tag:www.reiznersway.com,2008:/articles/1 2008-07-28T22:45:07Z Articles providing investment advice and insight by John Reizner Movable Type 3.34 tag:www.reiznersway.com,2008:/articles//1.22 2008-07-28T22:13:06Z 2008-07-28T22:45:07Z

Downloadable PDF version of this article Americans are known for voting according to the health of their pocketbooks, and this year’s election may be no exception. While Ronald Reagan’s election in 1980 emerged out of the very noticeable dissatisfaction with...

Downloadable PDF version of this article Americans are known for voting according to the health of their pocketbooks, and this year’s election may be no exception. While Ronald Reagan’s election in 1980 emerged out of the very noticeable dissatisfaction with the economic policies of the Carter years, Senator Obama may capitalize on similar sentiment among voters today in the race for the Presidency. ]]> Reagan asked the voters if they felt that they were better off than when Jimmy Carter was elected. The voters ushered in Reagan to the White House as voters answered that question for themselves. The misery index, a measure of consumer discomfort based on the high inflation and high unemployment of the Carter years made Reagan’s election more likely. Senator’s Obama rapid rise to become a popular candidate for the Presidency may be attributable to the current level of dissatisfaction with the economy: the level of high inflation, mortgage defaults, bank failures, a faltering stock market, and the feeling among the citizenry that they are not better off than they were four years ago. Senator Obama has been saying that America needs change, though he has stated that he is going to tell Americans not what they want to hear, but what they need to hear. I think Americans hunger for something, though I am not sure that many are bargaining for the changes that Senator Obama might effect. I would argue that while the Reagan years ushered in an era of relative economic stability, dramatically lower inflation and unemployment, and a stock market boom, the Obama years may result in a contracting, less globally competitive (competitiveness is a must in today’s globalized world), less flexible economy, higher inflation and unemployment, a declining or range-bound stock market, and waiting lists for such essential health services as non-elective surgery. The consumer may feel more pain, not less under Obama. Inflation results in the debasement of the currency. When prices rise, it takes more dollars to buy goods and services. The current high oil price and easy monetary policy have resulted in price inflation across many sectors of the economy and may auger in greater inflation in the future as the level of inflationary expectations continues to rise. Obama may face this threat to economic health from day one if he is elected, as people are conditioned to expect greater inflation, and may act accordingly. Inflation has a distorting effect on the economy, and consumers may feel more pain under Obama if the price level of goods and services increases more rapidly. Obama’s proposed economic policies of greater trade protectionism (free trade tends to moderate the level of inflation), budget-busting government spending, tax increases, and policies favoring higher cost, less flexible unionized labor may do little to curtail inflation, and may actually add to the problem. I believe that it is important to put the inflation genie back into the bottle at this time as the rate of change of the inflation level appears to be accelerating. Obama’s budget-busting policies may not accomplish this end. As readers of this article blog know, I have been making the case for a year and a half that we may be experiencing, and may continue to experience a worsening inflation rate similar to the 1970’s period that caused so many economic problems. What was needed then, as inflation surged into double digits, was a tighter Federal Reserve monetary policy. This contained inflation for two decades commencing in the early 1980’s as Paul Volker’s Federal Reserve clamped down on the economy, the latter which endured a terrible recession at that time. Containing inflation is really a balancing act, as an overly zealous Federal Reserve and poor government economic policy choices can result in an economic depression, as happened in the 1930’s, and which some feared a repeat of after the millennium stock bear market commenced. Current Fed Chairman Bernanke seems to be playing with fire as he vigorously eases (for now) monetary policies to stave off recession and the effects of the housing crisis. I must write a moment about the potential future of our healthcare system under an Obama administration. His stated goal of reducing the cost of everyone’s health insurance policies by $2,500 may not really reduce by much the cost of healthcare, as many existing insurance policies may be unprofitable for the insurance companies to continue to offer in their existing forms to new clients. Uninsured individuals entering the insurance market for the first time may receive less expansive coverage reflecting the reduced premium levels to the insuring companies. Some insurance companies that rely on healthcare premiums for their entire business may fall into financial distress as their lines at the reduced mandated premiums may not cover costs. Thus the burden of insuring many citizens may fall into the government’s hands, which may cost the American taxpayer more, not less. Even if government picks up the slack and there are more insured, expect waiting lists for life-saving surgeries as a more heavily regulated health system struggles to keep pace with demand. I do not believe that Obama’s vision for the economy will produce enlightened government policies that will protect the value of the dollar, contain inflation, keep us globally competitive and maintain the quality and rapid accessibility of our healthcare. Rather it appears that many of the ideas of the Obama campaign are drawn from the economic and political ash heap of history: the utopian concept of equality between the haves and the have-nots, or a society that redistributes wealth from its producers to others who are not as productive, is an idea that was hated by the citizens who lived under such “utopias” and whose end was celebrated when the regimes that embraced such ideas collapsed. tag:www.reiznersway.com,2008:/articles//1.21 2008-06-20T06:16:00Z 2008-06-23T17:04:33Z

