Gyroscopic Investing

http://www.jsmineset.com/2013/06/10/get ... he-system/

Jim Sinclair's website indicates his closeness to the industry over the course of decades.

He is making very strong, contrary recommendations...even for PPers. Is this just fear-mongering? Or should his recommendations be taken seriously?

murphy_p_t wrote: http://www.jsmineset.com/2013/06/10/get ... he-system/

Jim Sinclair's website indicates his closeness to the industry over the course of decades.

He is making very strong, contrary recommendations...even for PPers. Is this just fear-mongering? Or should his recommendations be taken seriously?

I feel like that link picks up in the middle of something.  What is he saying?

(It sounds mostly like fear mongering, though).

It's probably a bit of both. 

He's a gold trader and fear can sell a prudent idea better among those inclined to pay attention to financial  doom porn (as many gold enthusiasts might).  Messages based on fear evoke responses in people where they are more likely to take action--or at least pay attention to the message.  This can have negative outcomes (cashing in your portfolio when the market tanks, then missing the subsequent run up) or positive outcomes (diversifying your 401K portfolio so that your company's stock makes up the smallest allowed percentage, thus avoiding being wiped out when the company goes belly up).  BTW, both outcomes happened to many during the 2008-2009 financial crisis.

Taking stocks out of street name and putting them under direct registration (in your own name, either on the books of the transfer agent, or in paper certificate form) is a prudent move if you think there is a possibility of an MFGlobal style confiscation of your stocks as part of a CYA for the brokerage' s bad bets.  Or if you want to make sure the broker really did buy the stock and is not using your money to pay off others in a Madoff style ponzi scheme.

Given that, it probably doesn't make much financial sense for those with small stakes in an individual company because the fees can be high.  I've seen $50 on the low end, and $500 or more on the high end.  The latter is probably related to the transfer fees, new account set up fees, minimum annual fees, annual valuation fees, custody fees, etc. related to trying to direct-register stocks that are part of a retirement account--they have to go with a self-directed custodian, and they tend to charge mightily for their services.

You can also go the direct-stock-purchase route, where you buy the shares directly from the company or its transfer agent--then you have direct registration and no brokerage fee.  Most companies offer this to prospective or existing shareholders, some fee-free (except mandatory SEC fees, usually $0.06 per transaction), others for small fees, usually less than Sharebuilder would charge, but nothing like $50.

AdamA wrote:

murphy_p_t wrote: http://www.jsmineset.com/2013/06/10/get ... he-system/

Jim Sinclair's website indicates his closeness to the industry over the course of decades.

He is making very strong, contrary recommendations...even for PPers. Is this just fear-mongering? Or should his recommendations be taken seriously?

I feel like that link picks up in the middle of something.  What is he saying?

(It sounds mostly like fear mongering, though).

You are right, Adam. That link is a major prescription of Mr. Sinclair to avoid what he is forecasting...major collapse of Western financial system. I was searching for a succinct link from his site, but didn't find it. One big thing he has spoken of is the "bail-in" (see Cyprus) which is now the new European/Candaian (global?) standard.

He is very clear not to rely on FDIC...just as HB did in presenting the PP. Sinclair goes further, and says that even brokerage accts are no longer secure...also subject to bail-in...or MFGlobal style theft.

I think he is probably just fighting the last war (as people often do).

What he is talking about already happened, and it was the 2008 financial crisis.  It was probably worse than he was expecting at the time, and yet not as bad as he is predicting now (which tends to be how the human imagination works).

As an example, think about the aftermath of World War II.  People assumed that more vastly destructive nuclear conflicts were inevitable because one had just happened and many prepared for them, and yet they never came.  Meanwhile, the real threat was in the form of chronic low level conflicts in places like Korea, Vietnam and Afghanistan, and people didn't see these as serious threats at all until the country was too deep in them to pull out.

If you read what Ron Paul and others were writing about in the early 1980s, it was basically "If you think the 70s were bad, you aint seen nothing yet.  The 70s were just the beginning of what will culminate in the collapse of the dollar."  You know what, though?  They were wrong.  They were extrapolating past experience based upon a reasonable analysis that just happened to be totally wrong in its predictions.

