Weakness in China
Someone sent a note to me about China, in which they pointed out current weakness in China, fear of housing deflation, and some other weaknesses. They then complimented me on publishing Blogs long ago on the coming troubles in China, on the massive undisclosed debts of state-owned enterprises, and the inefficiencies in China.
Thank you for recognizing my comments.
Who is Correct?
I wish that I were always correct, but no-one is. The best we can do is think about the broader issues and make our observations based upon thinking about the issues, and examining such data as is available.
Over the past two years, I have made a number of suggestions to readers, and thankfully on a number of occasions the commentary has been quite on the mark.
Gold
When the gold bugs were touting that gold would rise from $1,900 to $2,500 or higher, I urged caution. I did the same with gold at $1,800, and at $1,700. This was particularly difficult as the Cymor Strategic Growth Funds have many junior gold stocks in their portfolios.
I advised readers of the risks and outlined the criteria that we use to make our picks.
It turns out that my cautions were very accurate. Those that paid attention avoided the drop in values.
As to the future pricing, that issue was discussed separately and the future remains to be told.
The US Economy
Many times, I have pointed out how the USA has inherent strengths that will allow the USA to lead the world out of the malaise brought on in 2008 and 2009. This is in spite of the fact that the shudder the financial world felt was created in the USA.
Those that followed the new financial instruments often were bitten hard and painfully by those in the USA that created these monsters that tried to tear down our world.
But if you look at the statistics today, the USA is recovering faster and stronger than anywhere else in the world. Those that felt the US dollar would collapse were wrong.
Those that followed their Investment Advisors’ advices that diversification into foreign markets and foreign ETFs was absolutely necessary, lost money. That diversification, which I recommended against, turned out to be a faulty decision.
Comparing Capitalism to Government Intervention
On this topic, the jury is still out. I have written a number of times on simple steps that should be taken to protect society, and instead Governments have chosen to bring in complicated and self defeating myriads of new rules and regulations. This was and is a wrong way to correct the situation.
However, the issue of which economic system is best is now clearer and I think you would agree that Capitalism – with all of its faults – is the most robust system.
Iron Ore
I advised readers that iron ore was a place to invest, as China and others would increase their demand and the rich ore deposits in Canada and elsewhere would come into greater demand.
If you look at the import numbers of iron ore coming out of China, this prophecy has been proven correct. Demand is strong and rising.
Investing in Large Caps
I recommended against investing in large caps, and with the exception of Apple, I was essentially correct. Large caps have not fared well in the past year.
Investing in ETFs as Compared to Mutual Funds
I cautioned that ETFs were by far the better choice. You need only look at your portfolio to determine the validity of this comment.
Expect the Unexpected
This is so basic that I need not repeat the comments here. Essentially the market reacts ALWAYS in Unexpected ways and to Unexpected events.
What amuses me is the classification of something called a “Black Swan” event. People repeatedly are predicting Black Swan events as if they are predictable. The news is always interviewing someone who thinks they know what the next Black Swan will be.
What is ironic is that by definition, a Black Swan event is something that is unanticipated and unexpected. If we all had sufficient foresight to predict a specific Black Swan event, the world would be a far different place.
A Hindsight Look at Our Blogs
We have been right a number of times. We will try to continue being right more than wrong.
Thank you for reading.
We may or may not have positions in the securities we name. In making an investment decision numerous factors must be considered including portfolio balancing, timing, cash and capital reserves, asset allocation and other factors. Readers are strongly advised to do their own research. Matters discussed contain forward-looking statements that are subject to risks and uncertainties and actual results may differ materially from any future results, performance or achievements expressed or implied.
Views expressed are opinions and not investment advice. Persons investing should retain a licensed professional to guide them and not rely on the opinions expressed herein. This report is neither a solicitation nor a recommendation to buy or sell securities. We are not a registered investment advisor nor a broker-dealer. The information contained herein is based on sources which we believe reliable but is not guaranteed as being accurate or a complete statement or summary of the available data.
