Saturday, August 28, 2010

A glass half full.

I get a lot of grief from my colleagues where I work. They think I'm all negative and pessimistic.

Naturally I disagree.

Take for instance my reprinting of another blogger's take on how hyperinflation will play out that was posted on Tuesday.

It was not well received. 'Gloom and Doom' was the way it was perceived.

Gonzola Lira has posted a follow up and, if you are interested, you can see it here.

I won't repost all of his article, but I will focus on this part:

  • "I’m not repeating this insight as an empty comfort to my readers — I’m saying it as a trading strategy. When things are at their crazy worst, when everyone believes the Apocalypse is well nigh here, that’s when thing are about to turn for the better. This applies to every situation — including and most especially in a hyperinflationary situation... So if the currency goes up in flames in a hyperinflationary fire, of course there will be a period of terrifying instability — but it will pass. Either the currency will be repaired somehow (as Volcker repaired the dollar back in 1980–’82). Or the currency will be completely and irrevocably trashed —and then be replaced by something else. Because—to insist—people need a stable medium of exchange.

    If Treasuries tank and commodities shoot up so high that they essentially break the dollar, civilization will not come crashing down into anarchy. At worst, there’ll be a three-four years of hell—economic hell. Financial hell. But then things will settle down into a new normal...

    What I do know is (1) a hyperinflationary event will happen, following the crash in Treasuries. (2)commodities will be the go-to medium for value storage. (3) all asset classes will collapse in short order. And (4) and most importantly — civil society will not collapse along with the dollar. Civil society will stumble about like a drunken sailor, but eventually right itself and carry on with a new normal.

    During that stumble, opportunities will present themselves. I hope I have explained why."

Yes, opportunities.

Whether it be the looming real estate crash, or the inevitable economic fallout from the massive amount of debt being built up in other areas of our economy, it isn't doom and gloom... it's all about opportunities.

Peering presciently across what (for some) are the gossamer waves of time and recognizing the obvious conditions of the real estate bubble is not about preaching doom and gloom.

It's about seeing beforehand what will soon be obvious to all and positioning yourself to take advantage of it.

Pessimistic or opportunistic?

I guess it depends on your point of view.



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  1. Like many others you all seem to know what the future are all not as smart as you would have us believe you are. No one can predict the future...... The best you could ever come up with is an educated guess!


  2. Unbounded optimism is what got us into this mess in the first place.

    I prefer the term "pragmatist".

  3. How many years did it take the economy to recover from the 1929 crash? The stock market took until the 1950's to regain it's lost ground. We look for buying opportunities on the dips, but we sure don't learn from the past.