Downloadable PDF version of this article I would like to draw your attention to the following web page graph denoting the Presidential futures market vote shares between Democratic and Republican candidates in the upcoming 2008 Presidential Election (as expressed in...

Downloadable PDF version of this article I would like to draw your attention to the following web page graph denoting the Presidential futures market vote shares between Democratic and Republican candidates in the upcoming 2008 Presidential Election (as expressed in the Iowa Electronic Markets – a respected election futures market): http://iemweb.biz.uiowa.edu/graphs/graph_Pres08_VS.cfm. This shows a potential Obama victory in the Presidential election, as the Iowa Electronics Markets has a good record at predicting election outcomes. ]]> The Level of Confidence in Our Stock Market and Our Social Contract, posted on my website on October 1, 2007. Without confidence, there is nothing to hold the stock market up. An example of this was in the aftermath of the October 1929 stock market collapse, when poor policy choices caused much suffering among the public and businesses (the Federal Reserve shrinking the money supply, tax increases, the Smoot-Hawley trade tariffs of 1930, and the wholesale liquation of debt). A loss of confidence in the stock market and the economy ensued and persisted for years. Should Obama win in late 2008, and should he make poor policy choices, the stock market may proceed into a 1970’s style decline. As a result of this potential destruction of wealth, investors and the economy may be in for real difficulty. I have been writing about the 1970’s style inflation in our economy on my website article blog for over a year. We already have an embedded inflationary economy which I believe may worsen over the next few years. Also, recent Federal Reserve easing to combat the credit crunch / subprime crisis may likely filter through the economy, perhaps lifting inflation dramatically. I also believe that as this inflation takes further hold, interest rates may climb. A rejuvenation of the unenlightened policies of the 1970’s and even from the 1930’s may cause a contraction in the price earnings ratio of many stocks (many stock prices may decline) in the market as well as a continuation of a higher inflation economy. I first wrote about this contraction of P/E ratios in my January 18, 2008 article, The Stock Market and Economy: A Return to the 1970's in Form?. We have already witnessed a 15% decline in the stock market. Some sectors of the stock market may resist the decline of equity prices. I plan to hold onto my oil, oil service, and railroad stocks, along with certain industrials and my gold position. The oil companies may be hit by a windfall profits tax, which may result in less oil being produced. Excess regulation in this area and the railroad sector would be a cautionary factor for these stocks. I also have some large cap growth companies which are already doing well: Anheuser Busch, Wal-Mart, and Johnson & Johnson (all Warren Buffett holdings). I will maintain these. I also continue to hold a position in the Templeton Global Bond Fund. If the general market turns down, most stocks, even the best groups, may move downward. However, I believe the resource and materials (inflation-hedge) stocks along with the price of gold may recover and surmount their highs as inflation may be hard to contain. With the higher inflation I foresee, the economy may in time need to be stifled by high interest rates and tight money to cure the inflation disease–just as Paul Volker’s Federal Reserve in the early 1980’s put a monetary stranglehold on the economy after the high inflation of the 1970’s. I am going to continue to watch the Iowa Electronic Markets for clues about the election outcome. As far as my remaining stock portfolio, I am going to look at stocks to sell that may be badly bruised by an Obama market. Perhaps cash will continue to be king for now as we proceed through the unwinding of this credit crunch and the beginning of a possible ultra-liberal administration. ]]> tag:www.reiznersway.com,2008:/articles//1.20 2008-05-14T22:26:05Z 2008-07-09T01:05:12Z

Downloadable PDF version of this article Sir John Templeton’s sentiment that never before in U.S. history has our government and its citizens accumulated the level of financial debt as we have recently was referenced in my February 28th, 2007 article....

