[Running Bear]

That is the point. I don’t want to be in dollar denominated assets right now. I think we will have a short term bounce in the dollar but my long term outlook is negative. We have lost over 40% of the value of the dollar over the last 6 years and that was when our economy was going strong and the Fed didn’t have its finger on the button ready to flood the market with credit and money at a moments notice.

I encourage you to do some reading on Helo Ben and see what you think his philosophy is. He was a student of the Great Depression and his conclusion was the Fed at the time didn’t cut rates fast enough and therefore caused it to last much longer then it should have. If our country is heading toward a large asset deflation and recession, what do you think he will do? I believe he will very aggressively cut interest rates and flood the market with cash and credit. What effect do you think this will have on the dollar and your wealth held in dollars?

If you believe the housing market is tanking and going down, you need to keep looking down that road and see what the greater consequences are for this economy. If you think that housing is going to drop by a large amount just so we can buy some good deals, you aren’t looking at the broader economy.

The last point is if you believe this country is the only place where there is a housing bubble and credit bubble you need to start reading some articles in England, Spain, Ireland, etc. There is a global asset bubble/credit bubble and I am prepared for the worse case scenario but hoping for the best. We will know much more in the next 18 months how a lot of this stuff will fall out and I will move out of my ultra conservative stance when I have a better read.

I see a large downside risk here in stocks without a huge upside benefit.

my2cents

[Running Bear]

Gents,

I had a nice little chuckle with your surprise that a bank can’t be real if it doesn’t do loans. I discussed with some friends recently how our current banking system is not the 0% risk that people assume it is. Let me ask you a simple question. Why were banks created in the first place? Was it an investment vehicle? Or a place to hold and protect your wealth? How about this one. Do you want your money where you tell your bank to put it or leveraged over and over again on residential and commercial loans in bubble markets? So far this year we have had 3 banks taken over by the FDIC. With the coming housing crash and following commercial market tank, do you really think we won’t lose any more banks?

The answer to your question about how the bank makes its money is through fees charged to customers like me. I pay a small fee for the investments I make just like a broker charges and for holding my deposits in their bank. I have no problem paying these fees in order to know that my money is sitting in their bank and not in a high rise condo project in Miami.

Opening a bank account like the one I did is for one main reason, wealth protection. I searched for the bank with the cleanest balance sheet and as little risk to financial turmoil. It will cost me a fee to have that protection but because of the size of the money I am moving there it is worth it to me. This isn’t necessary for every person.

For the person asking whether you have to go over there to open an account the answer is yes for the private banks.

I am not expecting large gains from this move. I think the short term outlook for the markets is negative and I will park liquid assets over there and wait for the right time to make my investments. Having a very safe 5% return on my investments for the next year is completely acceptable for me.

Hope I answered all your questions.

[Running Bear]

Gents,

I had a nice little chuckle with your surprise that a bank can’t be real if it doesn’t do loans. I discussed with some friends recently how our current banking system is not the 0% risk that people assume it is. Let me ask you a simple question. Why were banks created in the first place? Was it an investment vehicle? Or a place to hold and protect your wealth? How about this one. Do you want your money where you tell your bank to put it or leveraged over and over again on residential and commercial loans in bubble markets? So far this year we have had 3 banks taken over by the FDIC. With the coming housing crash and following commercial market tank, do you really think we won’t lose any more banks?

The answer to your question about how the bank makes its money is through fees charged to customers like me. I pay a small fee for the investments I make just like a broker charges and for holding my deposits in their bank. I have no problem paying these fees in order to know that my money is sitting in their bank and not in a high rise condo project in Miami.

Opening a bank account like the one I did is for one main reason, wealth protection. I searched for the bank with the cleanest balance sheet and as little risk to financial turmoil. It will cost me a fee to have that protection but because of the size of the money I am moving there it is worth it to me. This isn’t necessary for every person.

For the person asking whether you have to go over there to open an account the answer is yes for the private banks.

I am not expecting large gains from this move. I think the short term outlook for the markets is negative and I will park liquid assets over there and wait for the right time to make my investments. Having a very safe 5% return on my investments for the next year is completely acceptable for me.

Hope I answered all your questions.

[Running Bear]

coop,

If you want to take advantage of being out of the dollar and in other foreign currencies you can in several ETFs. FXY, FXB, FXE etc. They pay a dividend based off of the interest rate of their central banks.

As far as where to put your money I would recommend asking yourself some questions, doing some research, then base your investments off of that so you can sleep at night.

1. What do you see for the future of the US economy? If you are on this board I assume you are negative on the housing market. How do you think this will impact the US consumer? They are 66% of US GDP.

2. How do you think Helicopter Ben will react to a slowing US economy? How do you think this will impact the dollar?

3. If you look at and research emerging markets do you think their near vertical rises are sustainable? Most of the graphs look like vertical lines.

4. Where do you see the US stock market headed? Take a look at the drop in foreign investment in our market and what impact do you think that will have.

5. Commercial Paper markets backed by loans are in free fall. Without the free flow of easy credit and cash what effect do you think this will have on asset values in the future?

As you can tell by my name I am very negative on many of these things. I like the Yen because it has been so undervalued for a long time by the BOJ. I don’t think they will be able to keep their current interest rate forever and will be forced to raise rates as china exports inflation to the world. The other event that will help the Yen is the unwinding of the Yen carry trade. If you watched the Yen when the market took its 10% shave the yen got dramatically stronger. This will happen again when our market drops.

