Thursday, November 27, 2008

Happy Thanksgiving

I've already posted my love of cooking. I'm up early this a.m. I just popped in the Maple Pecan Chocolate Tart. I realize just now that I only put two eggs (do not ask me why--I think I just forgot to go back to the fridge for the 3rd one) in it rather than three. I should not cook prior to drinking coffee. Now, I'm worried that it will not set up--likely it will not. !@#^%$.

Thankfully I had people over for dinner on Sunday, so much of my EPA cleanup is done. But with 20 feet (4 bipeds and 3 quadrupeds--I'm not counting the cats, their feet are pristine) in and out on multiple basis, dirt gets in quickly.

I normally ease into Thanksgiving by doing research trying to find at least one new dish. Not this year. I didn't even make it through the Bon Appetit Thanksgiving issue--this is where I get my new ideas generally.

I began writing this post at 6:15, thinking I would finish my coffee. Given that I was deficient on eggs, I decided to make one more dessert (now 3). It is a lemon brulee tart from John Folse's page. I did lengthen the cooking time of the maple pecan chocolate tart...and it seems to have firmed up...but I do not want any surprises. So, I have a new dish.

Looks like energy stocks are breaking out. My HERO is now positive after being sickeningly underwater--but I don't have that many shares. I did buy some {gasp!) ERX the triple bull energy. Small position. I also have a bit of CEF.

UYG is seeing some improvement as is SSO. Still mostly cash, though.

John Mauldin's letter this week is good. He opens with this quote:

"It will therefore be crucial that you see the world anew. That means looking from the outside in to reanalyze much that you have probably taken for granted. This will enable you to come to an understanding. If you fail to transcend conventional thinking at a time when conventional thinking is losing touch with reality, then you will be more likely to fall prey to an epidemic of disorientation that lies ahead. Disorientation breeds mistakes that could threaten your business, your investments and your way of life."

-- James Dale Davidson and Lord William Rees-Mogg, The Sovereign Individual, 1997

As you know, I've been pondering in this space the wisdom in conventional thinking with respect to this bear market. I felt some comfort from not only the opening quote, but also the commentary.

On Real Money, there was a link to a Peter Schiff video. That it is entitled vindication is a little misleading. While Schiff has been very prescient on the the debt crisis, and seeing that it was more than subprime (but I figured that out too!), he miscalculated the inflationary effects of the FED's response. Here is an example of paired unconventional thinking (debt bubble bursting) with conventional thinking (Fed's response would be inflationary).

These are not a right and a wrong that cancel each other out. Rather, by piling up with commodities (including PM) pre-cyclical bust, a great deal of wealth gets destroyed--no less so than had one remained exclusively in stocks. It is worth noting that commodities have fallen by 52%.

I'm not trying to be hypercritical, but rather to caution on a mixed bag of right and wrong thinking can still lead to the same result: heavy losses. Interestingly, Schiff, on his recent FSO broadcast stated that he was reminding investors that "they were investing for the long term".
I guess that is a 3rd piece of conventional thinking where Schiff is just manning another oar position as the other equity guys/gals in the same boat.

I'm in the camp of future inflation and higher interest rates....but it seems to me that it will be subject to the USD falling in value. Right now, against the other basket of currencies, it is still doing pretty well.

Much has been made of the latest Jimmy Rogers video on Bloomberg. I've not listened to it yet, but I will. You can find it here.

Enjoy your holiday!

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