The first is on my gold/silver recommendations done last year in October and November. Now one would think with the market's huge rally that maybe it would have been better to be in "regular" stocks.
Here is the link to the original article:
http://asliceofpi-cviox.blogspot.com/2009/02/gold-update_18.html
and here is the updated returns using the 11/6/8 date (which is more favorable for the S&P 500):
S&P 500 16.18%
Gold 37.99%
Silver 72.90%
GDX 119.24% (mining stock etf)
AUY 144.33%
SLW 255.50%
So if you put an equal amount into each of my five recommended holdings your return would have averaged merely 126%. Incidently, gold is just under alltime highs as I write this. The S&P 500 is still nearly 50% under it's alltime highs. The fundamentals for gold and silver remain strong while the fundamentals for the market as a whole are tenuous at best.
This leads to the second update:
http://asliceofpi-cviox.blogspot.com/2008/11/precipice.html
In this one I preditcted a pattern for the Dow Jones. So far the pattern has been almost perfect. I will say my timing was off by a couple months (I thought the bottom would be in December not March, and I thought the rally would be sharper and end in about 4 months). The Dow is just below my predicted top of between 10000 and 10500. I still hope I am wrong about all of this. However, I really believe this drop will happen at some point unless the fed keeps printing money like it's going out of style.
Right now the biggest threat for a massive blowup "lies" in the banks. As of now most banks have tremendous amounts of bad debt sitting on their balance sheets at false levels. The fed and the accounting board are allowing the banks to put these "assets" on their books at full value. Who out there really believes all these Alt A laons, sub prime loans, ARMs, etc will be fully recovered. In fact, recently a major bank that was forced to be taken over had their assets wrote off at 37% (a mere 63% below where our government was allowing them to show)!!!!! The reason our government is doing this: if the banks are forced to mark these assets to market (like has always been the case), most would be bankrupt. This was why the gov bailed them out, and this is why we are likely screwed. Despite the huge bailout, only a small part of the huge canyon was filled.
A new wave of mortgage blowups are expected to hit in 2010 and 2011 on the same scale that has happen the past 2 years due to ARMs (adjustable rate mortgages) resetting. ARMs were the huge fad towards the end of the housing boom as a way to get people that had no business getting homes, or second homes, or investment homes into the market. Banks quoted teaser rates as low as 1% for 5 yrs. They also signed these people up with no financial records because they got paid for each loan finished. Volume equaled huge profits. Screw the long-term. Well the long-term is almost here, and all these people that signed up are in deep shit. Already the default rates on these loans are high and the intereset rate reset hasn't even occurred on most. The estimated default rate on these loans are over 50%!!!! I haven't even gotten into commercial loans which typically trail consumer mortgages. These size of this market isn't as large as consumer but it is expected to be extremelky weak also.
Can this be fixed? It's a catch 22. If the government steps aside as they should in a true capitalistic economy, the financial sector (and as a result the entire economy) will be %^#^**. However, we will recover fairly quickly as the strong players will come out stronger, and the weak will be gone. If the government keeps trying to prop up every weak player, then our country's debt will continue to skyrocket, and the dollar will continue to get weaker.... and our economy will still be %^*%&$ (just in a different fashion with huge inflation and impossible debt loads). The strong players will get punished because the incentive to do things the right way will be gone. The idiot's that took on too much risk or flat out cheated will be bailed out at the expense of those that went about things the right way. This would sacrifice our country's future for the present. Currently, our government is choosing the latter option. It's pretty sad......
I'm not sure when or what may be the cause that starts the downturn, but I truly believe it will happen (pending the printing press). It could be sudden or just a rolling over of the market that slowly picks up steam. Please tread carefully everyone, and do not get caught up in the propaganda getting spewed out of Washington or Wall St.
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