Old newspaper rave from 80's era

[nero3]

It's fun to read old newspapers. Read from the 1900-2011 period. Read what the experts advice to buy, regular papers is good enough, you dont need finacial papers. One thing that I'm sure is going to happen is that you will see how few companies of what analysts advice you to buy in 1980, 1982 or whenever you want is around today. They totally missed the concept of long term value through buying an expensive quality company. Another thing that will come to your mind is how they miss secular changes, telling people to buy some "cheap" energy stocks far after the bull-market was over. Some experts were calling for the dow to go to around 500 into 1982. Reagen was going to be the hoover of that generation. In one article there was around 12 stocks adviced from different experts, with only one of these stocks being a company I had heard about / still around. That was Geico. The Dow Theory letter blew it in 82.


If I go back to 1980-1981, you can read about copper, the mining boom in australia, how one small mining town was very hot, and is even hot today as they are building new houses there now. you can read about gold crashing 175 dollar in one day, read about Jim Sinclair indicating gold was fully priced and that it was more than a correction the day after that crash, only to change his opinion later in the year. To get that kind of action in gold now, you probably need a 1000-1400 dollar decline in one day and a gold price around 6000. read about how energy stocks performed poor during the 1982 breakout rally. The volume in 82 came after old all time highs on the indexes were taken out by what an expert calls people that missed the ship, trying to jump into the water and swim after it. Laszlo Birinyi made great calls back in 82, that was one of them. What's really special about 82 is how high the dow was very early in the economic cycle, relative to the old all time high at the time. In other cycles a new all time high have arrived much later.

In 82 it was about the farmland bubble having ended, farmers having a hard time. It's really so many things that's really the same all over again.


What can be learned from the newspapers from the 80-82 era:
Jim Sinclair had his guru days. He had a good call, but screwed it up. Speculation in mining stocks, australia was big, even china was on their radar, experts missed the secular change in energy and commodities, they failed to advice people to buy high quality blue-chips, instead looking for bargains in the old secular bull-market of the 70's. They were also trying to ride the next wave, unknown tech companies, instead of trying to go with cheap stocks from the tested and tried.

More later.

[FRED]

Re: Old newspaper rave from 80's era

It's fun to read old newspapers. Read from the 1900-2011 period. Read what the experts advice to buy, regular papers is good enough, you dont need finacial papers. One thing that I'm sure is going to happen is that you will see how few companies of what analysts advice you to buy in 1980, 1982 or whenever you want is around today. They totally missed the concept of long term value through buying an expensive quality company. Another thing that will come to your mind is how they miss secular changes, telling people to buy some "cheap" energy stocks far after the bull-market was over. Some experts were calling for the dow to go to around 500 into 1982. Reagen was going to be the hoover of that generation. In one article there was around 12 stocks adviced from different experts, with only one of these stocks being a company I had heard about / still around. That was Geico. The Dow Theory letter blew it in 82.


If I go back to 1980-1981, you can read about copper, the mining boom in australia, how one small mining town was very hot, and is even hot today as they are building new houses there now. you can read about gold crashing 175 dollar in one day, read about Jim Sinclair indicating gold was fully priced and that it was more than a correction the day after that crash, only to change his opinion later in the year. To get that kind of action in gold now, you probably need a 1000-1400 dollar decline in one day and a gold price around 6000. read about how energy stocks performed poor during the 1982 breakout rally. The volume in 82 came after old all time highs on the indexes were taken out by what an expert calls people that missed the ship, trying to jump into the water and swim after it. Laszlo Birinyi made great calls back in 82, that was one of them. What's really special about 82 is how high the dow was very early in the economic cycle, relative to the old all time high at the time. In other cycles a new all time high have arrived much later.

In 82 it was about the farmland bubble having ended, farmers having a hard time. It's really so many things that's really the same all over again.


What can be learned from the newspapers from the 80-82 era:
Jim Sinclair had his guru days. He had a good call, but screwed it up. Speculation in mining stocks, australia was big, even china was on their radar, experts missed the secular change in energy and commodities, they failed to advice people to buy high quality blue-chips, instead looking for bargains in the old secular bull-market of the 70's. They were also trying to ride the next wave, unknown tech companies, instead of trying to go with cheap stocks from the tested and tried.

