The 2010 elections are the most important elections in my lifetime

First, a little background on why you should listen to lil ole me.  Bear with me, I know this is wordy. 

I foresaw the dot.com and housing bubbles bursting.  Really, I did.   Well, I still lost my ass in both bubbles, so act on my wisdom, rather than merely agreeing with me but doing nothing.  True confession to follow:

  In late 1999 or early 2000, I had a little “disposable income” that I wanted to invest. But I had never invested in the stock market and was afraid.

So I did what I always do when I venture into some area of unfamiliarity: I studied up on it.  In the case of stocks, I read books. Many, many books. New ones, old ones. I became quite the student.  I studied the economic reports and company balance sheets in the Wall Street Journal. 

I vividly recall reading one book in particular, about how the stock market works not just in good periods but in bad ones, too.  I can’t remember the name of the book, but the guy detailed what had happened in the past, and showed how the market is cyclical, and that in each phase of the cycle people had acted the same as they always had acted in the same phase of all previous cycles.

I know I am being vague, but it was a long time ago, and I can’t remember the name of the book.  My point is that I read the book and then looked at the stock market at that time and thought “Wow! The market is over-valued!  Price-to-earnings ratios are sky-high! Most of these dot.com  companies do not even have any earnings!  Dividend and yield are miniscule! The stock market is going to crash!”  Okay, I did not say exactly those words, but you get the picture. 

And not only did I think it, I put my money where my mouth was, and I shorted a couple of companies (for those who do know, shorting is when  you borrow shares at the current price, sell them and re-buy shares later to replace them; if the current price drops, when you buy them later you keep the difference, but if the price increases, you have to pay extra for them).  I even remember the companies that I shorted, LU (Lucent Tech) and IBM.  LU in particular seemed grossly over-priced. No way could it keep going higher, it was bound to crash.  At least that’s what the books said.  (Contrary to this information, all the “experts” were saying that the dot.com bubble was different. He he. The experts were probably saying that about the tulip craze in Holland way back when.)

So I shorted those stocks in late 1999 or early 2000.  And promptly started losing my ass.  In other words, the prices kept going through the roof.  If any of you remember, I shorted them at about the worst time ever to short, at least for a small time short-term investor who lacked balls and who could not afford to lose money, at least on paper.  When you short a stock, as the price goes up, your account goes down, at least on paper.  I saw my hard-earned money going down the toilet and promptly sold my positions shorting LU and IBM to cut my losses.  And those stocks kept going up!  So I joined the crowd and even “went long” those stocks (I purchased them this time instead of borrowing somebody elses to sell and repurchase later).

A short couple of months or so later, the stock market bubble burst.  At first, many people (most?) did not believe it.  Keep buying, they said! When the prices drop, the stock market is offering a discount, so it is a great time to buy more!   So I did.  And I lost my ass.  Even though I knew–or at least had the knowledge that in all likelihood–that the stock market was about to crash.  All the signs were there, I had the book-smarts to read the signs, but I failed to act upon them.  I lacked the courage to do what I thought was right. And I lost thousands of dollars that I could not afford to lose.

Fast forward a few years to the housing bubble. After a little background.  We bought our first  house a year after my graduation from law school.  We sold it five  years later for five thousand more than we bought it for: not much, but a cool five grand that we did not have before, and for which we did not have to do much to “earn.”  We bought our next house and lived there for ten years.  In ten years the purchase price of that house went from $194,000 to $335,000!  It was too easy.  But just as with the stock market bubble, I knew that something was rotten in Denmark. 

I wanted to sell and get an apartment, or rent.  But no. I allowed my wife to nix that idea.  Rent, and miss out on the income tax deduction? Lease, and miss out on all the appreciation in value that we experienced the last ten years? Are you crazy? So I dutifully said yes dear and we bought our current house (smaller, closer to town, but still almost as expensive as the big house out in the country).  (I’m not blaming my wife–I could have overruled her and she would have done what I said. She’s great like that.  I take full responsibility.) 

