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Bear Rally Tactics


The salvation for this bear market may be near.   See below how bear rally tactics can help you profit in the current economic downturn.

History suggests that we will not see a lasting bull until 2012…but one more bear market rally may provide an escape hatch for those who are caught with too many depressed shares. These tactics begin by understanding where the US economy and equity markets are in relation to thirty year cycles that seem to dominate the flow of mankind’s industrial productivity.

These cycles are not economic cycles.  They are cycles of human interaction, technology and productivity that drive the economy and hence the stock market. These cycles are intricately connected with new waves of productivity that grow from some great human platform of combat.  Struggles for survival in the Civil War, WWI, WWII and the Cold War (WWIII) super charged inventiveness that created new forms of productivity…the steam engine, the internal combustion engine,  production line processes, jet engines, TV, farming techniques, plastics, telephone, computer and internet, etc.

Each new invention helped win a war. Then shifting the technology to domestic use after the war created a boom.

Each boom led to excess.

Each excess led to a correction…and viola here we are…in a correction again…at the correct time!   This downturn started almost exactly (1998), 16 years after the last boom began (1982)…which began after the last great human struggle called the Cold War.

This correction like its predecessors has enjoyed a number of bear market rallies. You can see this quite clearly, in the graph below, how each upward cycle rises after a war (postwar boom) and how the market then crashes before the next upcoming war.

We have been viewing this process via this chart at our site since it began and we can observe how the last bear market recovery ended around December 2007 in this update from yahoo.finance on Wednesday December 3, 2008. dow charts

The yahoo chart looks a little different because it is not dollar adjusted, but we can see a bear market pattern, beginning in 1998, similar to one that began in the 1920s and ran though the 1930s into the 1940s.

We see another bear from the mid 1960s that ran through through the 1970s in the early 1980s. The last bull market began in 1982 so it is significant when we see newspaper headlines like USA Today’s December 3, 2008 headline, Auto Sales Fall to 1982 Level. If car sales…stock market levels and economic signs are at their lowest level since the early 1980s, history suggests that the end of the current correction is heading our way….but not quite here yet.

This is why the portion of the Dow graph from 1920 to 1940 is of special interest to me. I see that the sharp 1929 contraction was too sharp. The real correct correction took place from 1929 to 1942 with a strong, last bear market rally from 1932 through 1936.

graph

Everything about this 30 year theory suggests that the bear market will not end until about 2012…and we need a serious human struggle and new technology before we see the next boom. Yet this same theory also suggests one last bear rally which may be a savior for baby boomers who would like to see their pensions and savings recover a bit before they retire.

The current bear trend began in 1998.  The 2005 to 2007 bear market rally led many investors astray. We are now in a late 1920s style market slide.

This has all been pretty predictable…which is why beginning August 2007 this site began recommending a reduction in equities and debt.

In September 2007, this site listed four important facts that affect most investors:

#1: They care too much about day to day volatility.

#2: They care too little about strategy.

#3: The short term process of buying and selling takes too much time.

#4: This short term process leaves too little time to analyze and forecast. We added seven suggestion then about of what to do when there is a market crisis.

#1: Turn on the auto pilot and normally add to your position.

#2: Do not panic.

#3: Do not let feelings influence you too much.

#4: Add some restructuring stories to your portfolio.

#5: Know that a period of high returns will be followed by a period of low returns…and vice versa.

#6: Do not underexpose yourself for the long term.

#7: Risk is your friend or alibi for expecting higher returns. Take risk in good value!

The market outlook at this site then (Sept 2007) was:

#1: Expect moderately higher stock markets at the end of 2007.

#2: Earnings growth will slow further.

#3: Watch out for core inflation and GDP growth. Dramatically lower growth with high inflation is the signal to watch for.

This could create a recession, the worst enemy for equities. We have that recession now. Hopefully you have been following these ideas.  If so, you have been hurt less than most and now we should be thinking hard about a reentry into markets. There are some stunning values developing especially if we engage three bear market rally tactics now.

Bear Market Rally Tactic #1: Realize that some blue chip equities in old industries may see some sharp immediate gains…but are not the wave of the future. If you hold such shares…when they recover…take your profit if the shares begin to be sold at an unreasonable value.

