Dr. "H" explains our Inevitable Impoverishment

[metalman]

Re: Dr. "H" explains our Inevitable Impoverishment

There is no 'market' and 'There are only individual stocks. '

stop. you assert 'the market' will rise 300% or whatever. then you say 'the market' is tripe. which is it?

The assertion that "gold handily outperformed the market" is tripe, because there are dozens and dozens, and HUNDREDS of stocks that rose 500%-800% in the 2002-2007 market.

but you had to pick 'em! net of the shit you picked, you lost thus 'markets'.

gold is like a stock... the antithesis of the dollar... a common share in usa, inc.

wish you'd pay better attention. i'll be retired from here soon. as soon as itulip sends me another cre type short call that i don't f*ck up.

[Guest]

Re: Dr. "H" explains our Inevitable Impoverishment

stop. you assert 'the market' will rise 300% or whatever. then you say 'the market' is tripe. which is it?

Metalman - Obviously the market is an average number. Whenever "the market" rises, pieces of it move in advance, and others to the rear, by large variances.

So when you say the market "only kept up with inflation" that means half the market did, and maybe another quarter of "the market" greatly exceeded that inflation. Like scattershot, spread over a large field front to back.

What I mean is that measuring the rise of gold against "the market" is an abstract construct with plenty of large gaps in it's results. And the market can easily rise sharply in response to say, 150% inflation over five years.

That alone would be one hefty dose of inflation for a big country and large currency unit, right there. Meanwhile plenty of stocks and entire stock segments can rise multiples of that 150%.

The market could rise that much, AND it's rise as an index relative to gold could still produce quite an ambiguous ratio, with large sub-segments of the equites moving twice or three times as high as gold.

So, "the market" as a single unambiguous number in ratio to gold at the end of an inflationary rise, does not exist. That's why it's referred to as "tripe" when this stat is quoted as though it were definitive.

Maybe it should have been referred to as "significantly imprecise" rather than "tripe" - to use more moderate terms. But as you regularly use blunt descriptives verging upon crude, maybe this use of the word "tripe" can be excused in my own description.

but you had to pick 'em! net of the shit you picked, you lost thus 'markets'.

You mean, locating the sectors primed to rise for the next decade, which will catch the largest updrafts of that inflationary gust? Same candidates as in the 1970's, which should grow their market share over a decade to become a much bigger segment of the DOW and S&P.

All the future stressed resources. Nero3's Railroads. Energy infrastructure - that general area shouldn't wind up too egregiously off the mark, right Metalman? -- Eureka. What a sleuth I am, I have already divined where the next decade's investable themes are hidden away. :rolleyes:

BTW, to give an idea of how devilishly hard it is to assemble a decent portfolio in a sector slated for serious inflationary reaction - the last time I tried to "pick 'em" (2003-2006), the worst of my picks were up 80% - 120%, and I'm a rank amateur.

Presumably we've also gleaned a few hints as to thr right sectors for the next decade, while reading iTulip for the past few years? So, the stock picking dilemma appears to have been handily resolved by the expected huge outperformance of a narrow handful of asset types which traditionally rise a lot in large inflations. Not a whole lot of sleuthing to be done here.

gold is like a stock... the antithesis of the dollar... a common share in usa, inc.

A fine sentiment - but, so what? You own some gold, and you own a piece of a few other of the most compelling assets and stories for the next ten years, just to avoid getting too consolidated into one theme.

Like petroleum and gas and coal - What is it, are all these going to sit there like a barrel full of dead mackerel in the form of catatonic oil, coal and gas shares, while inflation gets up to 12% - 15%? Most likely not.

A five year inflationary event careening towards us? Better have a little more **variety** than just gold and cash - for when those Kondratieff deflationary-winter freaked-out fears subside a little bit in the puiblic magination. People start to nibble away at other assets and whatnot?

wish you'd pay better attention. i'll be retired from here soon. as soon as itulip sends me another cre type short call that i don't f*ck up.

Well, that's very impressive on your part - to be one step from retirement and "the big score"! I'm giving you my full and undivided attenteion here, meanwhile.

