If you want to fire up an otherwise dull conversation, express an opinion on a divisive topic.
I’m going to do that this coming Friday, with perhaps the decisive, divisive topic of the financial world — the end of the everything bull market.
I know I’ve written about this at length before.
But the research I’m going to be releasing on Friday is different.
I’m going to be putting my money where my mouth is, as the saying goes.
We’ll look at what this reversal might look like.
Four investments you should consider liquidating if you’re looking to exit before the herd.
A five-part strategy for managing your wealth through a turning in the cycle.
This is based on a strategy I’m personally implementing with my own family wealth.
That’s all due here in The Rum Rebellion, on Friday.
But back to the other two boats we’ve been rocking recently…
Taking a contrarian view on an emotive topic is always going to get a reaction.
Something like, ‘I’d vote for Trump’, almost guarantees you’ll be in a minority of one.
Part of the reason for being the devil’s advocate is to test the veracity of the opposing argument.
Have they something insightful to add to the discussion or will it be the same old ‘one-liners’ you hear in the press?
When asked about Trump’s position on illegal immigrants or initiatives to reduce red tape or why blatantly-corrupt institutions like the UN and WHO should continue to be funded, they remain largely silent.
The same goes for climate change. The science is settled. End of story.
But what if the quality of the scientific research is questionable or results are based on predetermined outcomes and/or biases?
Professor Peter Ridd was terminated from James Cook University (JCU) for breaching the university’s code of conduct. According to JCU, colleagues were denigrated by his public criticism of their research.
‘…that bodies including the Australian Institute of Marine Studies could ‘no longer be trusted’ and saying many scientists examining the health of the Great Barrier Reef were emotionally attached and not objective.’
Did Professor Ridd have valid grounds for this criticism? In risking his employment, he obviously thought so.
This case should be a wake-up call to question the veracity of scientific research produced by those employed by wealthy benefactors (who may have significant investments in green start-ups), government-funded bodies, NGOs, and think tanks.
How many more Peter Ridds are out there but too afraid to speak up?
Powerful vested interests suppressing the lone voice of dissension is not without precedent.
Remember big tobacco in the 1960s?
Or the NFL publicly discrediting the doctor who discovered the link between concussion and severe brain injury?
Where are the voices in the financial sector alerting society to the (obvious) dangers in central banks pursuing their ‘growth at all cost’ policies today?
They remain silent. Why? Self-interest.
Loan volumes are up. Funds flowing into investment products has never been greater.
The dotcom and US housing bubbles showed us in vivid technicolour how this movie ends. Yet, the attitude remains one of ‘go along to get along’.
In my opinion, the cults of climate change and cryptos need to be challenged.
Both are being pushed by very powerful vested interests.
To not question the legitimacy of the claims supporting the narratives of each cult would, in my opinion, be a dereliction of duty.
If, as I suspect, they are proven to be frauds, then, as always, it’ll be the person in the street who pays the price.
Climate change feedback
‘Stick to your knitting’ is the opinion of one reader:
‘I’m not a scientist or Financial Planner (FP). But I will rely on a FP to make investments, not on a Climate Scientist (CS), and I will rely on a CS for advice on climate, and not on an FP. I’m not sure who you rely on for advice on climate, but the people that Jim Rickards relies on are like minded authors (without a science degree) or non-climate scientists.
Had Hans Christian Andersen accepted this counsel, we would have been denied one of his most enduring fairy tales.
The little boy, without any experience in fashion design, would never have laughed at the naked emperor.
Even if you agree with the science being settled, what’s not been settled is how much is all this going to cost AND is the cost worth it?
The vocal — and very wealthy — champions of climate change are long on emotion and rhetoric but very short on detail. Costings are glossed over. So too are the details on how much these individuals stand to gain.
Experience has taught me what the BIG print giveth, the small print taketh away.
The devil is always in the detail. ALWAYS!!!
Give us the detail…like how much more are food and energy going to cost?
Less well-off households — on a percentage basis — spend far more of their income on these basics than the wealthier households.
Can they afford to pay even more?
Or is it the same old story of the many being pawns for the privileged few…like the Aussie diggers were for the toffy British officers at Gallipoli?
The other question conveniently ignored is how will Australia’s trillion-dollar (or more) CO2 reduction undertaking make one iota of difference when our island nation emits only 1% of the world’s greenhouse gasses?
Without serious efforts by China and India, zero-net emissions by 2050 is nothing more than a very costly exercise in tokenism.
These are questions to which political leaders, members of royalty, billionaire cheerleaders, and climate scientists are not providing any real answers.