More later.

You were doing great until the "It's really so many things that's really the same all over again" part!

Inflation
Then: 14.8%
Now: 1.1% (so they say)

Prime Rate
Then: 20.35%
Now: 2.25%

Unemployment
Then: 5.8%
Now: 9.4%

Nothing grows an economy like falling interest rates after a big inflation has wiped out all the debt.

Today we have low rates and a mountain of private and public debt.

1980 and 2011 are 100% polar opposites. You're barking up the wrong tree.

[c1ue]

Re: Old newspaper rave from 80's era

Until you show some credibility moving forward - it is hard to distinguish your insights from simple survivor selection bias.

You keep talking about this or that, but so far it seems you are only looking backward.

You didn't actually invest in these past environments yet feel the prerogative to derive conclusions from them.

[nero3]

Re: Old newspaper rave from 80's era

You were doing great until the "It's really so many things that's really the same all over again" part!

Inflation
Then: 14.8%
Now: 1.1% (so they say)

Prime Rate
Then: 20.35%
Now: 2.25%

Unemployment
Then: 5.8%
Now: 9.4%

Nothing grows an economy like falling interest rates after a big inflation has wiped out all the debt.

Today we have low rates and a mountain of private and public debt.

1980 and 2011 are 100% polar opposites. You're barking up the wrong tree.

And now the dollar is rock solid? Come on.
I think I agree that an economy like the US will do well after inflation and commodity prices have peaked. Maybe they already have, who knows really, it's never been as much oil floating around in the US since 1982. But that peak in commodities don't have to come after a treasury bond crash. That's just one possible outcome. It can come in the early phases of a secular bear market in bonds, like in the 1950's. Back then you also had a huge increase in public debt. What's similar to the late seventies or early 80's is the mining boom, the farmland bubble, the commodities bubble, the weak dollar, even the fact that some guru's like Jim Sinclair is a bit back in the action, The second coming of Schiff (now it's jr that's been making books, in 76 or 78 it was senior, guys like Howard Ruff is even back), etc.
There are other periods that are similar. I think the period right before WW2, even WW1, there is a similarity to the early 90's.

[jiimbergin]

Re: Old newspaper rave from 80's era

What can be learned from the newspapers from the 80-82 era:
Jim Sinclair had his guru days. He had a good call, but screwed it up. Speculation in mining stocks, australia was big, even china was on their radar, experts missed the secular change in energy and commodities, they failed to advice people to buy high quality blue-chips, instead looking for bargains in the old secular bull-market of the 70's. They were also trying to ride the next wave, unknown tech companies, instead of trying to go with cheap stocks from the tested and tried.

More later.

I don't understand your comment about Jim Sinclair. For example

http://gold.approximity.com/gold_pri..._sinclair.html

Jim Sinclair's Model: The Federal External Debt Equilibrium Gold Price

In 1977 James Sinclair boldly predicted that gold would rise from $150 per troy ounce to $900. Gold never reached that mark, but it came close on Jan. 21, 1980, peaking at $887.50. The next day, says Sinclair, he unloaded his entire gold position, personally netting $15 million. Pointing to the Federal Reserve's efforts to fight inflation, Sinclair then predicted at an annual gold conference that the metal would languish for the next 15 years.

These introductory lines from a Forbes article titled the Golden Oldie from 2001 describe how Jim Sinclair, the famous gold guru and proprietor of the web blog on gold and economics, JSMineset, sold his entire gold position on January 21, 1980, at a then all-time high of over $800 an ounce, pocketing a profit of $15 million (CPI-adjusted approximately $40 million in 2009). People who read Sinclair's blog and listen to the interviews he gives know that he himself helped create this price top by selling his entire gold position after the price had reached $850 per ounce in the London PM Gold Fixing (and after it had reached an intraday high of $887.50) on that day. The next morning, after Sinclair had sold out, the London AM Fixing priced gold at $763 an ounce. A price of over $800 would not be seen again until November 11, 2007.

