Wednesday 3 August 2011

The Battle for Investment Survival, Gerald M. Loeb - BOOKS


The Battle for Investment Survival - 4 September 2008

cover of The Battle for Investment SurvivalThe Battle for Investment Survival (Wiley Investment Classics)
Author: Gerald M. Loeb
Rating: 
ASIN: 0470110031
Binding: Hardcover 

Even during the Great Depression, the biggest threat to investors was inflation...

THE PRINCIPLE OF COMPOUND INTEREST shows that, if an investment returns a 5% or even 3% rate per year, then over the years it eventually attains a colossal sum, writes Nathan Lewis for The Daily Reckoning.

   Say one million dollars – a decent house these days – invested at a mere 3%, becomes $136 billion in four hundred years. At 5%, it would be $299 trillion.

   But this doesn't mean that it is easy to make money. In fact, it demonstrates that making money is hard. I don't know a single example of significant success with this simple strategy, building a family or business's wealth over time. Why not?

   Many things can happen in four centuries. One thing that seems to happen, with regularity, is currency devaluation, possibly to the point of worthlessness.

   In 1935, a stockbroker named Gerald Loeb wrote a book called The Battle for Investment Survival. It is considered a classic today, and is still in print. The dramatic title might be ascribed to the dramatic period in which it was first published. Disaster-mongering books were popular in the late 1970s as well.

   However, in the book (which was revised in the 1950s and 1960s), Loeb makes clear that the "battle" he had in mind was with inflation.

   "The greatest threat to successful preservation of capital [is] the varying purchasing power of money," Loeb wrote. People who held their cash at a "safe" 2% or 3% were sure losers in the long-term Battle for Investment Survival, Loeb argued.

   Sometimes, cash was a good option. But in the long term, even just to stay even, it was necessary to speculate. The best defense is a strong offense. "Because I am personally completely convinced of the inevitability of loss when attempting to secure a safe income of small return, that I constantly suggest speculation rather than investment [meaning investment-grade bonds] as the policy less apt to show a loss and more apt to show a profit."

   The funny thing is, Loeb lived almost his entire life under a Gold Standard. There was a devaluation of the Dollar in 1933, but that was the only one of consequence for most of his adult life. Oddly enough, money did keep its value in those days. It wasn't until the floating currency period started in 1971 that Loeb's worst fears began to be realized. He died in 1974. Maybe his last words were: "I told you so."

   Loeb wasn't the only person worrying about keeping up in the Battle for Investment Survival. It is no surprise that government bonds were popular in the 1930s and 1940s, what with Depressions and World Wars and all. In 1949, the 10-year US government bond traded for about 2.0% yield!

   That was the peak of the great bond boom. You might even call it a bubble, to the extent that there can be a bubble in government bonds. People then began to come to their senses.

   At first, they noticed that stocks were yielding five or six percent in dividends. But, later, they listened to what was being said by their leaders in Washington, and decided that they didn't like the way things were going. Ten-year Treasury yields ended 1967 at 5.7%. They ended 1968 at 6.03%. They ended 1969 at 7.65%.

   Bondholders were intensely aware of the risk that inflation – currency devaluation – posed to their capital. Their fears came true in 1971, when, after 182 years on the gold standard, the US Dollar's final link with Gold was severed. The Dollar was floated and devalued. It eventually lost about 90% of its worth during that decade.

   After a twenty-six year bull market in bonds, since 1982, we now have 10-year Treasury bond yields again very low, now under 4%. This might have made sense when the Dollar was "as good as gold", as it was in 1949. However, the Dollar has spent the last seven years declining against every possible benchmark: Gold, foreign currencies, a basket of consumer goods, and commodities. The situation that people feared in the 1960s – currency devaluation – has been going on for years now.

   Inflation will probably continue until a Paul Volcker-like character appears to put an end to it.

   Yet, there is little concern. The government's CPI statistics are widely regarded, by big-name bond gurus like Pimco's Bill Gross for example, as something between an honest mistake and a dishonest one. However, the entire Treasury yield curve is now trading below even this artificially low hurdle. The latest CPI readings show an increase of 5.6% from a year earlier.

   Government bondholders today think they are "safe" from market turmoil, but, I argue, they are likely to be certain losers in the Battle for Investment Survival. The only safety today, as Loeb argued, is in speculation. Loeb recommended equities. That might not be such a good idea at the present juncture.