Downloadable PDF version of this article Sir John Templeton’s sentiment that never before in U.S. history has our government and its citizens accumulated the level of financial debt as we have recently was referenced in my February 28th, 2007 article. And it is the citizenry who usually suffers from the eventual debt reckoning, forcing a decline in their living standards, Templeton believes. The last great debt liquidation in the United States happened as the 1930’s Depression unfolded. After the stock market Crash of October 1929, the fledgling Federal Reserve shrank the money supply by a third, presumably to fight inflation, only exasperating the severe economic downturn of the 1930’s. ]]> article. However, it may be that certain inflation sensitive investments do well over the longer term. I own shares of the Templeton Global Bond Fund to take further advantage of the potential of a declining dollar. Gold is also a beneficiary of a declining dollar over the long term, and has even made upward progress during the last few years when the dollar has been intermittently strong. Gold can also be a hedge against a debt crisis such as we have seen with the subprime contagion, though the recent March 2008 high in gold was marked by the Federal Reserve bailout of Bear Stearns, which has hopefully stemmed the tide of the current crisis. I have owned gold over the last several years and plan to continue holding the yellow metal. The Federal Reserve’s job is to fight inflation. As Chairman Bernanke is a student of the 1930’s Great Depression when the economic system failed, he seems determined to prevent a similar economic catastrophe from happening again. Thus, recently we have seen easy money policies implemented designed to stimulate the economy and the housing market, where the hurt is greatest. Preventing a debt implosion whereby the financial system collapses seems to be on the Fed’s priority list. That the Federal Reserve has taken such steps in the face of a current inflation indicates that the possibility of such a collapse has been seen as a possible reality. About the Author John Reizner was first exposed to financial markets when he started reading the stock quotes out of the newspaper to his businessman grandfather, who was legally blind, when he was about ten. Papa always told him: "Buy Triple A" (the best stocks). Later, John studied economics at both Vassar College and Columbia University, where he became intrigued by the link between psychology and economic theory. His current book, A Way to Wealth – the Art of Investing in Common Stocks, is available at his website, http://www.ReiznersWay.com. ]]> tag:www.reiznersway.com,2008:/articles//1.19 2008-04-01T23:27:42Z 2008-04-01T23:47:03Z

Downloadable PDF version of this article The inflation that I believe may throttle though our economy in the late 2008-2010 period may not be the first inflationary economy many of us have ever seen. There is widespread commentary these days...

