"itulipians": contrarians or herd followers

[touhy]

I'm a newbie here. I feel like a simple Roman citizen watching the decline of his empire around him and reduced to grasping at ways to protect his farm and family against forces much larger than himself. I have been lurking and reviewing the thesis posited by the itulip community. I must admit I am somewhat intimidated by the impressive level of discourse here, but fear and and unease(and greed of course) compel me to request your help.

I guess I buy into the debt-deflation model. Many of you make a compelling case and the historical record of itulip's market calls are note-worthy. But years of "buy and 'hope'" programming and the desire to be contrarian(buy low, sell high) lead me to wonder if I am late to the party and pursuing a "debt-deflation >>>>inflation" defensive position would be ill timed and unwise. I am 60% equities, 40% bonds and Treasuries, and 0% commodities. Inflation seems inevitable. But isn't everybody adding precious medals, oil, and other commodities to their portfolios? Might we just be following the herd? Isn't there just so much negative sentiment out there already? Are we(really just me...you guys are smart) too late?

I'm thinking I should dump the Treasuries and buy gold, copper, oil, and some Ag commodities. Maybe 20-30% of my portfolio? Would ETFs be a reasonable medium? (with some gold hidden in an ammunition locker?)

I just don't know. I hate to be the "weak hand".

I must say that I found Rogermexico's assertion that gold ownership is a quasi patriotic thing to do as a citizen, regardless of its investment rationale, quite moving and compelling.

Am I too late?

Thank you for your thoughts.

[CanuckinTX]

Re: "itulipians": contrarians or herd followers

I think of it this way - how many of your friends, family, colleagues are talking about their Oil, gold, or various other commodity portfolio? How many have said they've moved almost all of their investments or 401k to cash or treasuries?

We can fool ourselves into thinking we're following some herd when we spend a lot of time on iTulip and other financially responsible sites but we're still very much in the minority vs. the general public. If you're nervous about getting in too high then just step in a little at a time until you're more comfortable - but I think your 60% equity position would have me losing a lot more sleep than paying too much for some inflation insurance.

[jk]

Re: "itulipians": contrarians or herd followers

imagine for a moment that you were 100% in cash. what would you like your portfolio to look like, if you were starting from cash? if that's not what it actually looks like, change it.

i know that such an approach is not cost free- there are commissions, slippage, spreads, taxes to consider, but starting at cash - at least mentally- is a clarifying exercise.

if you are concerned that you are buying at the wrong time, buy only 40% of the position you wish you held. then wait a month and re-evaluate.

[anoop]

Re: "itulipians": contrarians or herd followers

...then wait a month and re-evaluate.

A month is too short a time, especially for itulip-style investing. I bought GLD a month ago and its underwater (not by much, though). In any case, I would have been better off buying equities in that month.

To the original poster...I don't think it will be a good time to be in equities until the housing prices stabilize. And regular bonds seem like a bad idea (to me at least) because we can no longer trust the ratings of these bonds -- "AAA" is meaningless. So at that point, you either have to be all cash (I was there for a while), or buy things like precious metals, which some folks think will do well even in a deflation.

I could be wrong, though, so only you can decide what's right for you. :-)

[metalman]

itulipers who've been here since day one got out of stocks & into treas bonds in 1998 and gold in 2001. ej, fred, others issued a few 'get out now' calls in apr 2007 and dec 2007 for the stragglers.

with respect, your appearance here and your question indicates that positions taken here years and years ago when they were contrary (nay, insane!) are going :eek: mainstream!

so... a re-phrase of you question is in order...

'now that a smallish herd is forming behing positions itulip took 8-11 years ago, is itulip's old contrary position now at risk?'

i ask my self that all the time these days.

take gold...

back in 2001 the gold price was not reported in the wsj or on tv. now it's regularly reported eveywhere. gold was never talked about on cnbc. the airline mags ran these ads for buying gold coins. all that has changed.

a rising price does not mean gold will stop rising. if you've been here since 2001 hanging on to your gold position you heard 'gold bubble!' called so many times! you could get rich buying gold on the plunge after every 'bubble' call before the price took off again. here's ej calling gold bubble claims in 2006 at $720. maybe the 'gold bubble' calls are engineered by a pack of hedge funds pirates?