   Does Loeb offer an alternative to both bonds and stocks? "In the history of the world we find the record of savings really saved through buying gold, hoarding precious stones, and other forms of 'hard wealth' privately secreted. In the future history of America most of us will, in my opinion, learn this lesson too late," he wrote.

   Gold, silver, and other commodities have had a tough couple months. They seem exceedingly risky, compared to the apparent safety of T-bills. For an inexperienced speculator, these wild moves can lead to catastrophic losses. For the experienced speculator, these hard assets are merely tools in the Battle for Investment Survival – perhaps the best tools for the present situation.
Nathan Lewis04 Sep '08


By 
Rob Ryley "Robert" (Northeast NJ)
(VINE VOICE)
I've read many recently published books on how to profit from the financial markets. Too many of them leave me feeling like I wasted my time and money.I decided to go back to the "classics"--Schabacker, Edwards and Magee, Graham, Hamilton, Rhea, and of course, Gerald Loeb.
The more I read these "classics" of investment literature, the more I see the market hasn't fundamentally changed at all. All of those books have taught me something important, but I will always have Loeb's "Battle for Investment Survival" close to the top of my list.
Loeb demonstrates he is fundamentally honest. Unlike most books, that get you to think becomming a millionare through daytrading is easy, Loeb teaches that there is no such thing as "easy money" in the financial markets, nor are there "safe investments" (bonds) as the value of money is constantly depreciating.
He also teaches that there are NO guarantees, and that most people WILL lose money regardless of what they do. I think this is true, but most people cannot face it--even those "efficient market" types who advocate the buy and holding of index funds. (I believe Loeb would be a big fan of Exchange Traded Funds, however)
So, what is one to do in order to preserve purchasing power? His answer: intelligent speculation and the ever-liquid account.
To speculate intelligently, Loeb advises focusing on actively traded stocks--not illiquid "penny stocks" for your SPECULATIVE activities.
Let's be clear--Gerald Loeb is no "buy and hold" advocate. Loeb could be considered an advocate of the "relative strength" approach--before the concept of "relative strength" ever existed.
The moment your stock is failing to deliver superior profits, and you have no fundamental reason to believe its uptrend will continue, he advises you sell and look for another. If you can't find anything interesting, or the market is going down--you stay in cash. For Loeb, you MUST avoid catastrophic losses like those sustained in the crash of '29. A stock that doesn't rise (or fall if you like to short) is a waste to be avoided.
Loeb is not a fan of too much diversification. He thinks it is a crutch that guarantees mediocre performance.
His most important teaching would focus on money management (what we would now call "asset allocation"). Loeb would consider it foolish to allocate a significant (more than 50%) of your capital to stocks. You always need a cushion for those inevitable losses in trading operations.
I've taken Loeb's advice to heart. His advice is even more applicable to options trading.
By keeping a small amount of money in a volatile asset, and ruthlessly cutting losses, you give yourself a chance to match the market or even outperform, but with significantly less risk (volatility), due to the large cash reserves.
Loeb's advice isn't easy to follow. But making money isn't easy. And by following Loeb's advice, I'm quite pleased.



All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

PLUMMETING TREASURY RATES - pragcap.com

http://pragcap.com/plummeting-treasury-rates?utm_source=twitterfeed&utm_medium=twitter

PLUMMETING TREASURY RATES
3 AUGUST 2011 BY SURLY TRADER
To put this in perspective, this is the 17th largest absolute drop in the 30 year treasury rate since January 1990.


What I found even more interesting is that the gap between 30 year treasury rates and 30 year breakeven inflation rates dropped to its lowest level in 13 years to just 1.25%:



http://pragcap.com/plummeting-treasury-rates?utm_source=twitterfeed&utm_medium=twitter

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

Comex gold races to new record, $1,700/oz now in sight - www.fastmarkets.com


http://www.fastmarkets.com/scoop/?id=32559&v=0&lang=en&cid=142717&type=1

US GOLD - Comex gold races to new record, $1,700/oz now in sight


By Tom Jennemann, Correspondent tom.jennemann@fastmarkets.com 973-204-3383


New York 03/08/2011 - Gold on the Comex division of the New York Mercantile Exchange set another all-time record on Wednesday morning as pessimism permeates most markets and traders take pre-emptive positions ahead of possible additional quantitative easing (QE) measures by the Federal Reserve.


Gold futures for December delivery were last up $25.20 or 1.5 percent at $1,669.50 per ounce and earlier hitting lifetime high of $1,675.90 for the most active contract.


