Wednesday, May 31, 2006

The Anti-Investment Blog


Notice the name change?

We are now: The Anti-investment blog.

If you want deeper understanding of the why and wherefore of this attitude read our archives or check out our Speculation Rules anti investment advice site.

We can state it simply.

Investment is dangerous because it seems safe.

Investments are a sub class of speculation - the blue chips are still gambling chips.

If you speculate you know there is a risk, and you protect yourself from the risk.

Yes people lose money in the futures markets, in forex, shorting stocks, or playing with options. They also lose money in IBM, government bonds, and soon probably in housing. The key is not to avoid risk - you can't. The key is to manage the inevitable and inescapable risks that come with life. Manage risk to have the best opportunity to win.

If you are lead by an adviser to an investment; they lead you to believe that you are making a wise long term choice. They pocket part of your money as a commission. You take a risk until they tell you to change your asset allocation - and they pocket another part of your shrinking wealth.

Learn to speculate instead of only investing. Play on the big kids playground.

Make investment decisions yourself, you want to be in charge of your own future.

No one cares more about your investments than you do - unless they plan on stealing your money.


Thursday, May 18, 2006

'Evils' that lurk in the speculative swamp

I'm not back yet, but as you know the difference between speculating and investing is dear to my heart.

The Fleck, Bill Fleckenstein, turned that "speculative swamp" phrase in a recent article at MSN.

This is a guy that has paid the dues, and survived due to cautious speculating.

This is worth the read.

I'll be back in a week or two with regular updates. You will find some new material - and some interesting navigation and organization at the new Speculation Rules main site.

As an example check out the sovereign individual pages and liberty links.



Wednesday, May 10, 2006

It's Tough To Leave

Leaving for even a short time is difficult.

Normally is "so much to do, so little time to do it." As of today, for the next few weeks or so, it will be "and no time to do it."

I will be keeping an eye on Gold and the other futures markets - Gold seems to be in a true bull market - it will probably have violent, short reversals. It will be difficult to buy, hard to sell.

There will be work being done on our new Speculation Rules main financial resource site, visit it, or those favorite posts to the side if you want more speculation insights.

Best to ya.

I'm off----


Tuesday, May 09, 2006

Very Scary News For The Dollar


A weak Dollar, still supported by the world, has allowed the USA to export inflation, and import deflation.

Inflation is a hidden tax. Governments create excess money which drives down the value of cash -- pulling money out of everyone's pockets to support politico's pet projects.

Real inflation in the USA has probably exceeded 10% - the amount of money growth. Some of that inflation has been shipped overseas. Governments in the rest of the world have been willing to take USA bonds that are losing value - so they can sell products to the USA - so they can build more factories and improve their infrastructure.

The USA has devalued the dollar so much that the rest of the world is getting scared. If major parts of the world abandon the dollar, it is the USA that will be burned first. A fear that has been shoved aside for years may now happen.

That makes the following quote from a Bloomberg article very timely.

Korea, Japan and China agreed in Hyderabad to ``immediately launch discussions on the road map for a system to coordinate foreign exchange policy.''

This could make for some very unpleasant consequences in all sorts of financial markets.

It may also be one reason gold has been climbing versus the dollar. China recently opened up gold trading in their country, I'm sure you can see many reasons they may have done this.

A diminishing roll of the dollar as the world's major reserve currency could see a large flow of dollars back to the USA. All of that exported inflation may return very quickly.

It may even hasten the greater depression.


Saturday, May 06, 2006

The Decision Matrix

The first time I saw a decision matrix used, it was before personal computers.

George Morrisey led a group in an executive decision making seminar and demonstrated this effective little tool, the decision matrix. George is a wonderful speaker - we all gained from his insights into decision making.

I have used George's decision matrix since and have taught it to others.

It takes a multi faceted problem, compares each choice to each of the other choices, and presents an optimal decision. You will experience a coolness factor when using a decision matrix, it allows a lot of adaptable comparisons.