Downloadable PDF version of this article The inflation that I believe may throttle though our economy in the late 2008-2010 period may not be the first inflationary economy many of us have ever seen. There is widespread commentary these days about the similarities between the stagflation/inflation that transpired in the 1970’s, and what may be starting to happen in that manner in 2008 and going forward. There are the behavioral similarities between the 1970’s and now: a rising gold price, increasing oil prices, an increase in the rate of inflation in certain commodities such as food, milk, farmland, copper, and a declining dollar (concurrent with a rise in the value of harder money currencies such as the Euro and the Swiss Franc).]]> The Stock Market and Economy: A Return to the 1970's in Form, that I foresaw for the present: a temporary cresting of the prices of inflation hedges such as gold and oil. In the case of gold, the price has shot recently through its old 1980 high of $850 per ounce like a knife through soft butter, to as high as $1,023.50 on March 17, 2008, causing me to believe even more strongly that the long term outlook is good for the yellow metal, though as I said, there may be a pause or even an intermediate consolidation/downtrend, before it may resume its powerful rise. I believe that this is so, as even the intense rise in the price of gold in the 1970’s was interrupted by a sharp mid-course correction in mid-decade. I came into my initial age of investing during the late 1970’s inflation when there was a dynamically rising gold price, rising interest rates, and high unemployment. The depth of the recessions this country experienced in the 1970’s and early 1980’s dwarfs those that we have experienced since then, including the banking/real estate collapse of the early 1990’s. Anecdotally, there were numerous popular newsletters and books at the time of the 1970’s inflation predicting a permanent upward price spiral that would hobble the economy. Many writers in that last inflation were actually advocating converting one’s money into gold, diamonds, rare coins, and stocking up on canned goods. Some newsletter writers were preaching to their readers regarding how to protect one’s family should the U.S. economy collapse. That this collapse did not pan out is a credit to the tight money Federal Reserve led by Paul Volker, who probably saved this country from a distinct possibility of hyperinflation into the 1980’s. This proved that it is possible to stop inflation in a financial system based on paper money if the will of the Federal Reserve is strong enough. Volker’s actions laid the groundwork for twenty-five years of relative price stability. Yet today our Federal Reserve under Chairman Bernanke is doing something altogether different – stoking inflation through powerful monetary easing – while at the same time inflation is percolating in areas of the economy. What are the markets telling us now in 2008 that so many commentators are beginning to make analogies from current trends to the 1970’s? I personally have been invested in Canadian Maple Leafs and gold bullion for several years, and have offered positive commentary on gold during much of the last year on my website article blog. I believe that the rising gold price reflects not only increasing consumer inflation today as in the 1970’s, but is anticipating a potential Democratic Presidential victory in the fall, where policies hostile to the stock market and economic growth not seen since the 1970’s could be implemented – a poor omen for the economy and a harbinger of greater inflation. Please see my article, The Hillary Clinton Stock Market and Economy: Three Areas to Consider. Ken Heebner, a veteran fund manager whose opinions I have mentioned in my article blog in the past, was reported to say that he expects for the next few years a stock market showing out performance by inflationary hedges similar to 1976-1980. I would agree with this sentiment, reinforcing Heebner’s view that money may be made with inflationary hedges such as gold and oil. Some of the advice the doomsday writers of the 1970’s handed out might actually be worth taking now. Stocking up on goods before the price of those goods goes up seems a sensible strategy. I recently visited Nordstrom where I saw my Italian Napa leather shoes (the only kind of leather my feet will tolerate) on sale for $460 a pair, $60 a pair dearer than over a year and a half ago when I first bought them. Those extra $50’s add up quickly! And owning gold which I believe will likely be worth more in a few years than the recent price of $879, appears to be a sound all-weather investment. Gold can be both an inflation and a deflation hedge (gold shares did well during part of the deflationary 1930’s), which may explain why it is rising at the same time as the declining housing market. Assuming the entire system does not buckle, and I do not think it will, I am also thinking of dipping a toe into the water and buying one or two banks not affected badly by the subprime effect, but whose price went down in sympathy with affected banks. Warren Buffett has bought shares of US Bancorp, a high yielder. ]]> tag:www.reiznersway.com,2008:/articles//1.18 2008-02-29T23:22:49Z 2008-02-29T23:49:33Z

Downloadable PDF version of this article The disinflation we have experienced in our economy from 1982-2007 (until what I call the silent inflation of the last couple years turned into a more evident broader inflation in recent months) has been...

Downloadable PDF version of this article The disinflation we have experienced in our economy from 1982-2007 (until what I call the silent inflation of the last couple years turned into a more evident broader inflation in recent months) has been in my opinion one of the major underpinnings of the long term bull market in equities during much of the former period. This time was punctuated by the 1987 crash and the 2000-2003 post bubble era bear market. In addition, the lower regulation and non interference with the economy ushered in by the Reagan administration over two decades ago created an atmosphere conducive to investing in stocks and bonds – not to mention Paul Volker of the Federal Reserve Board being determined to successfully break the back of the 1970’s embedded inflation. ]]> http://iemweb.biz.uiowa.edu/graphs/graph_Pres08_VS.cfm. It is possible that the stock market will decline as the presidential election approaches and the market anticipates the probable democratic winner of the election. I think it is important to realize that if we do return after 2008 to the decades ago battered policies of regulation, re-regulation, trade tariffs, or the socialization/government takeover of the healthcare sector – I think the stock market could experience a contraction of price/earnings ratios reflecting those policies. The combination of an increased inflation and the politics of regulation could result in a stagflation last experienced decades ago. Should the next administration be elected on a left leaning platform, but moderate their policies to the political center, we could be spared a bear market in the economy and stocks. A McCain presidency would likely be a positive for stocks. ]]> tag:www.reiznersway.com,2008:/articles//1.17 2008-01-18T18:49:12Z 2008-01-18T18:57:56Z

Downloadable PDF version of this article We are entering, in my opinion, a period of economic and stock market turbulence that will affect the pocketbooks of our citizenry going forward. Commentators on financial television have been reluctant until recent days...