The most recent spate of data has been quite poor. July PMI readings in the US, Europe and China have all disappointed while US personal income grew by only 0.1 percent in July on the previous month, while personal spending fell 0.2 percent.


“The data out there isn't really what's needed to let this economy turn around,” a US-based gold trader said. “Markets are being driven by fear as we've seen a number of recessionary figures come out lately.”


Given high unemployment rates and worries about near-term growth prospects, Fed chairman Ben Bernanke could hint at a third round of Treasuries purchases - or QE3 - at its annual meeting later this month, market participants said.


“My guess is that Bernanke will prime the pump for additional easing. Certainly, the gold rally we've seen the past couple days came about in part because people like me are pricing in some level of QE3,” the trader said.


Nevertheless, gold did come slightly off the morning’s highs after ADP Employer Services reported that US companies added 114,000 workers to payrolls in July. While this is still a weak number, it did beat expectations of 101,000.


“This didn't really have much impact as most folks are waiting for Friday's [non-farm] payrolls number, which most people think is going to be pretty stinky,” the trader said.


Meanwhile, Moody’s and Fitch ratings agencies have affirmed the US’ current AAA rating; however, Moody's has placed the US on a negative watch. S&P will make a decision on the country's debt rating by mid-October.

http://www.fastmarkets.com/scoop/?id=32559&v=0&lang=en&cid=142717&type=1

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

Gold Price Sets Records in Dollar - 3 August 2011 goldnews.bullionvault.com

http://goldnews.bullionvault.com/gold_price_080320112


Gold Price Sets Records in Dollar, Pound & Euro amid "Growing Risk" of Euro Credit Crunch - 3 August 2011
The Gold Price hit a record $1672 per ounce Wednesday morning in London – a 2.7% rise from last Friday's close.
The Gold Price at the London Fix meantime hit four figures in all three currencies – the Dollar, Euro and Pound – for the first time in history on Monday afternoon. The Gold Price repeated the feat this morning, where prices per ounce were $1667.50, £1016.77 and €1163.40 – a record in each currency.
Silver Prices hovered around $41.15 per ounce Wednesday morning – 3.2% up for the week so far.
Stocks, commodities and US Treasury bonds all fell as fresh sovereign debt fears hit Italy and Spain.
"Looks like the crisis [will] just bounce back and forth between both sides of the Atlantic," says a Hong Kong bullion dealer.
"This crisis, unfortunately, seems to be spreading to Italy and Spain," agrees Jesper Dannesboe, senior commodities strategist at Societe Generale.
The Gold Price "is reacting to this and that is the main driver right now."

http://goldnews.bullionvault.com/gold_price_080320112

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

110802 - Hyper Report


by on Aug 2, 2011

This Hyper Report is sponsored by FutureMoneyTrends.com (http://futuremoneytrends.com/ )

Source Links for Today's Items:

Europe on Brink of Financial Crisis
http://www.cnbc.com/id/43988195

After Debt Deal, Economy in Deeper Peril
http://www.msnbc.msn.com/id/43976115/ns/business-eye_on_the_economy/#.TjhD7GE...
http://www.christianpost.com/news/senate-passes-debt-ceiling-bill-who-voted-y...
http://www.bloomberg.com/news/2011-08-02/u-s-aaa-rating-faces-moody-s-downgra...

US Debt Deal Agreed but May Not Save AAA Credit Rating
http://www.guardian.co.uk/world/2011/aug/01/debt-deal-agreed-concern-congress

Manufacturing Growth Hits Lowest Level in 2 Years
http://news.yahoo.com/manufacturing-growth-hits-lowest-level-2-years-14142688...

Survival Preparedness for $100 Dollars
http://modernsurvivalblog.com/preps/survival-preparedness-for-100-dollars/

Bulldoze: The New Way to Foreclose
http://curiouscapitalist.blogs.time.com/2011/08/01/bulldoze-the-new-way-to-fo...

The content contained in the Hyper Report is provided for informational purposes only. Use the information found in these videos as a starting point for conducting your own research and before making any significant investing decisions. All stories are sourced and assumes all information to be truthful and reliable; however, I cannot and do not warrant or guarantee the accuracy of this information.

This video is protected by the Fair use Act-Title 17 Chapter 1, Article 107 pertaining to the use of copyrighted works to illustrate an opinion, or for educational purposes...

Thank you.


