Investing into a Mad World
I’ve had more people asking me for advice about finances for the future. I’m sure you know that I’m not regulated to give individual advice. But who said being regulated was much of a safety measure?
I’m not happy about giving advice in any case. I am very concerned that I could give advice that would lead to you losing money, and I do not have a crystal ball. All I can do is give general advice, and that means, probably for those of you who have suffered my rants for a few years, much of the same.
I will go back to taking chapters from my forthcoming book on an analysis of the modern chaos that surrounds us, but in the meantime here is an update on the current state of affairs.
What I find dangerous in the current situation is that we have an administration in Washington that is completely out of control. We have a country that has declared war on other countries no less than 36 times since the end of the second world war, and they are now having a go at a totally harmless country that has over the same period declared war on nobody.
We also have a country effectively declaring war on what was supposed to be a friendly nation, or group of nations, Western Europe, and bombing a major energy source, which under any usual definition is an act of war.
At the same time we have a mega world-wide debt crisis. At the same time we have a crisis of confidence in the US dollar as a medium of international trade, and a move away from fiat currencies, which in turn leads to a contraction of credit, which in turn leads to a contraction in business in general and trade in general, and a flight to safety in terms of business success, and sound money, which naturally leads to a flight from fiat money.
Naturally a flight from something leads to a flight to something, which means we are currently seeing a flight towards the creation of a new international currency based on sound terms rather than being based upon dodgy credit.
At this point I would like to make a generalisation. You dont branch out and make investment decisions when the investment arena is in such a state of flux. None of us knows which way things are going to turn out over the course of the next five years and counting. Jim Rogers is a smart and very successful investor. He says that he makes his money by doing nothing until he sees a pile of money somewhere. When he does see that he goes over and picks it up. That may sound a bit gimmicky, but it’s sound advice. Dont guess the future. Wait till you can see it, and then move in for the kill.
If you can currently see the future then you dont need to take my advice. If you are not so cock-sure, then I suggest you dont invest when things are in the state they are now.
Let’s count up a few things and be sensible.
The dollar as international currency is on the way out. That is going to lead to foreigners not needing to hold dollars to use for international trade. Those dollars are going to head back to the USA. That will mean more dollars sloshing around the home economy, and will therefore lead to a reduction in the value of the individual dollar. That is going to be bad for the US economy.
There is a further problem heading towards the US and that is the fact that foreigners will not have so much need for buying US treasuries. So who is going to buy US debt? The answer to that is, the US. So you will have the US borrowing from itself, which is another way of saying money printing, which is another way of saying, dilution of the value of the dollar.
In the EU we have, as I have repeatedly said, and which must be painfully obvious to anyone with the occasional brain cell, massive inflation right across Western Europe, a drastic reduction of the availability of energy, a serious risk to food production throughout the area, and the spectre of a return to conditions last seen in the Middle Ages.
Certain things are taking place which are pure insanity. Who but a complete lunatic would try to stop the farmers in the Netherlands from farming? Do these people seriously think that food is a discretionary luxury?
Do these half-wits seriously think that destroying Europe’s remaining industrial base and exporting it to India and China in any way helps the green agenda? It simply moves a perceived problem from one part of the world to another. What does that achieve?
At the moment, that is not the question. The question is: what does one do about it?
The real answer is that one has to be very careful. One has to take a protective attitude to investing, which probably means doing very little, because the usual suspects cannot be trusted.
Despite the lunatic greens, oil is not going away any time soon. The oil has to get through. In the USA that means Kinder Morgan will remain in business. I’m not recommending a buy, but it’s certainly something to investigate.
People will always need food. Someone has to grow it and make things with it and get it from A to B.
Things which require borrowing will have a very dodgy time. Housing is going to struggle.
You will need to have something to buy things with when things reach rock bottom. That is when you really make money. Buy when no-one else is buying after a massive crash.
Girls should do well. They smile when the sales are on. Be patient, the sales will be on after the dust from the crash has settled. That will be the time to go out and buy.
Next week I will try to make some practical pointers which may help you to see where we are headed for the rest of this decade, but of course, I may well be wrong. What I will try to do is to look at what is possible rather than what the future holds. There is a difference.