question... the cause, why has gold gone up? the itulip thesis from 2001 was the debt-money based global cb program was due to blow up some day as cbs print around the world... because the cb program of debt, debt, and more debt will some day end with the collapse of the 'monetary units of debt'... the currencies. buy gold because cbs own it. that is not the standard goldbug line. also itulip says gold is not 'natural money' but was made into money by governments who wanted taxes paid in one unit hard to get... peasants and lords can't dig out of the ground or make for themselves.

gold goes up first in dollars then in all currencies as the usa devalues and other cbs follow...


from http://www.itulip.com/forums/showthread.php?p=31884

not much has changed since the 2001 gold call by itulip except that more people are now wise to it. that doesn't make it wrong... but it does mean some day the problems that are causing gold's rise will be fixed, ala paul volcker in 1980 but different.

btw, google is your friend. google 'site:itulip gold' turned up everything i just posted. goggle images will give you tons of itulip charts.

on treasuries...

much more troublesome! the price is so high now compared to 1998, who wants them? everyone! itulip is 'working on' a article on re-allocating out of treasuries but we haven't seen it yet.

[goadam1]

Re: "itulipians": contrarians or herd followers

Thank god for Metalman, itulips most valiant and learned knight.

[jk]

Re: "itulipians": contrarians or herd followers

it is the conversion of skeptics to believers, one by one, which makes a bull market. the fact that the crowd around you is growing doesn't mean the bull is over, it means it is in progress. relatively speaking, gold is still early. in the 1970's i could hear the price of gold every half hour on the business report of a nyc all-news station. currently, that particular datum is still very much a rarity.

[Jim Nickerson]

Re: "itulipians": contrarians or herd followers

I'm a newbie here. I feel like a simple Roman citizen watching the decline of his empire around him and reduced to grasping at ways to protect his farm and family against forces much larger than himself. I have been lurking and reviewing the thesis posited by the itulip community. I must admit I am somewhat intimidated by the impressive level of discourse here, but fear and and unease(and greed of course) compel me to request your help.

I guess I buy into the debt-deflation model. Many of you make a compelling case and the historical record of itulip's market calls are note-worthy. But years of "buy and 'hope'" programming and the desire to be contrarian(buy low, sell high) lead me to wonder if I am late to the party and pursuing a "debt-deflation >>>>inflation" defensive position would be ill timed and unwise. I am 60% equities, 40% bonds and Treasuries, and 0% commodities. Inflation seems inevitable. But isn't everybody adding precious medals, oil, and other commodities to their portfolios? Might we just be following the herd? Isn't there just so much negative sentiment out there already? Are we(really just me...you guys are smart) too late?

I'm thinking I should dump the Treasuries and buy gold, copper, oil, and some Ag commodities. Maybe 20-30% of my portfolio? Would ETFs be a reasonable medium? (with some gold hidden in an ammunition locker?)

I just don't know. I hate to be the "weak hand".

I must say that I found Rogermexico's assertion that gold ownership is a quasi patriotic thing to do as a citizen, regardless of its investment rationale, quite moving and compelling.

Am I too late?

Thank you for your thoughts.

You didn't mention exaclty what type of bonds and Treasuries you are in, not that I particularly care.

Here is a chart from this week Barron's smart money poll. Look at the percentage of "smart money" that is bearish on US Treasuries. 84%. Now if that is not everyone being on one side of the boat I don't know what is.

For a while, 2-3 years in my own case, it seems everyone's worry has been inflation and that concern continues unabatedly. The fooler will be if we are in, enter, or should continue to be in a deflationary environoment.

[allenjs]

Re: "itulipians": contrarians or herd followers

on treasuries...

much more troublesome! the price is so high now compared to 1998, who wants them? everyone! itulip is 'working on' a article on re-allocating out of treasuries but we haven't seen it yet.

I've heard people talk about "risk of loss of principal" with treasuries, but I am not sure I understand. As long as you are holding for the maturity period, there is no risk of loss, correct? IOW, if you have money in VSIPX, which has average maturity of 5.8 years, at the end of 5.8 years you will have retained your capital, plus any extra amount paid out to compensate for inflation. If you need to pull the money out before the maturity period, though, there is a possibility of losing a great deal.

Am I understanding this correctly?

[petertribo]

Re: "itulipians": contrarians or herd followers

It may be more important in what Jurisdiction you hold your assets than what assets you hold. The United States is now proven to have committed War Crimes and there may be many other Crimes not yet revealed. And, from NYAG Cuomo at least, we have proof of Wall Street Crimes. So, what assets can be really protected from a Criminal Regime?