Because they want us to believe climate change is like a magic fabric, only able to be seen by those worthy of high office.
Don’t make me laugh.
Last week, billionaire CEO of JPMorgan Chase, Jamie Dimon, offered his opinion (once more) on the value of Bitcoin [BTC] (emphasis added):
‘“I personally think that bitcoin is worthless,” Jamie Dimon, head of JPMorgan Chase, said on Oct. 11 during the Institute of International Finance’s [IIF] annual membership meeting.’
Dimon is part of a growing list of high-profile investors who’ve arrived at the same conclusion.
Bitcoin has ZERO value.
Dimon attracted plenty of criticism over his apparent hypocrisy (emphasis added):
‘“Our [JPMorgan Chase] clients are adults. They disagree. If they want to have access to buy or sell bitcoin, we can’t custody it—but we can give them legitimate, as clean as possible access,” Dimon said at this week’s IIF event.’
Those saying Dimon is two-faced know nothing about the investment industry.
This is from the 16 August issue of The Gowdie Letter:
‘Here’s what I know from my experience in this business.
‘If there was a growing trend in society to “sell your mother” for profit, you can rest assured institutions would find a way to package up a product to capitalise on the trend.
‘Heck, if the bonuses were good enough, the instos would even throw in their own mothers.
‘Institutions getting involved in a hot sector is as old as time.’
Dimon isn’t a hypocrite. He’s a pragmatic businessman. Dimon doesn’t believe there’s ‘gold in their heels’, but that shouldn’t stop him from selling pans in a gold rush.
This is an edited version from one of the many emails I received (emphasis added):
‘Hello, I have written a couple of times before without getting any response. However, I just have to say that someone must tell Vern to stop rabbiting on about bloody crypto and tether!! I used to really enjoy his communications, but now I open them with trepidation, feeling like I’m going to stand and bang my head against the same wall again. HE’S WELL AND TRULY MADE HIS POINT, FFS [for f**k’s sake]!
Mike, I appreciate where you’re coming from. Believe it or not, I too have crypto fatigue.
So why persist?
Let me share a story with you.
In my planning days, I wrote a weekly newspaper column titled ‘The Big Picture’.
In 2006 and 2007, I wrote several articles warning readers about the two edges of the margin-lending sword.
In late October 2007 — a week before the All Ords peaked — I penned another article on the perils of borrowing to invest in an overvalued market.
My advice to those who had slavishly followed this strategy was ‘Take profits, pay off the margin loan and let the remaining equity ride.’
This way, when a market downturn comes, you won’t get the dreaded margin call.
After the article was published, the editor of the business section told me (words to the effect), ‘People are getting tired of you banging on about margin lending.’
And I understood why. The market, to that point, had made me look rather foolish.
On paper, people were compounding their wealth with the margin-lending strategy.
So, I accepted the editor’s advice.
The October 2007 article was the last one I wrote about the downside of margin lending.
12 months later, Storm Financial imploded. Investors lost heavily…in some cases, people lost their homes, superannuation funds, and all other savings. Completely devastated.
I recall a retired couple came to see me in the forlorn hope that something, anything, could be salvaged. Sadly, the damage was done. It was heartbreaking to watch this couple sob as they tried to comprehend how a lifetime of savings could be lost in a matter of months.
At the time, I really wished I’d persisted with the warnings on margin debt. Not sure it would have helped, but at least I wouldn’t have been left wondering.
Some of the stories I’ve been told about the level of exposure some people have in cryptos (with their own cash and/or leverage) fill me with dread.
To me, the speculative mania around cryptos has the look and feel of margin lending circa 2007.
Mike, I’m sorry to inform you, I do not intend to repeat the mistake of 2007. It’s my intention to keep ‘rabbiting’ on — when appropriate — about the capital destruction capabilities of cryptos.
I’ll leave you with this quote from yesterday’s New York Intelligencer (emphasis added):
‘NYU professor Nassim Taleb, whose now-canonical book The Black Swan warned about the dangers of unpredictable events just ahead of the subprime crash, argues that bitcoin is functionally a Ponzi scheme.’
Can all these seriously smart people — warning about fraud, being a Ponzi scheme, having no value — be so wrong?
Which brings me back to a much in-depth project I’ve been working away on in the background for several months now.
If you think the issues above have ruffled some feathers…stay tuned for what’s coming this Friday…
Editor, The Rum Rebellion
PS: Vern is also the Editor of The Gowdie Letter and The Gowdie Advisory — investment services designed to help everyday Australians avoid the financial pitfalls of a volatile economy and make informed decisions to grow their wealth for generations to come.