All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

Gold hits record Aug 2, 2011 8:24pm EDT

Gold hits record

SINGAPORE | Tue Aug 2, 2011 8:24pm EDT
Spot gold rose to an all-time high of $1,661.14 in early Asian hours, hitting its ninth record since July 13. It was trading at $1,652.69 by 0009 GMT, down 0.4 percent.
U.S. gold rose 0.7 percent to $1,655.3.
Spot Gold 1652.69 -6.56 -0.40 16.43
Spot Silver 40.56 -0.24 -0.59 31.43
Spot Platinum 1789.24 -1.56 -0.09 1.23
Spot Palladium 823.75 1.17 +0.14 3.03
TOCOM Gold 4106.00 61.00 +1.51 10.11 44793
TOCOM Platinum 4500.00 -5.00 -0.11 -4.17 2237
TOCOM Silver 100.20 1.50 +1.52 23.70 317
TOCOM Palladium 2066.00 -10.00 -0.48 -1.48 124
Euro/Dollar 1.4180
Dollar/Yen 77.22

http://www.reuters.com/article/2011/08/03/businesspro-us-markets-precious-idUSTRE7592IU20110803

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

US Senate has passed a deal struck between Republicans, Democrats - www.bbc.co.uk/news













US Senate backs debt ceiling deal hours before deadline

The US Senate has passed a deal struck between Republicans, Democrats and President Barack Obama to increase the US debt ceiling and avert a default.

Mr Obama is due to speak shortly after the legislation's passage and then sign the deal into law.

The bill raises the debt limit by up to $2.4tn (£1.5tn) from $14.3tn, and makes savings of at least $2.1tn in 10 years.

http://www.bbc.co.uk/news/world-us-canada-14379240




Graphic

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

Senate poised to pass US debt deal


Aug 2, 2011 by

A vote in the Senate looks set to pull the United States back from the brink of economic disaster today, with just hours to go to avert a default.

A last-ditch deal on debt between rival Republicans and Democrats has already cleared its most difficult hurdle in the House of Representatives.

The measure was passed in the Republican-led House despite noisy opposition to the compromise from Republican right-wing Tea Party supporters on one side and liberal lawmakers on the other.

...
http://www.euronews.net/


All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

Breaking News: the "Law of Monetary Rarity"


by on Aug 2, 2011

Because those who stand against us will stand alone. Hello.

Hello.

Yes.

Good evening, listen.

Please tell me.

I wanted to ask you something. Let's say your theory was to be accepted ..

Yes.

.. in Italy, and in Europe. What would happen, when there was too much money, wouldn't the currency devaluate?

Thank you.

We have developed a new scientific evidence, at the University, during my "Graduate School of Legal and Monetary Values."

For the first time in the history of monetary science, we have also developed the "Monetary Law of Rarity."

That is, when the question was posed to Einaudi, Einaudi said, "The rarity of gold was replaced by the wisdom of Governors."

But the wisdom of Governors leads to what we've said, i.e. to a root canal like treatment because of monetary rarefaction, and it torns the Third World with debt before torning it with famine.

So, that is the current situation of the wisdom of Governors. "My gosh, what a wisdom!" Totò would say.

But, at this point, we want to clarify what the Law of Rarity is.

Listen carefully.

Given that the market price is not only the index of the value of an asset, but also the index of the point of saturation of the market, then the market is saturated when the price tends to coincide with the cost of production.

Only when this occurs, and only then we must stop to issue currency and to produce goods because the market is saturated.

So, once we have elaborated this principle of The Law of Rarity, we finally have a law that scientifically establishes the limit of rarity, an objective limit, detectable by all statistical and survey tools at our disposal today.

Just as today the purchasing power of the currency, the GDP and other forecasts are based on statistical data, so are ours!

Because we have discovered the Law of Rarity, we affirm that a currency must be produced only until the realization of a "trend to concurrence" between the law of the market (price) and production cost.

With this Law, we have what in science is called a "principle of technical discretionary," not only because it is scientifically verifiable, but also rationally verifiable by Parliament and the Government, if the Government is acting in good faith, of course.

If the Government is in bad faith, then it only wants to be on the side of loan sharks who want to kill Italy.

Rinaldo Pilla, English translation


All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

Putin calls for "Other Reserve Currencies;" U.S. puts Burden on Entire W...


by on Aug 2, 2011

Russia Today—Aug. 1, 2011-- http://rt.com/news/putin-us-default-position/

Copyright Russia Today 2011

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Putin reserve currency dollar euro US debt default budget house approves Russia today


All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.