Mr. Kuppy: Is your opinion the same as Robert Precther that the dow is headed to 1000?
Nope. I have never said anything of the sort. I actually think that the Dow goes much higher over time–not because it is cheap or because businesses will do particularly well in a high inflation/tax/regulatory environment, but because they print money and the money flows into the stock market. However, I do think that gold will significantly outperform the market (as it has done for the past 10 years).
If the macro is all that matters, are you a little scared of Energold and Aeroquest? I own both of these companies for the same reasons you do. I have losses in both of them currently and i can’t help but think if the stock market gets hammered, so will these cause they are stocks first. I trade for a living and dont have a lot of money, so it is very important that I know what is going on. I just feel there is very little reason to be long anything. I know gold will be going higher, but will these companies follow along. The only time they seem to play along is on the down side.
First off, I recently joined the board of Aeroquest. I cannot comment on it. My comments below on exploration spending apply only to Energold.
Of course I’m scared about everything I own. If i wasn’t, I wouldn’t be doing my job right. No one knows what will happen. All I try to do is make educated guesses. You should NEVER invest with money you cannot afford to lose. Companies can trade at almost any price–especially when things get crazy. At one point in 2008, Energold traded below net cash. That shouldn’t be possible.
What happens in the next few months in the market? Or to Energold shares? I have no idea. I bought a pile of them in the low to mid 2’s. I’ll buy more if they keep dropping. I believe that if the price of gold goes up, mining companies will have increased cash flow and they will use that cash flow to grow their businesses. The only way they can do that is to spend on exploration. In addition, junior miners will be able to raise more capital and spend as well. This isn’t a physics experiment and the correlations are not exact. However, history is on my side. When the price of a commodity has gone up, exploration spending has gone up as well in the past. Will that happen again this time? I hope so. In the interim, I’m bI am very comfortable with my Energold position.
Great posting today. I’ve been struggling with this same thing for about a year and a half (slower on the uptake). Everything I learned in school, all the BS I imbibed in the CFA program and everything I learned starting and running small companies is right out the effin window. Suddenly I found myself reading von Mises and Rothbard and following Capacity Utilization and monetary stats instead of looking at companies. Like you, I ended up saying, “I’m not sure of anything except that money itself is beyond screwed up, so I’ll buy some PMs and wait.” For what exactly, I have no idea – a blood in the streets type collapse to buy? the end of deflation and resumption of inflation? a war?
No freaking idea, but it has NOTHING to do with understanding businesses and financial statements.
Strange days indeed.
This isn’t a question, but I received quite a few emails like this and clearly a lot of other people are thinking the same thing. He also seems to have come up with a similar solution on how to cope.
complements what you just wrote about…..I know of a least 5-6 guys who have shelved new startups because of the uncertainty…smart guys with lots of $…I know of one owner of a major trucking company who is literally shutting down his business because he is fed up with all this….guy has thousands of employees…another client of mine is a dentist and he makes over $1.0m/year….spoke with him yesterday…he is going to cut his practice by 3/4 next year so he earns under $250k…by the way, his practice is down 20% yoy and his competition is down much more than that as people defer non-emergency care….
Another interest comment from a friend. I’ve gotten quite a few of these.