I could talk for hours on my investment philosophy and why I am doing what I am doing. However, I am just one voice in the crowd. I do much of my own research and also subscribe to a variety of investment letters to help get other perspectives on the investments I am doing. The bottom line is you need to invest in such a way that allows you to sleep at night. Right now getting a 4% return on the Euro is much better then a 5% return from the dollar along with a 35% drop against the Euro over the last 6 years. In just this year alone the dollar has lost 7+% against the Euro. Having just returned from Zurich, it is eye opening just how little the dollar buys in Europe. For the longest time this has been masked by China exporting every cheaper goods. Starting just this year the export prices in China are on the rise. Americans in the coming month are going to fully understand the impact of the falling dollar.

Just an FYI on commodities, China plans to spend a large percentage of their 200 billion SWF on commodities, infrastructure and private equity.

Good luck with your investments. I hope I was able to give you some positive feedback.

[Running Bear]

coop,

If you want to take advantage of being out of the dollar and in other foreign currencies you can in several ETFs. FXY, FXB, FXE etc. They pay a dividend based off of the interest rate of their central banks.

As far as where to put your money I would recommend asking yourself some questions, doing some research, then base your investments off of that so you can sleep at night.

1. What do you see for the future of the US economy? If you are on this board I assume you are negative on the housing market. How do you think this will impact the US consumer? They are 66% of US GDP.

2. How do you think Helicopter Ben will react to a slowing US economy? How do you think this will impact the dollar?

3. If you look at and research emerging markets do you think their near vertical rises are sustainable? Most of the graphs look like vertical lines.

4. Where do you see the US stock market headed? Take a look at the drop in foreign investment in our market and what impact do you think that will have.

5. Commercial Paper markets backed by loans are in free fall. Without the free flow of easy credit and cash what effect do you think this will have on asset values in the future?

As you can tell by my name I am very negative on many of these things. I like the Yen because it has been so undervalued for a long time by the BOJ. I don’t think they will be able to keep their current interest rate forever and will be forced to raise rates as china exports inflation to the world. The other event that will help the Yen is the unwinding of the Yen carry trade. If you watched the Yen when the market took its 10% shave the yen got dramatically stronger. This will happen again when our market drops.

I could talk for hours on my investment philosophy and why I am doing what I am doing. However, I am just one voice in the crowd. I do much of my own research and also subscribe to a variety of investment letters to help get other perspectives on the investments I am doing. The bottom line is you need to invest in such a way that allows you to sleep at night. Right now getting a 4% return on the Euro is much better then a 5% return from the dollar along with a 35% drop against the Euro over the last 6 years. In just this year alone the dollar has lost 7+% against the Euro. Having just returned from Zurich, it is eye opening just how little the dollar buys in Europe. For the longest time this has been masked by China exporting every cheaper goods. Starting just this year the export prices in China are on the rise. Americans in the coming month are going to fully understand the impact of the falling dollar.

Just an FYI on commodities, China plans to spend a large percentage of their 200 billion SWF on commodities, infrastructure and private equity.

Good luck with your investments. I hope I was able to give you some positive feedback.

[Running Bear]

I just got back from Zurich and opened a Swiss bank account in a small private bank. They don’t do loans of any kind and have a 75% liquidity ratio. I have yet to allocate all of my funds because I am waiting for a few market moves but my investments will be as follows:

70% Euro 3 month paper
10% Yen
20% Gold

Back here in my trading accounts I will play in commodities(energy and grains)and some shorts.

[Running Bear]

I just got back from Zurich and opened a Swiss bank account in a small private bank. They don’t do loans of any kind and have a 75% liquidity ratio. I have yet to allocate all of my funds because I am waiting for a few market moves but my investments will be as follows:

70% Euro 3 month paper
10% Yen
20% Gold

Back here in my trading accounts I will play in commodities(energy and grains)and some shorts.

[Running Bear]

Gold might be the next bubble. I am not a gold bug and I don’t hold any gold positions but I think you are going to see a large run up in gold. Right now people are running from the dollar and the bearish sentiment is huge. Most people are going to the Euro and Pound. However, these currencies could easily fall out of favor. There is a credit and housing bubble in England, Spain, France, Australia, New Zealand, Ireland and many other places. Right now the dollar is getting slammed but the English economy is in just as bad a shape as we are and will probably fall first. This will begin to be repeated all over the world and the currency market is the largest market in the world. I think when more and more economies are exposed to be on the decline you will see more and more money heading to gold. Compared to the currency market the gold market is very small and you could see very fast run ups. I will start buying gold after the next major correction in the market. I am waiting because I want to see how many people will sell gold when the stock market drops to cover other positions. Anyway, that is my guess right now until I see more market reactions.

My2cents

[Running Bear]

Jimmyle,

I wouldn’t focus so much on the home prices as the inventory numbers. As long as inventory is high and growing we will not see a price increase but a price decline. You will know when we are getting close to the bottom when the inventory begins to get cleared out. But don’t think once we hit the bottom we will see a reversal straight back up. Housing prices will stay low for years. All the things that fueled the double digit price gains of the last boom are gone.

As for interest rates, if they continue to go higher and with financing more difficult it will only put more downward pressure on prices. Just remember what got us here in the first place, low interest rates and creative financing. We already know the creative financing element is now gone so if the interest rate component also gets negative, will just add more fuel to the downward pressure. Keep your powder dry.

my2cents

[Author]

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