Good luck with "the big score" shorting the markets! Indubitably a conservative play [not] - let's go diddle the Fed plunge protection team a little bit for some sport, while scoring our retirement money in one fell swoop!

[yernamehear]

Re: Dr. "H" explains our Inevitable Impoverishment

1. Yahoo charts are lousy for comparing long term performance because they do not include dividends
2. If you do the careful math with Yahoo or Morningstar data, since inception in 2000, prpfx and hsgfx have very similar returns (both excellent by the way vs. S&P 500- as in $10000 then is $7000 in the S&P and close to $22000 in either fund.
3. Hussman's stated objective is to out perform over full cycles- which he has done spectacularly since inception in 2000

I don't agree with everything he does, partially because he likes to parse words. He won't call himself a market timer even though he is, for example. Anyway, the vast majority of investors would have been better off investing in his fund instead of doing what they did between 2000 and 2009.

[metalman]

Re: Dr. "H" explains our Inevitable Impoverishment

BTW, to give an idea of how devilishly hard it is to assemble a decent portfolio in a sector slated for serious inflationary reaction - the last time I tried to "pick 'em" (2003-2006), the worst of my picks were up 80% - 120%, and I'm a rank amateur.

but, but, but... the market on average over that period was up 100%, right between your 80% and 120%... an s&p index fund did that. then... the 2008 crash took it all away... to 'make it back' the market must go up more then 100%... just to break even! and... over the same 2001 - 2009 period gold went up > 300% and... this is key!... the crash did not take it all away. no losses to recover.

itulip's gold/treasury portfolio is where i stay until itulip shows me a clear path out of 70% treasuries. there is no path out of a 30% gold allocation as far as the eye can see.

Presumably we've also gleaned a few hints as to thr right sectors for the next decade, while reading iTulip for the past few years? So, the stock picking dilemma appears to have been handily resolved by the expected huge outperformance of a narrow handful of asset types which traditionally rise a lot in large inflations. Not a whole lot of sleuthing to be done here.

A fine sentiment - but, so what? You own some gold, and you own a piece of a few other of the most compelling assets and stories for the next ten years, just to avoid getting too consolidated into one theme.

Like petroleum and gas and coal - What is it, are all these going to sit there like a barrel full of dead mackerel in the form of catatonic oil, coal and gas shares, while inflation gets up to 12% - 15%? Most likely not.

A five year inflationary event careening towards us? Better have a little more **variety** than just gold and cash - for when those Kondratieff deflationary-winter freaked-out fears subside a little bit in the puiblic magination. People start to nibble away at other assets and whatnot?

i'm also expecting stock suggestions here along the lines of peak cheap oil and infrastructure/energy bubble. what's ej/grg/et al waiting for?

Well, that's very impressive on your part - to be one step from retirement and "the big score"! I'm giving you my full and undivided attenteion here, meanwhile.

Good luck with "the big score" shorting the markets! Indubitably a conservative play - let's go diddle the Fed plunge protection team a little bit for some sport, while scoring our retirement money in one fell swoop!

shorting cre was solid. not sure there will be many more fire econ crash ops like that in the future. maybe insurance?

[raja]

Re: Dr. "H" explains our Inevitable Impoverishment

That's what the other Dr. H(udson) said

http://216.240.133.177/archives32/Ch...809_100000.mp3


No inflation, but he also voted for hope & change.....

O.K. guys and gals . . . what's up :confused:

Dr. Hudson says DEFLATION in our future! (about 44:00 in the audio)
People don't have enough income to purchase goods, so not only asset prices go down, but consumer prices go down as well.

This is THE Dr. Hudson that has been interviewed twice by EJ, and quoted at length by Fred . . . so one would think his coming out in apparent contradiction to the iTulip KaPoom thesis would generate some discussion . . . but there has been nothing :eek:

Maybe I'm missing something here . . . if so, somebody please clue me in. Otherwise, I'd like to hear from EJ, Fred, metalman or somebody on this. Hudson is no economic lightweight, and he seems to command some respect around here, so why no comments? Did I miss it?