How could Sinclair call this top, a price level gold would not see for another 28 years, with such precision and confidence? On the radio show Financial Sense Newshour, Sinclair himself said in 2002 that

[...] although you would like to claim to be a genius, I personally think I just got sober one day before everyone else. But for the grace of God, I might also have gotten myself caught.

[nero3]

Re: Old newspaper rave from 80's era

I don't understand your comment about Jim Sinclair. For example

http://gold.approximity.com/gold_pri..._sinclair.html

Jim Sinclair's Model: The Federal External Debt Equilibrium Gold Price

In 1977 James Sinclair boldly predicted that gold would rise from $150 per troy ounce to $900. Gold never reached that mark, but it came close on Jan. 21, 1980, peaking at $887.50. The next day, says Sinclair, he unloaded his entire gold position, personally netting $15 million. Pointing to the Federal Reserve's efforts to fight inflation, Sinclair then predicted at an annual gold conference that the metal would languish for the next 15 years.

These introductory lines from a Forbes article titled the Golden Oldie from 2001 describe how Jim Sinclair, the famous gold guru and proprietor of the web blog on gold and economics, JSMineset, sold his entire gold position on January 21, 1980, at a then all-time high of over $800 an ounce, pocketing a profit of $15 million (CPI-adjusted approximately $40 million in 2009). People who read Sinclair's blog and listen to the interviews he gives know that he himself helped create this price top by selling his entire gold position after the price had reached $850 per ounce in the London PM Gold Fixing (and after it had reached an intraday high of $887.50) on that day. The next morning, after Sinclair had sold out, the London AM Fixing priced gold at $763 an ounce. A price of over $800 would not be seen again until November 11, 2007.

How could Sinclair call this top, a price level gold would not see for another 28 years, with such precision and confidence? On the radio show Financial Sense Newshour, Sinclair himself said in 2002 that

[...] although you would like to claim to be a genius, I personally think I just got sober one day before everyone else. But for the grace of God, I might also have gotten myself caught.

He made a good call. He really did. Not only that. His whole perception around the time of the peak, both before and after in 1980 seems correct, if I wrote he changed his mind in mid 1980 that was wrong, however one of his mistakes seems to have been that he through gold would go up again in early january 1982, when it was trading around 400 dollar in a "gold bug touts bullion" article. Of course then gold was in a bear-market. He said: Given the general apathy in the market, one can only assume that the buyers today are either fools or very clever. We don't think the buyers are fools. He certainly was not foolish, but he thought gold would do as well as many other market's that year.

What was interesting about gold during the 1981-1982 period (and also some agriculture products), that might or might not apply to China (australian dollar etc) today, is how demand then was coming from Latin-America who clearly was having huge problems with inflation due to the effect's Paul Volckers interest rates had on their currencies, might could give a false bullish indication (inflation driven hoarding, causing price spikes) for things that in reality already was in a bear-market.

There is also something with fed policy today that I think have changed since the seventies. I recall Bernanke speaking about the commodity inflation in a long speech in 2005 or 2006, and how it this time around did not cause a wage price spiral. There is also research that suggest that this commodity inflation should be dealt with as a bubble that should collapse on it's own rather than raising interest rates like crazy. There is some of the modern central bank thinkers, that seems to think that Volcker was wrong in sending interest rates so high, because the bubble would had collapsed anyway.

[nero3]

Re: Old newspaper rave from 80's era

Here is some great stuff from 1989.

- Morita says U.S. firms are obsessed with thinking about ``10 minutes from now'' and regard their workers as ``mere tools'' whom they can ``dump whenever the market sags.'' Morita has seen U.S. business from the inside. His firm, Sony, owns CBS Records and has made the biggest U.S. investment by a Japanese company: It bought Columbia Pictures Entertainment Inc. for $3.4 billion in September .

The book, written by Sony Chairman Akio Morita and prominent Japanese politician Shintaro Ishihara , characterizes the USA as a racist, economically stagnant country that can't deal with its own problems, let alone Japan's. It encourages Japan to stand up and say, ``No,'' to Uncle Sam's demands that Japan curtail its exports and buy more U.S. goods. And it suggests the unthinkable: that Japan could change the world's balance of power by selling computer-chip technology to the Soviets.