For example, General Motors was a Blue Chip that spiked in the late 1970s bear market rally.  The internal combustion engine was a productivity technology that came out of WWI.  Selling GM in the $40 range in the late 70s was the smartest thing a person could have done. From then forward, if you take the dollar’s fall and inflation into account, these shares have been a bad value and poor investment.

gm-share-chart

The Blue Chips that could peak in this rally are WWII era firms..plastics…telecommunications…TV…computer (not internet)…fertilizers and such.

Dump them if you get a decent price.

Boomers especially will want to use such timing.  If you have to sell shares to for liquidity, sell these Blue Chips in old industries that are not likely to have a bright future ever again.

Boomers, hold your new era investments that have a bold future and can still rise a lot to provide your income later when you are in your 80s and 90s and 100s!

Bear Market Rally Tactic #2:  Watch for the next war or struggle and the technology that will emerge. The nature of the battle will have an impact on what technology might emerge. Last year I thought that the war could be in Iran. See why at  WWIV

There are other options. For example a December 2, 2008 CNN article said:

Terrorists are likely to use a weapon of mass destruction somewhere in the world in the next five years, a blue-ribbon panel assembled by Congress has concluded. They are more likely to use a biological weapon than a nuclear one — and the results could be devastating, the chairman of the commission told CNN. “The consequences of a biological attack are almost beyond comprehension. It would be 9/11 times 10 or a hundred in terms of the number of people who would be killed,” former Sen. Bob Graham said. He cited the flu virus that killed millions of people in 1918 as an example. “Today it is still in the laboratory, but if it should get out and into the hands of scientists who knew how to use it for a violent purpose, we could have multiple times the 40 million people who were killed 100 years ago,” he said. Graham warned that such measures would be costly, but were necessary. “The leadership of this country and the world will have to decide how much of a priority … they place on avoiding the worst weapons in the world getting in the hands of the worst people in the world,” he said. “It is not going to be cheap. It is not going to be accomplished without some sacrifices. It won’t be accomplished without putting this issue ahead of some other competing national and international goals. But I think our safety and security depend upon doing so,” he added. It cited testimony before the commission from former Sen. Sam Nunn, who said that the “risk of a nuclear weapon being used today is growing, not receding.” The report recommends a range of measures, including increased security and awareness at biological research labs and strengthening international treaties against the spread of biological and nuclear weapons. “Many biological pathogens and nuclear materials around the world are poorly secured — and thus vulnerable to theft by those who would put these materials to harmful use, or would sell them on the black market to potential terrorists,” the report warned. The commission expressed particular concern about the nuclear programs of Iran and North Korea, and about Pakistan, which it described as “the intersection of nuclear weapons and terrorism. While observing that Pakistan is a U.S. ally, the report said, “the next terrorist attack against the United States is likely to originate from within the Federally Administered Tribal Areas” in Pakistan. The tribal areas lie in northwest Pakistan where the government exerts little control; the United States says it is a haven for militants from both Pakistan and neighboring Afghanistan. Congress created the commission to investigate and report on WMD and terrorism in line with a recommendation from the 9/11 Commission, which compiled a report on the September 11, 2001, terrorist attacks on the United States. Commissioners heard testimony from more than 250 experts from around the world over the course of their six-month investigation.

This is what it takes…a struggle where all concepts of return on investment go out the window….a no holds barred struggle that must be won. This type of endeavor breaks molds…urges thinking outside the box and changes the way humanity thinks, lives, works and interacts.

The struggle could be against global warming. This would be good, man against his bad lifestyle habits instead of man versus man. What will that struggle and new technology be?

None of us know for sure since we are all afflicted with that human failing of only being able to see the immediate future and (pretty badly) the past.

Yet being aware and watching for both (the struggle and technology) increases the odds of spotting them early and helping you venture into the next winners…that are the ones that can really grow over the next 10…20 and 30 years.

Bear Market Rally Tactic #3: Treat new era investments as high risk venture investments. Buy a little of several hoping to catch the winner.

In the last era for example, as mentioned, computers were the deal…so perhaps you invested a bit in shares of Data General…one of the first minicomputer firms from the late 1960s that due to a series of missteps in the 1980s, including missing the advance of microcomputers led to its decline and demise.

Plus maybe you invested in a bit of Sperry Univac…still in business as UNISYS CORP but only trading at .47 cents a share. Plus perhaps you purchased a bit of  Commodore Business Machines (big in the 80s…bankrupt in the 90s).