[Mango]

Re: Dr. "H" explains our Inevitable Impoverishment

Thank you D-Mack & Raja for clarifications. After I went back and listened to all of Hudson via headphones I too heard him calling for deflation and noting that he voted for Big O. Then your terse message, D-Mack, made perfect sense to me. (It's always that way--all I have to to do is ask someone else question, then I find the answer myself)

Like Raja, and for the same reasons, I wondered why Hudson's prediction of deflation is not more debated here vis-a-vis Ka-Poom theory.

[ThePythonicCow]

Re: Dr. "H" explains our Inevitable Impoverishment

O.K. guys and gals . . . what's up :confused:

Dr. Hudson says DEFLATION in our future.

This inflation versus deflation versus variants thereof talk continues to strike me as a red herring. It is at best a short to medium term asset allocation timing issue.

We humans have seriously misallocated our investments in productive capacity, and entangled what useful investments we did make in the FIRE bubble. We shall now have less stuff, less real wealth, less productive capacity. Were the currency fixed to a non-inflatable basis such as gold, this would be a prolonged deflation. Given instead that the currency is fixed to a printing press controlled by a bunch of scoundrels, we shall in due time have serious inflation.

Exactly when and in what manner this happens is a timing issue that only matters much to those who have any liquid assets or callable debts or who depend on income from any such person, firm or entity (I guess that's most of us :rolleyes. We're trapped on an Indiana Jones Hollywood screen set during the filming of the climatic scene, as bombs and flames and guns are going off all around us :eek:, doing our best do juke and jive, duck and run, to stay out of harms way.

Learn to live with less and stay nimble. You may still crash and burn. But in the final analysis, success is determined by how well you played the hand dealt you, not how good a hand it was.

[medved]

Re: Dr. "H" explains our Inevitable Impoverishment

1. Yahoo charts are lousy for comparing long term performance because they do not include dividends
2. If you do the careful math with Yahoo or Morningstar data, since inception in 2000, prpfx and hsgfx have very similar returns (both excellent by the way vs. S&P 500- as in $10000 then is $7000 in the S&P and close to $22000 in either fund.
3. Hussman's stated objective is to out perform over full cycles- which he has done spectacularly since inception in 2000

I don't agree with everything he does, partially because he likes to parse words. He won't call himself a market timer even though he is, for example. Anyway, the vast majority of investors would have been better off investing in his fund instead of doing what they did between 2000 and 2009.

Thanks for correction.

I know, HSGFX pays much higher dividends, I just did not think, they could compensate for the lack of appreciation taking into account taxes on divs. One of the nice things about PRPFX is its stated goal of tax planning, i.e. minimizing dividends. Besides, I also mistrust market timing, no matter how good it is. I can dedicate a part of my money to speculation, but not a big one. Another important PRPFX advantage, IMHO, is its stable PM position (25% of the assets).

[ThePythonicCow]

Re: Dr. "H" explains our Inevitable Impoverishment

Well -- it may be a short term asset allocation question, but I can't resist setting forth my own predictions for this coming year (American centric.)

Within the next month or two, we'll hit another deleveraging downdraft, which will give new life to the dollar, as before. There will be another rush to dollars. Dollar up, stock markets down, treasuries firm, gold unsteady.

Then with a strong dollar and treasury debt, more such paper will be printed in more nefarious schemes to paper over the debt collapse and reward the guilty. This time around, America's creditors will be in a better position to tell us where to stick it, and even more incensed, and even more politically desparate to maintain power at home. Alternative currency arrangements to the dollar for nominating international trades and contracts will become much more common. The calendar is perhaps in early 2010 at this point.

The foreign exchange value of the dollar will collapse, and the dismantling of supply side production capacity over the previous year or two will combine to a bout of serious inflation for the American consumer. The price of gas at the pump will spike sharply up. This will be followed a bit later by federally mandated price controls on essential goods, which will soon lead to greater scarcity and gas lines. My crystal ball grows weak at this point, but I'd guess the nominal value of paper assets and black market essentials rise sharply.

I understand Dr. Hudson to be saying "no inflation" because the American consumer will continue to have less spendable money. He says "the income is going down," and that housing and consumer prices will necessarily continue to decline for the lack of American consumer dollars to purchase them.

