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Conventional Wisdom = Disaster & Opportunity
If there is one thing that life has taught me it is that if everyone begins to agree on something, regardless of subject, they are probably wrong. Conventional wisdom is in reality collective stupidity. And this is not mitigated by class or education. Some of the biggest morons that I have ever met in my life were the most educated. If anything, their education lulled them into believing their own baloney.
Over the past 30 years, I have made a series of financial predictions that have turned out right. In fact and please forgive the bragging here, I have actually never been wrong in any of these forecasts. I accurately predicted the crash in 1987 within one month, the recovery by January 1 of 1988, the Dow topping 10,000, the real estate collapse of 1986, the bear market of 2000-2003, the total destruction of the dot-coms, and the current residential real estate crash. Now, none of this means that I will ever be right again, but for whatever it is worth I see another opportunity born of collective stupidity coming.
I understand that usually I blog on business only, but if things go well in your business then you are going to have money to invest and so I am going to share some advice. You should take it seriously because unlike your broker, banker, insurance guy, or whomever you invest with, I am not soliciting anything so at least the advice is honest. Here it is: There is going to be HUGE commodity price collapse, particularly in oil, gasoline, and gold. Further, the Euro is going to dive against the dollar and by this time next year they are going to be in rough parity. Oil will trade by that same time substantially less than $100 per barrel, I think around $50, with gasoline dropping commensurately.
Why am I saying this when so many “experts” are predicting much higher prices? Because all of the movement up in these things that are about to crash have been driven by pure speculation and not any other fundamental reason. Oil is sitting in tankers in Iran unsold by the millions of barrels, European economies are anemic compared to ours in almost every measurable way, and gasoline inventories are very healthy. When investments move contrary to economic fundamentals, sooner or later there is going to be a collapse.
I know, I know there are LOTS of experts on CNBC and other places saying that it is only up and up from here. All I can say is that they have been so wrong so often in the past, I sit in wonder as to how they got to be such TV superstars in the first place? Maybe it’s like PT Barnum said, there’s one born every minute. The trick is just to make sure that it is not you!
Posted by Herb Kay on Thursday, May 22, 2008
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