And you rounded your diversification by investing in a small company formed by two guys who were writing a program for Ed Robertson and his Altair computer (a first personal computer…in a kit).  Roberts said he would buy the program if he could see it running on the Altair but the programmers didn’t actually have the programs written.  They immediately set out to write them. It took about six weeks and worked.  Those programmers founded a small company in Albuquerque and later moved to the Seattle area.  Their names… Bill Gates and Paul Allen. The company…Microsoft.  Ahhh.

You may have chosen three losers out of four…but the name of the game in venture investing is the huge run up you get when you select a winner. Hold your winners and sell your losers.

We are in an era that we as investors have never seen before.  I began global investing in 1968 and this is the worst correction in those 41 years. This means we have greater opportunity for finding good value then we have had for four decades.

Use the seven suggestions above for investing in a market crisis….especially, take risk in good value!  Watch for the bear market rally and use the three bear market rally tactics to take this risk as YOU START LOOKING FOR VALUE NOW.

Gary

You can get regular quotes on multi currency shares that could do well in a bear market rally from Jyske Bank and Jyske Global Asset Management.

For more details on this, US investors should contact Thomas Fischer at fischer@jgam.com

Non US investors Rene Mathys at mathys@jbpb.dk

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Multi Currency Realities


Let’s look at underlying multi currency realities of economics.

These basic multi currency ideals are what move the financial world!

Recent messages have looked at the importance of looking beyond perceptions created by the establishment. Look instead at the fiscal and demographic reality. Ignore the noise in the daily media.
Do not trust the manipulation of information, spin and perception management from governments.

We live in a global economy. The ultimate form of financial security is a multi currency existence. We are all one unit multi nationals!

The ultimate multi currency position is a six point command posture where you

Live in one country
Bank in a second country
Invest in many countries
Earn in two or more countries
Use a company incorporated in a fifth country
Take a second residence

Recently this idea has been disturbing a number of readers. They write and tell me that this type of thinking is unpatriotic. They think this is ahead of its time I guess.

These multi currency ideas are not new. In fact if anything, they are outdated. I originally introduced those very words in my first book, “Passport to International Profit “published in 1978…30 years ago!

Back then a lot of readers were disturbed at what they deemed was unpatriotic thinking. By the late 1980s, I thought everyone had caught on!

Now suddenly a batch of readers have been sending me some pretty rabid stuff.

This idea of being a multi national should be pretty common now.

What’s with this wave of disturbed readers? I have not seen this type of mail for 20 years.

I have been thinking about this and realize that these new disgruntled missives show just how much this idea really is becoming the norm. These readers who are disturbed now are the Johnny-Come-Latelies that have ignored realty for three decades. They are finally having to accept that Uncle Sam really is not really a guy in a top hat who is there to protect them. This fact is not always easy for them to accept.

They are so far behind the curve perhaps it disturbs them to see how much they really lag.

The advice to be a one man multi national has paid off for my thousands of readers over the last three decades as the global economy has emerged.

As the stages of the economic unification of the world unwind, technology is obliterating the concept of nationality and making it necessary to add a seventh command posture which is:

Be flexible at all times with an open mind and willingness to adapt.

Nationalism’s Death Throes

The industrialized world as we know it has evolved through a number of eras of improved productivity powered first by water, then steam, then the internal combustion engine, the jet, computer chip and finally internet.

Each wave of productivity has dramatically altered economics and these alterations eventually changed the political world.

The last three waves of productivity have especially diminished the power of governments that rule via force and control of information.

A reader sent me this note that shows how much of nationalism has been obliterated.

He wrote:

“Gary, I get goose bumps as I read this issue. To me this is another confirmation of the rapidity of this positive change going on with human consciousness.

“Below is some summary information and a link that shows me how the old paradigm is imploding making way for this new, shall we say, Golden Age.

“David Wilcock, has done some impeccable research about the onrushing new paradigm.Here is a small summary from David Wilcock’s article:

QUOTE
“The Internet has provided a robust new “medium” for these emergent properties to occur. Here are a few of many examples of how single agents within the system are utterly transforming the ‘old world’ as it collapses all around us:

“Napster: Initially traced to a single agent — Napster, then Kazaa — the youth culture is now completely hooked on stealing their music. (I have never done this, as you definitely take a karmic ‘hit’ for it.) As a result, the entire music industry — which was heavily compromised by the elite to manipulate the public — is now in terminal decay. The film industry is also in trouble, which is why every DVD you rent now tries to guilt you into not stealing movies.