Thus, one might consider a change of Jurisdiction or at least making provision to do so. If this option is unavailable, one should try to have assets which it is the most difficult for this Regime and other Criminal Regimes to seize. And since, G8 and G20 countries seem to be aboard for the Reflation, the seizure of assets may occur on an International level, that is, No Place To Run, No Place To Hide.

You might want to read Victor Klemperer:
http://en.wikipedia.org/wiki/Victor_Klemperer

May you live in interesting times.

[metalman]

Re: "itulipians": contrarians or herd followers

You didn't mention exaclty what type of bonds and Treasuries you are in, not that I particularly care.

Here is a chart from this week Barron's smart money poll. Look at the percentage of "smart money" that is bearish on US Treasuries. 84%. Now if that is not everyone being on one side of the boat I don't know what is.

For a while, 2-3 years in my own case, it seems everyone's worry has been inflation and that concern continues unabatedly. The fooler will be if we are in, enter, or should continue to be in a deflationary environoment.

it's odd... markets extrapolate the present at the extremes. why on earth didn't everyone pile into 30 yr treasury bonds at 15% in Oct 1981? what, did everyone think inflation was going to stay at 18% forever?

stupid goldbugs thought gold was gonna stay at $2300 (2009 bonars) forever.

both were wrong. inflation fell, bond prices went up and gold went down.

they got it wrong now, too, but in the other direction.

inflation will rise, bonds will go down and gold will go up.

gold is still cheap.

[jk]

Re: "itulipians": contrarians or herd followers

I've heard people talk about "risk of loss of principal" with treasuries, but I am not sure I understand. As long as you are holding for the maturity period, there is no risk of loss, correct? IOW, if you have money in VSIPX, which has average maturity of 5.8 years, at the end of 5.8 years you will have retained your capital, plus any extra amount paid out to compensate for inflation. If you need to pull the money out before the maturity period, though, there is a possibility of losing a great deal.

Am I understanding this correctly?

don't confuse holding individual bonds to maturity with holding a mutual fund with a certain average maturity and a portfolio which turns over. the mutual fund, unless it is a target fund with a date certain to liquidate, will never mature.

[touhy]

Re: "itulipians": contrarians or herd followers

Hello Everybody,

I want to thank you all for your thoughtful replies to my query. In fairness, I recognize you are not "herd followers", but more likely "herd leaders."

I suppose I'll start to transition into commodities tomorrow. I like the idea that it will be inflation insurance(the temptation among our betters to escape this disaster via inflation will be, I think, undeniable). But for the life of me my conscience can't wrap itself around whether I hope we are right or wrong. If we are right, there are even more troubled times ahead. I do love this country, or at least what our Libertarian founders intended it to be. I'm sad that our best days appear to be behind us.... but our fellow citizens have lost their self reliant virtues. We get what we deserve....that thought makes me grieve less.

Cheers,
Elsworth

[Jim Nickerson]

Re: "itulipians": contrarians or herd followers

it's odd... markets extrapolate the present at the extremes. why on earth didn't everyone pile into 30 yr treasury bonds at 15% in Oct 1981? what, did everyone think inflation was going to stay at 18% forever?

stupid goldbugs thought gold was gonna stay at $2300 (2009 bonars) forever.

both were wrong. inflation fell, bond prices went up and gold went down.

they got it wrong now, too, but in the other direction.

inflation will rise, bonds will go down and gold will go up.

gold is still cheap.

An answer, because I was there and asked the question of my accountant who in retrospect was maybe as dumb as I, was why loan money to the governement at 15-17% for 30 years when you can get almost as much in momey market funds? Plus there was a certain feeling as I remember that inflation was going to continue upwards.

[jiimbergin]

Re: "itulipians": contrarians or herd followers

Hello Everybody,

I want to thank you all for your thoughtful replies to my query. In fairness, I recognize you are not "herd followers", but more likely "herd leaders."

I suppose I'll start to transition into commodities tomorrow. I like the idea that it will be inflation insurance(the temptation among our betters to escape this disaster via inflation will be, I think, undeniable). But for the life of me my conscience can't wrap itself around whether I hope we are right or wrong. If we are right, there are even more troubled times ahead. I do love this country, or at least what our Libertarian founders intended it to be. I'm sad that our best days appear to be behind us.... but our fellow citizens have lost their self reliant virtues. We get what we deserve....that thought makes me grieve less.

Cheers,
Elsworth

I think many of us hope that we are wrong and everything just goes back to "normal", but unfortunately, we are virtually certain we are correct.

jim