A related decision matrix has been used as a one dimensional sales closing tool - in a simpler
do it - don't do it guise, but that is not where its strength lies. While I wouldn't use it to decide affairs of the heart; it works well for decisions as diverse as vacation destinations or business decisions.

There is now a free downloadable version, and it works quite well.

The important news is that it works for many complicated financial decisions, and can also solve complicated allocation problems so you can dedicate more time and thought to your speculations.

The catch is very small.

The company promoting the software, SiteSell, uses their website building and hosting tools as a simple example - that is the only catch.

SiteSell's software, prices, and support
are excellent - so a soft pitch should work well for them. They probably ran their decision to offer the software for free through the decision matrix.

If you are considering building or buying a web site consider purchasing their well priced, clean and powerful software.

If you are not in the market for an improved web presence, follow their SiteSell decision matrix example as a short tutorial and download this compact decision tool for free.

Whether you call it a decision matrix, or Choose It! as SiteSell does, this is a tool that may be valuable on your personal computer desktop.


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Thursday, May 04, 2006

Real Estate Investing - Boom or Bust

Most realestate agents today do not remember a real estate investment bust.

For instance if you have San Diego real estate you would have to go back about twenty five years to find the most recent real estate bust.

I went through the last real estate investment boom and bust while managing real estate offices. There was a significant decrease in the number of real estate agents as real estate speculation decreased. Right now in California the police ask for your real estate license - because not everyone has a drivers license.

How does a real estate bubble burst?

Last time it happened very slowly.

At first you are not even sure the market has slowed down, then you wait for the market to recover.

Real estate is not like other investments for several reasons. There is no daily price list showing the value of your property, so panics start slower. Most owners of single family dwellings don't have to sell, so they can just let their houses sit on the market. Once prices start to drop a bit - buyers hang back waiting for even better deals.

As prices drop a bit further - owners that borrowed too much against the value of the property may give their house back to the bank - many today already owe more than their house is worth.

The banks don't want to own property - it interferes with their ability to make loans. At first the banks put a fair market price on real estate and hope to make a profit. As the bank's real estate portfolio increases in size, they start cutting prices hoping to break even. Eventually they offer all kinds of special credits and inducements to try and unload their real estate.

In the last real estate crash you could pick up nice houses for a third of what they had once sold for, and sometimes with no payments for a year. There were frequently no takers even at these terms - everyone knew realestate prices were dropping.

Banks will create Real Estate Owned (REO) departments charged with dumping the unwanted housing.

More folks now find with the dropping prices that they are upside down in their loans, they walk away and give the homes back to the banks. The REO departments will get larger, even as the mortgage origination departments shrink.

Banks will quit investing in real estate loans and fund something they perceive as less risky. At this point only perfect applicants will be approved for new real estate loans.

Mark Twain said "
History does not repeat itself - it rhymes."

This real estate investment bubble will be different than the last one - it may even deflate much faster.

This realestate down turn will have to deal with
adjustable rate mortgages, mortgage backed obligations, and a huge host of esoteric derivatives. If those phrases don't mean much now - they will after the financial press starts looking for villains to blame.

Speaking of blame, expect the banks to file lots of law suits against appraisers and property owners for fraud - even though it was the banks that encouraged "liberal" qualifying so they could make more loans.

The real estate market boom may not yet be over, but the hand writing is on the wall.

The bubble pop might have already begun, and it could be dozens of years before real estate may recover.

There is not even any assurance this real estate bubble's burst will be accompanied by deflation or inflation. Absolute real estate prices may increase if the government insists on continuing to print mountains of money - but the prices of everything else will increase even more as cash becomes trash.

As incomes go up slower than expenses - real estate investment properties would still be thrown at the market.

Real estate investments should now be examined - and perhaps sold - before the slowdown accelerates.

If you wait until you are sure the real estate market has turned - it may be too late.


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