I think the same thing is happening today.  There probably won't be any more financial crises like we saw in 2008 for a long time.  There will be other types of economic crises, but I'll bet they aren't on anyone's radar right now, and that's what will make them disastrous and traumatic when they come along.

MediumTex wrote:
If you read what Ron Paul and others were writing about in the early 1980s, it was basically "If you think the 70s were bad, you aint seen nothing yet.  The 70s were just the beginning of what will culminate in the collapse of the dollar."  You know what, though?  They were wrong.  They were extrapolating past experience based upon a reasonable analysis that just happened to be totally wrong in its predictions.

Not sure this is helpful example...how much did a gallon of gas cost then vs. now? Maybe it wasn't a quantum collapse...but the USD has fallen a long way.

Your other statements seem more convincing.

murphy_p_t wrote:

MediumTex wrote:
If you read what Ron Paul and others were writing about in the early 1980s, it was basically "If you think the 70s were bad, you aint seen nothing yet.  The 70s were just the beginning of what will culminate in the collapse of the dollar."  You know what, though?  They were wrong.  They were extrapolating past experience based upon a reasonable analysis that just happened to be totally wrong in its predictions.

Not sure this is helpful example...how much did a gallon of gas cost then vs. now? Maybe it wasn't a quantum collapse...but the USD has fallen a long way.

Your other statements seem more convincing.

The dollar started strengthening and continued doing so for years after Ron Paul wrote these things.  His prediction was almost exactly wrong and continued to be wrong for 18 years.  When gold started going up again it wasn't because of inflation, it was because of negative real interest rates. 

Ron Paul and the inflationists of the early 1980s could not have been more off the mark.

The lesson is not that Ron Paul is not a sharp guy; it's just that predicting the future is hard to do.

MediumTex wrote:

murphy_p_t wrote:

MediumTex wrote:
If you read what Ron Paul and others were writing about in the early 1980s, it was basically "If you think the 70s were bad, you aint seen nothing yet.  The 70s were just the beginning of what will culminate in the collapse of the dollar."  You know what, though?  They were wrong.  They were extrapolating past experience based upon a reasonable analysis that just happened to be totally wrong in its predictions.

Not sure this is helpful example...how much did a gallon of gas cost then vs. now? Maybe it wasn't a quantum collapse...but the USD has fallen a long way.

Your other statements seem more convincing.

The dollar started strengthening and continued doing so for years after Ron Paul wrote these things.  His prediction was almost exactly wrong and continued to be wrong for 18 years.  When gold started going up again it wasn't because of inflation, it was because of negative real interest rates. 

Ron Paul and the inflationists of the early 1980s could not have been more off the mark.

The lesson is not that Ron Paul is not a sharp guy; it's just that predicting the future is hard to do.

Excuse me, but I did not notice the general level of prices start going down in the 1980's (or at any time since then for that matter). That's what a "strengthening dollar" would mean.

Libertarian666 wrote:

MediumTex wrote:

murphy_p_t wrote: Not sure this is helpful example...how much did a gallon of gas cost then vs. now? Maybe it wasn't a quantum collapse...but the USD has fallen a long way.

Your other statements seem more convincing.

The dollar started strengthening and continued doing so for years after Ron Paul wrote these things.  His prediction was almost exactly wrong and continued to be wrong for 18 years.  When gold started going up again it wasn't because of inflation, it was because of negative real interest rates. 

Ron Paul and the inflationists of the early 1980s could not have been more off the mark.

The lesson is not that Ron Paul is not a sharp guy; it's just that predicting the future is hard to do.

Excuse me, but I did not notice the general level of prices start going down in the 1980's (or at any time since then for that matter). That's what a "strengthening dollar" would mean.

One of the largest expenses of households and businesses is gasoline, and the price of gasoline declined throughout the 1980s.



Another huge expense item for households and businesses is the cost of credit expressed through interest rates, and interest rates also fell sharply throughout the 1980s.



***

If my cost of gasoline went down 40% over the course of the 1980s and if my cost of credit went from 18% to 6%, I could easily say that my overall price level for the decade went down due to the strong dollar, which was a primary driver of the decline in gas prices and interest rates.

Good audio interview with Jim Sinclair.

https://www.youtube.com/watch?v=GNjAg9x ... r_embedded