Downloadable PDF version of this article We are entering, in my opinion, a period of economic and stock market turbulence that will affect the pocketbooks of our citizenry going forward. Commentators on financial television have been reluctant until recent days to make the analogy of the present period to the awful economic period of the 1970's, which has been my thesis for some time. ]]> http://www.reiznersway.com/articles/index.html, the current strength in oil (reaching $100 per barrel), gold (over $850 per ounce), gold stock, oil stock and oil service stocks are mimicking in form the inflation racked 1970's. As well, the dollar is a weak currency now, much like it was in the late 1970's, when the Swiss franc was popularized as a hard money investment. In the December 2007 period, unemployment stepped up to 5% and inflation has been rearing its ugly head in recent months. If unemployment continues to rise, I believe that we may find ourselves in a medium level stagflation. The combination of rising prices and a weakening economy is not a good formula for the welfare of consumers, not to mention the stock market. The stock market has started out in 2008 on the wrong foot. I will stick my head out to say that the telltale similarities of the current gold, oil, currency markets, and inflation and potentially rising unemployment, to 1970's market behavior leads me to the opinion that the stock market may continue downward or at least linger in a trading range in the spirit, but probably not the severity of the 1970's. In other words, it is possible we may see a contraction in the price earnings ratio of the market. A caveat here is that should the Federal Reserve step in aggressively to lower key rates to counter the housing and banking decline, it would be constructive for the stock market. But as has been said widely, this would put the Fed between a rock and a hard place, as the dollar and inflation levels would likely react badly to a looser monetary policy. Interest rates would rise in inflation, putting pressure on the stock market. If it walks like a duck, then there are ways to make money on the 1970's analogy. I have been invested in gold coins and bullion for some time and have seen the value of those investments soar. As well, I own international oil stocks and shares in an oil service company, which have done well. Even the railroads which did well in the late 1970's have been resurging. On the other hand, we have seen bank and mortgage related stocks decline in the last few months, as I anticipated in my blog article, Bad Banks, Good Banks during a Credit Crunch: Opportunity Knocks. Even national politics seem to be swinging back leftward, which, according to the platform of some major democratic candidates for president, would lead to more regulation, less free trade and the redistribution of wealth (an action which would not create any additional national wealth). The stock market might find itself in a bind if unenlightened 1970's era policies are enacted after the election. So even though the gold and oil markets have been extremely strong lately, and I have stated in my investment blog that I believed that there may be a temporary cresting of inflation hedges – the long run still appears to bode well for the oil and (especially) the gold sectors. I also anticipate writing a blog entry on the possibility of buying in the future, strong banks that have been depressed in price in sympathy with the weak banks. So stay tuned. Downloadable PDF version of this article]]> tag:www.reiznersway.com,2007:/articles//1.16 2007-12-09T21:55:55Z 2007-12-11T20:54:03Z

Downloadable PDF version of this article Sometimes it takes a full generation to pass before the memories of important historical events are purged from the collective mindset of a society. For example, soon the living memories of World War II...

Downloadable PDF version of this article Sometimes it takes a full generation to pass before the memories of important historical events are purged from the collective mindset of a society. For example, soon the living memories of World War II will fade into history, and will be available only through our media. ]]> Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.15 2007-11-06T23:19:34Z 2007-11-22T19:58:27Z

Downloadable PDF version of this article Just when a new bull market in a category of investments (stocks or commodities, etc.) is percolating to the top, investors may still be immersed in the psychology of investing in the previous bull...

Downloadable PDF version of this article Just when a new bull market in a category of investments (stocks or commodities, etc.) is percolating to the top, investors may still be immersed in the psychology of investing in the previous bull market's most favored investment. As the maturing trend dies out, investors may still try to find reasons to invest in that trend, even though it may be actually reversing, with some investors playing yesterday's game. This may happen just when the long-term trend for the mature trend may have turned down.]]> temporary resistance near or slightly above this level. See my article, Bulletin: October 24, 2007 - What Now on Gold? However, the last four years of generally rising equity prices may be the limit to what we see in the stock market, as market-leading inflation plays (including traditional commodity inflation plays) hit resistance for now in front of the investment pack. In addition, the likelihood of a left-leaning President being elected next year may keep a lid on the general market. That said, we may indeed have a short grace period in the time before the election of rising stock prices due to the very positive effect of recent Federal Reserve Board consecutive discount rate cuts. Growth stocks may do well in the near term, given a temporary cresting in inflation hedges. I believe the long-term inflation genie is in the hands of Federal Reserve Chairman Bernanke. I have written about a building danger of underlying inflation in my article, Inflation and the Stock Market: Does Anyone Remember the Seventies? Gold, as an inflation hedge has already doubled in price. Nonetheless, the bull market in gold may continue for some time given that inflation still seems to be building and given that the 1970's bull market in gold lasted ten years. Bear in mind that during the inflation of the 1970's there were two waves of increasing prices for gold, punctuated by solid declines in between waves in that measure of prices and in the value of inflation hedges. We may now similarly be in a temporary topping of the first wave now around $850 per ounce. Whether the fever breaks for gold and other hedges and cools for a while remains to be seen. But as they say in Las Vegas, the cards have been dealt. Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.14 2007-10-24T17:28:07Z 2007-11-22T19:56:22Z