 That was back in late 2004/early 2005.  And for a short while this house “appreciated” rapidly in value.  At its peak, it went up in value $35k over what we paid for it in only a year or two.  

As with the stock market, though, all the signs were there that we were in a severe housing bubble. I had an online acquaintance who sold his three bedroom one bath starter home in Riviera Beach, California for half a million bucks. Many (including me) chided him for selling out, especially when the value  escalated the next year or two and he “lost” a hundred grand or so by selling out.  He said a bubble would burst, and I knew he was right, but I just did not have the balls to pull the trigger and sell.  

I had never experienced a housing bubble.  Always, always, always, houses had gone up in value during my lifetime.  Vaguely I recalled a burst bubble in Texas when the oil jobs dried up in the late 70s or early 80s. But that bubble and other mini bubbles had specific reasons, such as the loss of local jobs.  And Japan? That was a foreign country in which I had no interest.  This is America, I thought, we don’t do housing bubbles.  

The best investment that you can make is your house they, the “experts” told us.  Believe it or not, people were offering more than the list price for certain houses in certain areas around here.  That’s how hot the market was.  My confidence grew as my paper gains grew, so I took a second mortgage out on the home and started my own business.  At almost the exact wrong time, just as when I shorted LU back in 2000.  My bad timing is epic.

Our house is now worth less, at least according to zillow.com, than when we bought it six years ago. Sweet.  And LU, if I had not sold my short position, would have made me rich.  That stock, as well as IBM and almost all of the stocks in the dot.com craze, plummeted in value.  Having “book smarts” or intuition or whatever that warns you of danger is useless if you do not have the courage to act upon that danger.

Flash forward to today:  Well, for what it is worth, my danger detector is warning me that we are in trouble in the USA.  We have all these “baby-boomers” who are retired or retiring.  Somebody has to take care of them in their old age. Somebody has to pay for their social security and their healthcare.  They are going to be selling their homes, and down-scaling or going into condos.  They will be selling their stocks (too risky) and buying safer investments such as gold or C.D.s or municipal bonds.  With the cost of healthcare skyrocketing and the social security “lock-box” having been raided, and our already sky-high deficit, this country is so screwed. 

And we seem to be reaching a tipping point as far as entitlement spending is concerned.  So many are on food stamps and welfare and corporate bail-outs and this or that special program that nobody cares anymore that we can’t afford it.  I think our government will start inflating the money supply to pay for it.  Some guy at the Federal Reserve is already floating the idea of inflating the money supply.  (You and I would call it printing more funny-money.)  

I remember the inflation rates in the late seventies.  Old people lose their retirement savings.  A mortgage rate cost 12-15%.  In inflationary times, people get scared, take their money out of the market and out of banks and buy gold and other precious metals.  They are afraid to invest.  Without capital, businesses fail, workers are laid off.  And the economy goes into the shitter.  [Here is another guy thinking along the same Dooms Day scenario as me…1 in 5 mortgages are in danger of being foreclosed!]  Bottom line? We are getting perilously close to falling off a cliff with our economy. 

But I still think it could go either way.  I remember clearly when the country threw the bum known as Jimmy Carter out of the White House and elected Ronald Reagan.  It was as if a veil lifted, the skies cleared, and the sun came out all over this land.  Reagan cut taxes, reduced bureaucratic red tape, and the Fed clamped down on inflation.  But more importantly, Americans re-gained the most precious commodities–hope and confidence in our future. 

America is on the edge of a precipice.  This election, and the next, will be the most momentous elections in my lifetime.  And more importantly, the actions that our elected officials take when we hopefully elect good conservative politicians, will be the most momentous since Reagan’s actions in the early 80s.  If you aren’t motivated to vote and to help win these elections now, you have serious problems.

