocks
3) Dollar
4) Consumer Debt
5) Government Debt
A bit dry, but spot-on. And his recommendation for how to protect yourself?
Euros and Gold.
December 06, 2006
Here's an interview with the author of "America's Bubble Economy"
Subscribe to:
Post Comments (Atom)
18 comments:
Its always nerdy conservative guys like this who really know what is going on. This guy sounds like he knows what he is talking about...
Running from the dollar to the Euro...when everyone does that wouldnt it be like overloading of the lifeboat? Wouldnt that create another bubble in the price of the Euro? Lead to a crash there eventually? Pointing to the possibility of the global currency system being in for a bit of a roller coaster ride in the medium term (next 1-3 years).
Rao.
All hail E.J.!!!
Question: I own some physical gold and silver and quite a bit of stock in gold companies (ABX, GG). I read something about not having your money in equities that are U.S. dollar based. Since ABX and GG are traded on U.S. exchanges and priced in U.S. dollars, does that mean that if the dollar tanks, so do these stocks. The suggestion to get into Euro's - does that mean owning European gold stocks priced in Euro's is safer than U.S. gold stock priced in U.S. dollars? I can't hardly see how is would be a downside to own a U.S. gold stock simply because its priced in U.S. dollars ... wouldn't it price rise with gold and not decline with the dollars decline? Help me understand.
That's it, sell the low (USD) and buy high (Gold and EUR).
That's like trading your pets.com shares (if they still existed) at 1.50 for shares of Google at $479.
You guys have all been "had." That wasn't even a live person. That was a new generation Disney anamatronic machine - the grandchild of Great Moments with Mr. Lincoln. His digitized voice should have given it away.
i am not sure that investing in european stocks is so much safer than US stocks. european corparations earn a large percentage of their income from exports to the US. an highly valued euro will decrease exports even more...a slowdown or recession in the US will also decrease imports to the US....look to me like a major challenge to global monetary policies..
Gold is no where near it's high. 650 an ounce is still very cheap.
Financial Sense interview 11/25/06
http://www.financial
sense.com/Experts/
2006/Janszen.html
The Euro as safe haven? LOL!
Take a look at the economies in the EU, most have government deficits worse than ours. Add in the aging populations and the growing Islamic demographic, and it's not hard to predict trouble ahead.
Wealth is control of the means of production. Convert dollars into currencies where stuff of value is produced. In my book those areas are all in Asia now - China, Vietnam, Korea, Japan, India, Singapore.
Yeah, these stocks are going to the moon!
To the guy who thinks the Euro is overrated, I agree.
The idea of a unified currency for a disunited continent makes no sense. As of a now, the Norwegian Kroner and Swiss Franc are the best, European based hedges against the dollar from both a commodities (North sea oil) and financial (UBS, Zurich) povs.
Both the Euro and the Pound Sterling have been propped by the counter USD rally types and the threats of Euro based bourses in Iran and other OPEC type of countries like Venezuela. So, for a short while, perhaps next 5-7 years, this strong Euro/weak dollar phenomena will go on until the east Asian countries feel confident that they can allow their currencies to appreciate further w/o disrupting their economies. Once this shift in focal point occurs, the Euro will also go the way of the dollar with the world's bankers preferring Yuans, Yens, etc over western based currencies.
Eric Janszen is the MAN!. He is pretty much spot on and have been reading Itulip.com since 1998. He took a two-three year break and started his site back up several months ago when he found everything all bubbly again.
ignore his advise at your ourn peril!!!
Looks like there might be another chance to accumulate gold. 600 would be perfect. Cheap cheap with todya's dollar.
EJ is not nerdy or conservative.
He rides bikes. Bike riding
defines cool. He also comes from a
line of scientists. Dudes an
effing hero. Nuff said.
Also, Doug Casey is your go to guy
for the juniors. I'm up 50% since
our last dip to 560.
-m
Keith, I respect your blog but you've been way off so far with regards to gold and stocks. Gold is down since it's high and slipping more. My stock market portfolio is up 15% YTD and climbing.
When you get a chance, check out Harry Dent at hsdent.com. He's an economic forecaster and has several books on bubbles. Basically says that bubbles are just a naturally occurring phenomenom in markets, always has, always will.
He's calling for another US Stock Bubble from 2006-2009 based on two coinciding trends of, 1. Baby Boomers reaching peak earning years and 2. Adoption of information technologies from 50% to near 100%. The theory goes that as major technology changes happen, such as cell phones and the internet, the first bubble happens with technology companies because of the tremendous growth curve from 5% adoption to 50% adoption (10 fold). Think Nasdaq. Then as the technologies get broadly adopted by the public and companies (50% to near 100%), the network efficiencies they create drive a second broad based bubble (think Dow/S&P).
Dent compares this to the two bubbles in 1919 and 1928. Same thing except it was the phone and the automobile that went from early adoption to widespread adoption. Everyone knows about the 1928 bubble but no on remembers the 1919-1923 crash and recovery and then run up from there.
Think about it. Even the homeless have cell phones now and the internet is now widely adopted. Corporations are doing alot more with less, earnings have been double digit for years now, and corporate P/Es are low by historical standards.
All we've heard about for 3-4 months now is how bad the housing market is getting, but the stock market is up 10% since mid summer and strongly over the last 3 months in the face of alot of bad news. Why? Cause the rich just get richer and the poor stash their money under their pillows or buy gold after the party is over and it's already run up 100%.
Separately, look at the yield curve. YES, it's inverted. But not because short term rates are high by historical standards, but because long term rates are low by historical standards. Bonds have been bought up by foreigners and institutional investors like mad since the bubble. Now that the stock market is posting great gains, you will see a move back to stocks with a vengence. Add us getting out of the middle east, lower oil and an unfavorable housing investment scenario and stocks are going to boom over the next several years. Stocks are such a good deal right now that corporations are buying back their own stock at record rates. Dent calls for the Dow to be 20,000 in two year and I think he's right on.
The European markets are up about 150% over the last several years so you can run over there but you'll be late again. Asian stocks are a good place to be though for the longer term.
BTW, in case you already missed it, the dollar has already crashed. It's down by nearly 40% against its high versus the Euro. Could go down another 15% if things got really bad but that's max.
As a surfer and an MBA, here's what I can tell you about waves, both economic and water ones. DON'T look at the ones that just passed by you. Look for the ones coming towards you. Push yourself into position and if you get it right, you'll have a fun ride.
Peace.
ANON ABOVE, YOU ARE AN IDIOT.
JUST LOOK AT USD:DJIA. ITS IN
A SECULAR DOWN TREND. BUT DONT
BELIEVE ME, IT SOUNDS LIKE YOU
DESERVE TO BE POOR.
-MAHA
MAHA,
That's odd, some how I made almost 20% on my money this year? That's a secular down trend?
Post a Comment