“Apple: A mere handful of years ago, Bill Gates rescued Apple from bankruptcy so he’d still have some degree of competition for Windows. Now Apple has taken over what money remains to be made from music downloads with Itunes, Ipods and now the Iphone.

“Craigslist: A rarely-if-ever-seen figure named Craig has single-handedly destroyed the most powerful financial support for the entire newspaper media system — the classified ads. Let’s not forget this entire system was heavily dominated by the power elite as a means of propaganda, going back to projects like MOCKINGBIRD.

“YouTube: A small-scale start-up business has now virtually wiped out the younger audiences for television, another area of media that is almost entirely compromised by the elite. I just saw a recent study saying the average age of a television watcher is now 50. Hence, you see many, many pharmaceutical ads on TV.

“Drudge Report: Matt Drudge’s website, Drudge Report, dominates all American media and he has never been able to be controlled by the power elite, much to their dismay. Mainstream media must follow Drudge’s whims if they want to stay relevant.

“Huffington Post: Adrianna Huffington single-handedly built a website that is now the focal-point of left-leaning media — again outside the hands of the elite to control. If she gets mad at you and writes about it, God help you.

“Perez Hilton: Shockingly un-funny, immature and hurtful attacks against public figures took a no-name website and turned it into a major force affecting all paparazzi media. If he likes you, miracles can happen. Perez is almost singularly responsible for Amy Winehouse becoming the latest paparazzi sensation. About the only positive of this emergent property is he is anti-drug and has made it very un-cool to be an addict.

“Free Porn: According to Illuminati whistleblower, Svali, pornography was another major source of financing for the power elite, and highly compromised at the top levels. Now the market is in catastrophic decline thanks to certain websites hosting free streaming video, generated and / or uploaded by the users themselves.

“Google: another private company that is at least predominantly outside of elite hands has grown to completely dominate the search-engine market. They are rapidly expanding into many other areas — including buying YouTube and releasing their own upcoming competitor to the Iphone.

“Free Internet? Most importantly, Google is trying to be as quiet as possible about buying up all the ‘dark fiber’ in America — i.e. fiber-optic cables laid down in the dot-com boom but never used. It is very likely that they plan to create free, unlimited broadband access for the entire country. Why? The revenue it will generate — even in a minimally-invasive form for the end-user — should more than pay for the cost. In the process, big media companies would be further destroyed by the loss in revenue. They also appear to be investigating using the electrical power grid as a backup Internet delivery system, based on certain reports of their activity.

“Ron Paul: Though he did not win the Republican nomination, Ron Paul’s candidacy had all the qualities of a complex adaptive system with self-organizing emergent properties. His constituency self-organized to raise him over 34 million dollars, and gave him the publicity to create an incredible sensation everyone was talking about, substantially increasing public awareness of the reality of a negative elite behind the scenes. Once the globalists fall, many will credit Ron Paul for giving a very healthy shove in the right direction.

“Oprah: Granted, her emergence was in television, but with her vast audience, built up over many years, and a slick integration of the Internet for her audience to hear more, she possesses the power to effect great personal and spiritual change for many. Her official endorsement of Obama was arguably the pivotal event that differentiated him from the wealth of contenders.†

“The Internet is the common denominator in every one of these systems, and Obama’s candidacy is the latest “emergent property” to develop from a system reaching peak criticality. Over 250 million dollars have been raised by harnessing the power of the Internet.

“All of these cases provide tangible proof that the old-world method of top-down management and disguised control over the flow of media and information is falling apart. You may spend millions of dollars building up a public figure, and now Perez can attack them and blow your investment single-handedly… and this is just one of many examples.

“Music, television, movies, newspapers, magazines, you name it… everything is changing faster than it can be controlled. This will only continue — and our lives will be better and better for it.
END QUOTE

You are blessed!! Larry”

Wow look at the huge groundswells of change that are taking place before our very eyes. The have become so common…so accepted that we fail to realize that we are seeing the future in the here and now. Change is coming faster then ever before and we have all become multi national buyers.

If you have not done, now so is the time to become a multi currency investor and business as well.

Until next message, your future encompasses the world.

Gary

Join us October 3-5 for the Blue Ridge leaf change and learn about multi currency investing.
International Investing and Business Made EZ North Carolin

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Here our other 2008 courses in Ecuador.

September 17-20 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
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View from coastal condos for sale that we will view on the tour.

Sept 23-27 Ecuador Spanish Course
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Here is one house scheduled for the tour. 150 acres with two houses at $50,000

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