The tea party has given me hope.  The proliferation of conservative bloggers, and commentators, and political groups give me hope. But the polls, showing many stupid fuc#ing liberal a$$ho(e politicians–the ones who got us in this mess–being ahead so close to the elections scares me.  The polls scare me a lot.   Are people this stupid? Can’t they see the trouble we are in?  Evidently not.  Almost all of us got trapped by the Dot.Com bubble and the Housing Bubble, and 80% approved of Obama when he was first elected.  Many have awakened since then, but I fear that not enough have. 

Hopefully, those polls are more lies spread by the liberal elite. Or, hopefully, the stupid morons who support the liberal pols will stay home on election day, and those of us who know better will prove the pollsters wrong.  One can hope. 

John Doe

21 responses to “The 2010 elections are the most important elections in my lifetime

  1. JD…

    You certainly took a whack in IBM if you bought in late 1999 or early 2000…it went into the dumper at midyear.

    Here you can view the MorningStar chart, for that period…just click on [10Y] or if the chart comes up as a normal [daily/hourly] display.
    http://quote.morningstar.com/stock/s.aspx?t=IBM&culture=en-US&region=USA&r=817977&byrefresh=yes

    We took a real shellacking in the fall of 2008; even though I had established specific rules for how I would manage our portfolio. At the time I was primarily in fairly well diversified, mutual funds and was supposed to convert any fund that fell [10-12%] into a money market holding.

    This olde bony dumbe arse couldn’t “pull the trigger until some were down [20-30%]…Dang, I hate when that happens…!

    Today we’ve recouped everything we lost some two years ago and are much better off from a diversification point of view…we maybe a little heavy in precious metals, but hey!

    “Too soon olde, too, late schmart”

    If you have a good personal or online broker and keep a sharp eye on the market, either on your cell or satellite; you should be able to move expeditiously, to save yer portfolio and avoid total, abject, embarrassment and the “poor house”…!

    I can say this; were it not for the market, SWMBO and my ownself, wouldn’t have a “pot to piss in”!

    It would be Social Security and Medicare…ouch!

  2. Aye, Gramps, you should be able to do alright absent some other 9/11 event. Imagine if a nuke took out Manhattan? Go look at your charts on 9/11 and thereafter. Remember, Big Papa said we can “absorb” another terrorist strike. That tells me he knows one is coming and can’t do a damn thing about it. Hope I’m wrong.

  3. Buy gold. And demand physical possession of the coins or bars. Stay away from anything that is paper, even if your banker/agent/broker tries to call it gold.

    • We own physical gold, gold mining stocks, gold and silver ETFs and precious metals mutual funds…

      There are certain inherent problems with owning “physical gold”… Gold’s physical size, mass and weight require special secure storage and concealment. some options might include…

      The purveyor’s own vaults where you purchased [can you trust ‘em, how will you access it, if a “Mad Max” scenario evolves?]

      Local banks, safety deposit box[s]

      Personal concealed and secured remote storage…this may be very appealing; however I’d refer you to this booklet…for some ideas before you commencing…

      http://www.amazon.com/Modern-Weapons-Caching-Down-Earth/dp/0873645839/ref=pd_sim_b_4

      “This manual is recommended for entertainment purposes only…!”

      Obviously gold and silver don’t require the water and humidity protection that firearms, do!

      I personally don’t recommend any location; except the alien UFO we have contracted to store ours and I’m not at liberty to divulge any method of contact; it can be a real conundrum…you’ll have to werk it out fer yer own selves…Hehehe…!

      • Gentlemen: I don’t approve of or advocate for; the BS conspiracy scenarios included by the author in the manual that I linked, above…as I earlier stated my recommendation is for entertainment [and instructional] purposes only…!

        Capuche…yo?

  4. Agreed, Bill. I’m sticking to the heavy metals. Gold, silver, and lot’s of LEAD (.410, .357 Magnum, .380 auto, 30-06 and 12 gauge).

    p.s. Is that YOU Bill?

  5. If yer interests include some of the lessons we did and did not learned in the Hambone… yah might check this out…

    http://www.globalsecurity.org/military/library/policy/army/fm/90-8/Appa.htm

    Geezer sends all the very best…!

