Thought of the Day

A New Year’s Message

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“The Dalai Lama, when asked what surprised him most about humanity, answered, ‘Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live … Read more

My Most Popular Post of 2012: You Know You Are a Conspiracy Theorist If…

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While Piers Morgan’s interview with Jesse Ventura brought the most visitors to my site for any single post, the most read post I did all year from all sources was You Know You Are a Conspiracy Theorist If…

The post was read 71,382 times on Zerohedge alone and just missed the site’s Top 25 Posts for 2012 List.

So…in case you missed it the first time, here it is!

You Know You Are a Conspiracy Theorist If…

You are capable of critical thinking.

You distrust mainstream media.

You like nature.

You think it’s a good idea to spend the Friday after Thanksgiving with your family rather than camping outside Best Buy to get a cheap plasma television made in China.

You think it’s a little strange that WTC building 7 came down at free fall speed on 9/11 yet it was never hit by a plane.

You think that drones in America might not be for Al Qaeda.

You would like to be able to get on a plane without having to engage in a mandatory radiation bath and digital strip search.

You have read a book in the past year.

You think you have the right to protest.

You think the War on Terror is a scam.

You think the War on Drugs is a scam.

You think the anger directed at America from the Middle East could possibly be related to our foreign policy rather than hating how amazingly free we are.

You think the Republicans and Democrats are exactly the same on the important issues affecting our country.

You think believing in The Constitution does not constitute a terrorist act.

You have heard of the Bill of Rights and can even name what some of them are.

You question whether the government loves you.

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You Know You Are a Conspiracy Theorist If…

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You are capable of critical thinking. You distrust mainstream media. You like nature. You think it’s a good idea to spend the Friday after Thanksgiving with your family rather than camping outside Best Buy to get a cheap plasma television made in China. You think it’s a little strange that WTC building 7 came down … Read more

The Case for Precious Metals Miners

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The Case for Precious Metals Miners You don’t need me to tell you.  Precious metals mining shares have been nothing short of a historic fiasco over the past couple of years.  Specifically, gold is up 25% since the end of 2010, while the ETF of large cap miners, the GDX, is down 11%.  That is … Read more

Silver Plunges Below Marginal Cost: Commentary from a Retired Geologist

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Last week as silver headed toward the $29/oz level, I received an excellent piece of commentary from a retired Canadian geologist that goes by the handle “Rhody.”  In it he states that at sub $30/oz silver is below cost, which I take to mean marginal cost.  For those not familiar with the commodity markets, marginal … Read more

Thought of the Day – Bernanke is Concerned…Very Concerned

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I haven’t turned on my television in months other than to watch Game of Thrones on HBO (I highly recommend it if you haven’t seen it although this season has been slow so far) so it was an interesting experience watching CNBC for the first time in ages on the plane.  Since markets are solely … Read more

Thought of the Day – House Flipping in Colorado

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I overheard a very interesting conversation in a local coffee shop today between a realtor and a prospective client.  It was the sales pitch that really shocked me as I could have sworn I was transported back to early 2005.  She was using lines like “you’d be a fool not to buy with rates this low,” while also peppering the conversation with anecdotes about this “person she knew” that had just flipped a home for a 40k profit in just a few weeks.  America is back folks.

Does this conversation translate into any actionable investment ideas?  Not really, but it relates back to what I wrote several weeks ago regarding the equity markets.  That people that know better are once again drinking the kool-aid.  The one thing I do feel strongly about is despite ubiquitous prognostications of real estate brokers everywhere, housing is going to be in a deep slump for a very long time (unless we get hyperinflation of course, where anything is better than paper dollars).  Despite all attempts to revive housing and trillions of dollars printed and then spent by the government, all housing has done is bounced around the bottom.  Ex-hyperinflation I expect another major leg down within the next couple of years and even in hyperinflation I expect real estate will do poorly in real terms (ie versus gold).

It is at this point that I’d like to direct you to read a piece I wrote in March 2010 titled: Residential Housing: Why it Doesn’t Stand a Chance.  One of the focal points of this piece was that Americans would become a lot more like the Madrilenos that I lived with during my study abroad in Spain.  Basically a huge percentage of the population lived at home until marriage or even after and there is no reason that cannot happen here.  Not to mention the fact that the youth in America are not only likely to rent but also to simply shove more people in the same space.  All of the secular trends I identified back then hold true today and with over $1 trillion in student debt you better believe it is only going to get worse.  There is also the fact that household formation generally, ie marriage, is also likely to enter a secular decline much like has happened in Japan.  It has been and is my view that household formation in America is about to take a drastic turn lower and this will be the biggest headwind for the market.

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Thought of the Day – The Incredible Shrinking Size of Sunscreen

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As most of you reading this are probably well aware, the insidious tax that is inflation can come in many shapes and sizes.  The two main ways that it is manifested in our everyday lives is via price increases and shrinking portion sizes/lower quality.  I have noticed a lot of both in recent months but it is becoming apparent to me that the shrinking portion strategy has taken off into the stratosphere, at least for me in my everyday life.

It is this latter method of passing on inflation that really drives me up the wall.  While transparent price increases are clearly annoying, at least it is fairly clear to the consumer and he or she understands what has happened and that there may or may not be an economic choice at hand.  In the case of shrinking portion sizes, the price signal is much more subtle if present at all.  You may notice yourself going back to the grocery store more often but that might be all you recognize at first.  It is especially hard to notice in the early phases of inflation when the package size may shrink by 3% and the price increase 2% for example.  It’s only in the intermediate stages of the inflation that you really start to notice you are being screwed.  I believe we have entered that phase.

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