I think he's partially right, except for essential goods that are imported, which includes oil. Here the collapsing dollar foreign exchange value and the collapsing supply side capacity (whether post-"peak" oil or closed Chinese factories) will eventually win the tug of war, spiking free market (soon to be black market) prices. A higher percentage of the Americans monthly expenditures will go to essential basics -- food and energy.

[raja]

Re: Dr. "H" explains our Inevitable Impoverishment

This inflation versus deflation versus variants thereof talk continues to strike me as a red herring. It is at best a short to medium term asset allocation timing issue.

Hudson does not specify that he's talking about short to medium term.

If Hudson is wrong, I'd like to see Fred or EJ discuss why he is wrong.

His basic point is that consumers won't have money to spend . . . so prices can't go up.
That makes sense, since vendors will have to keep prices low in order to stay in business at all. You can't have a business if there are no customers.

Yes, lots of businesses will fail, and the remaining businesses could raise prices . . . but will they be able to if people can't afford to buy their products?

So what if government prints up all this money. If it's just going to the bankers and Wall Street to cover bad debts, and it doesn't get into the hands of the people, who's going to be buying and driving up prices?

I can see possible inflation in oil and food (which is largely oil), but with all the unemployment, and retired folks losing have their retirement savings in the stock market, the government is going to have to subsidize energy and food or there will be a revolution.

I've been using Google to try and find EJs the thread with ten causes of inflation, but I've been unsuccessful. Can anyone provide a link? I'd like to see a Hudson reaction to EJ's article.

[rogermexico]

Re: Dr. "H" explains our Inevitable Impoverishment

O.K. guys and gals . . . what's up :confused:

Dr. Hudson says DEFLATION in our future! (about 44:00 in the audio)
People don't have enough income to purchase goods, so not only asset prices go down, but consumer prices go down as well.

This is THE Dr. Hudson that has been interviewed twice by EJ, and quoted at length by Fred . . . so one would think his coming out in apparent contradiction to the iTulip KaPoom thesis would generate some discussion . . . but there has been nothing :eek:

Maybe I'm missing something here . . . if so, somebody please clue me in. Otherwise, I'd like to hear from EJ, Fred, metalman or somebody on this. Hudson is no economic lightweight, and he seems to command some respect around here, so why no comments? Did I miss it?

Sorry, Raja I don't rank with EJ, "Fred" or Metalman, but it seems obvious to me that EJ is just extracting very valuable insights from others like Hudson and Keen and incorporating them into the itulip model.

That there are valuable modules of analysis that can be "plugged in" to the itulip thesis does not mean kapoom theory is simply derivative of Hudson or Keen. Keen stated directly he thought Deflation was unavoidable.

When you read down the "9 ways to inflation", you can see that neither Hudson's nor Keen's frameworks include all the (especially capital flows) factors EJ is considering.

It is no secret I have contempt for Hudson's ethical framework and his ontology (the primacy of government and omniscient central planning) and I find any Marxist (or Marxian, if you prefer) framework woefully weak in explaining monetary phemomena and in capital theory (no, I am not kidding). This does not diminish the value of Hudson's acute description the FIRE monster and its rent-seeking stranglehold on our economy, but he is not the only one to have observed this, although he is the most prominent such Marxian.

In the same way, Keen's understanding of Debt deflation is excellent and his critique of Post-classical Keynesian economics as being basically a pseudoscience dependent on a non-existent "equilibrium" is brilliant. (The austrians, of course, have been making the same criticism of quantitative economics for about a century)

However, neither Keen nor Hudson, in their brilliant academic stances, have the kind of eclectic framework EJ has in making his predictions. This is what I rely on him for, and it it doesn't bother me if neither Keen nor Hudson is calling for inflation. In fact, it is my areas of disagreement with them that makes it predictable they might not predict inflation.