  6. I find it interesting how Gramps’ comments become so suddenly cogent and on point when discussing a subject like this, not subject to the strange rambling and bizarre sentence structure that we see elsewhere.

    “We own physical gold, gold mining stocks, gold and silver ETFs and precious metals mutual funds…”

    I am not buying the bumbling “Gramps” who has seemingly appeared elsewhere. Camouflage.

    • NV…
      “To thy ownself be true and then, yeh can be false to no man [or women]…!

    • NV…
      I gotta luv, yer affinity fer “Bombay Sapphire”…olde bean…

      If I may be so ‘effen bold…where did the “blue gem” first touch yer parched lips…?
      Really, really, olde, Jerkbah here…!

  7. Could also be the wodka.

    • Водочка…
      Is the soldier’s drink…some indulge, before battle, thousands after the victory…!

      I always confronted the enemy, without the benefit…for no special damn reason…!

  8. “for no special damn reason” my arse. You confronted the enemy” without the benefit” BECUZ YOU DID NOT HAVE IT BEFOREHAND. Admit it you old salty.

  9. I presonally tasted three different high dollar gins Tuesday night. With a little, a LITTLE tonic water and ice. My verdict? There was not a dime’s worth of difference between the three of them, and of the cheapest gin that VACBC stores sell. I could be wrong, but I’m never in doubt.

  10. JD…I’m not inclined to intrude into what is normal, everyday, family interaction…

    We “SF troopers” sat down to patrol briefings at 2300 Vietnam, [9 AM at home everyone’s gettin’ up!]…I’m not gonna attempt to take yah thru a combat or recon patrol briefing…
    OK…?
    We normally, commenced physical movement about, 0100 or one thirty.
    Our combat specialistists did this sort of military briefing every night from 1962 to 1967…when I was personally deployed in Vietnam…
    Actually it went on and on and on… until 1972… when that frat boye and sorry combat evader… “li’ll George Bush” said…
    “I didn’t see anything goin’ on over there…!”
    Hell, I’ve been flyin’ my “102” to, Florida, fer training…!”

    Thanks [TEXAS AIR NATIONAL GUARD] Lieutenant, Bush…!

  11. Best gin I ever drank was a bottle of Gilby’s me and my brother shared driving across Montana several years ago. We bought the bottle at a bar in Idaho…(evidently, that’s also the liquor store), and a bottle of tonic water, a bag of ice and drank Tom Collins till we ran out of liquor. We had just finished the last drink when I got pulled over for speeding in some little podunk town speed trap. If the sheriff’s deputy hadn’t smelled like beer, he might’ve smelled the liquor on my breath…whew, that was a close one. We drank nary another drop until we made it back to the comfortable environs of North Carolina and home.

  12. Hey, Gramps, was “Winter Soldier” John Heinz, er I mean Kerry, there wiff ya? Did he track down that unarmed gook wiff ya watchin? I’m just axen. Ugh, and did “I ain’t no Senator’s son” AlGore take yo picture? Don’t breve for 180 seconds in honor of global warming……………………………………

  13. Gramps–I switched to the Sapphire about 12 years ago. I’ve been a Martini drinker for about 25. There is nothing like a properly made Martini at about 0 degrees F. I will do a post about the “properly made” part some time.

    JD, I love ya man, but if all the gins tasted the same to you, you need some gin <iIeddication, or maybe just be a whisky man (which is a different, but equally wonderful, experience).

    • My beautiful daughter is a connoisseur of the Bombay gem…she likes it with two large green olives and a splash of the salty; juice, you can put the dry vermouth on the roast beef…!

      I believe they refer to that as “dirty”…?

  14. I’m a beer man. I can tell you many different brands of beer wiff my eyes closed. But with gin, and with whisky (and whiskey), bourban, and scotch I’m pathetic. Perhaps it is because I don’t drink them very often. I learned long ago that I drink too fast. At least with beer it takes awhile to drink too much.

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