Wednesday, October 11, 2006

Dire Predictions

John Greer starts and ends with peak oil, but the route he takes in between reveals a dream picture hung in front of a window to hide poverty.

Take a look at his interesting read. To find where I diverge from his views - take a look at my rant blog, Speculation Rules. You will find the first few paragraphs mirror this post.

Greer does a great job of entertaining with analogy as he points out what he calls Hallucinated Wealth.

He got me thinking along the same lines.

In our "let them eat cake" economy -- statistics and political pronouncements hide and disguise the unraveling real economy. Crashes of one bubble lead to the immediate inflation of the next bubble. Each bubble is of necessity created a bit larger and more unstable than the prior one.

The old saying that a broken clock is right two times a days is frustrating those of clear vision. They pronounce the end of a bubble and position themselves to profit from the pop, and frequently do make huge profits.

The problem is encountered in retaining the profits. Because their clear vision has shown them the bubble rests on a house of cards, they expect the bubble's burst to blow down the weak structure supporting it. They then bet accordingly.

A new bubble's emergence lifts the weakened
house of cards structure and the new imbalance comes into play.

Greer's analysis if good and worth watching and considering.

That brings us to a speculation rule:

Success is dangerous. Just because you won big does not mean your next idea is brilliant. Take money off the table, protect most of that huge gain.

Wealth is made through concentration, preserved through diversification.



Post a Comment

<< Home