I think we need to get away from the idea that all EJs sources must resonate perfectly with EJ and Kapoom theory. They are "not the thing itself" so how could they?

just my .02

[metalman]

Re: Dr. "H" explains our Inevitable Impoverishment

However, neither Keen nor Hudson, in their brilliant academic stances, have the kind of eclectic framework EJ has in making his predictions. This is what I rely on him for, and it it doesn't bother me if neither Keen nor Hudson is calling for inflation. In fact, it is my areas of disagreement with them that makes it predictable they might not predict inflation.

keen... academic economist (new-keynesian)

hudson... academic economist (marxist) with finance/wall street background

warburton... finance industry economist (austrian) w/finance background

schiff... finance industry economist (austrian), fund manager, entertainer

you can go down the list.

janszen... tech business person... runs companies, makes payroll, raises vc, etc. real world. inside contacts on wall street, hedgies, etc. part journalist, banker, economist, entrepreneur, finance...

as you say, eclectic!

ej interviews guys he disagrees with to test his theories... a few only once or twice until he figures out they're idiots. he re-interviews the others over and over.

ka-poom theory is over 10 yrs old... if there's a run on treasuries this year it'll look like genius.

over that time, 'don't sell your gold yet' through all the bitching and wailing re deflation... and half-asses guesses at why the price is going up and down ... the toughest call of all.

[raja]

Re: Dr. "H" explains our Inevitable Impoverishment

That there are valuable modules of analysis that can be "plugged in" to the itulip thesis does not mean kapoom theory is simply derivative of Hudson or Keen.

Your response to my post suggest that I am making several points . . . but I did not make these points. (You did this all through our nutrition discussion, too, and it's very unproductive.) For example, I never said that EJ's theory was "simply derivative of Hudson or Keen."

I think we need to get away from the idea that all EJs sources must resonate perfectly with EJ and Kapoom theory. They are "not the thing itself" so how could they?

I did not suggest "the idea that all EJs sources must resonate perfectly with EJ and Kapoom theory," so what is there to "get away from"?

Now, please try not to derail my post again by endlessly discussing this, and instead lets get on with answering my request . . . .

As I said, Hudson is no economic lightweight . . . so I'd like to hear some discussion about how and why he thinks we are heading for a deflation . . . and why that is or isn't correct.

[rogermexico]

Re: Dr. "H" explains our Inevitable Impoverishment

Your response to my post suggest that I am making several points . . . but I did not make these points. (You did this all through our nutrition discussion, too, and it's very unproductive.) For example, I never said that EJ's theory was "simply derivative of Hudson or Keen."

I did not suggest "the idea that all EJs sources must resonate perfectly with EJ and Kapoom theory," so what is there to "get away from"?

Now, please try not to derail my post again by endlessly discussing this, and instead lets get on with answering my request . . . .

As I said, Hudson is no economic lightweight . . . so I'd like to hear some discussion about how and why he thinks we are heading for a deflation . . . and why that is or isn't correct.

This is what you said:

" . so one would think his coming out in apparent contradiction to the iTulip KaPoom thesis would generate some discussion . .'

Does this not imply that it is somehow anomalous that they differ on this point? Else why discuss it?

I got the impression from your post that you found it not only interesting but actually disturbing (emoticons, etc.) that Hudson was in disagreement with EJ. I was sincerely trying to say it should not be so surprising, especially if you have read them both.

As far as instructing me on how to respond to your post you can guess what I think of that.

[raja]

Re: Dr. "H" explains our Inevitable Impoverishment

This is what you said:

" . so one would think his coming out in apparent contradiction to the iTulip KaPoom thesis would generate some discussion . .'

Does this not imply that it is somehow anomalous that they differ on this point? Else why discuss it?

Hudson is a respected economist.
EJ is a respected economist.
They apparently differ radically on their vision of the future -- deflation vs. inflation.

Is that not worthy of discussion?

Yet, you feel compelled to derail my post by imputing negative motives on my part, suggesting that I believe EJ is deriving his theories from Hudson and Keene . . . or that I'm saying that "all EJs sources must resonate perfectly with EJ and Kapoom theory".

I'm sorry, rogermexico, but I will not respond to your posts anymore. You seem incapable of rational discussion on the points I bring up, but instead respond with ad hominums in an attempt to discredit my position. I have complained about this behavior of yours in the Paleo nutrition thread, but you persist . . . .