Downloadable PDF version of this article In my article, When Gold Speaks a Thousand Words, published on this website on April 23, 2007, I posited my very positive view on gold. I wrote how that view, held by me for...

Downloadable PDF version of this article In my article, When Gold Speaks a Thousand Words, published on this website on April 23, 2007, I posited my very positive view on gold. I wrote how that view, held by me for some time, had led me to make several gold coin and bullion purchases in the $300’s and $400’s per ounce in recent years. Since that time, and especially quite recently, gold has rallied strongly, and has risen past its 2006 high to a present price of approximately $753.99. Oil has also risen in a spectacular fashion into the high $80’s per barrel. These support my conclusion in another article I penned for this website, published on February 26, 2007, Inflation and the Stock Market: Does Anyone Remember the Seventies?, that the gold price, oil and oil service companies stock price booms we have witnessed for the last few years are quite similar to the booms in like instruments last seen during the late 70’s. However, that boom in the late seventies and early eighties represented a long term peak in oil prices around $40 - per barrel and the gold price around $850. ]]> temporary resistance at the old 1980’s highs and will correct temporarily, perhaps for many months or, while testing that upward resistance level perhaps several times, before breaking through the old top and surging to uncharted territory on the upside, embarking on a new and powerful leg in the gold bull market. The third scenario rests on examining the history of the gold price bull market during the entire decade of the seventies, which started after the dollar was no longer redeemable into gold after the monetary crisis of 1971. The gold price rose powerfully into the mid-seventies, only to peak out and go lower, before taking off again into the second inflationary wave of that decade and multiplying many times in price to $850. This scenario, if it happened today, would mean that the gold price, would reach a temporary peak in the coming year or so, then decline into a lull that could last over a year, before beginning another powerful ascent that would dwarf anything we have seen to date. I feel the odds favor the 2^nd or 3^rd scenario, so I am personally holding onto my gold coin and bullion positions. I feel, as I said in my February 26^th, 2007 article, cited above, that "the jury has rendered a verdict of 'bull market'." Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.13 2007-10-01T21:05:49Z 2007-11-22T19:54:45Z

Downloadable PDF version of this article There is unsaid in our daily life a social contract between all the players. Individuals are able to live their daily lives in a manner without much fear because of this contract, unless one...

Downloadable PDF version of this article There is unsaid in our daily life a social contract between all the players. Individuals are able to live their daily lives in a manner without much fear because of this contract, unless one lives in an area where this contract has broken down. You might call this unseen force in ordinary life the confidence that people have that their persons, social, economic, spiritual lives will be protected from the actions of others in that society, or from their government. We have enacted laws, and have institutional structures to protect us, such as the judicial system and religion, however imperfect they are. We have laws on the books to protect the citizenry. The Ten Commandments states that it is not right, for example, for men or women to kill each other, or to steal, and so on. ]]> Stock Market Investing and the Power of Contrary Opinion. The exception to the rule of the viability of long term investment in the stock market is in the hands of our elected officials, who if they are not enlightened, may enact policies which cause the economy to fundamentally falter for an extended time, as in the 1930’s and 1970’s – or for the Federal Reserve to miscalculate and cause an ordinary recession to get deeper or to cause the economy to overheat. In my article, Hedge Funds, Derivatives, Debt, China, and the Risk of Systemic Market Panic,I write a bit of the systemic risks out there that could cause a economic breakdown in the economy and stock market. So just as the social contract holds the bonds of our democracy together and permits its citizens the possibility of living full lives, the level of underlying confidence in our free market system keeps our stock market from a catastrophic breakdown. Only terrible miscalculation by our government officials or by the Federal Reserve serves to threaten this bond. Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.12 2007-08-08T18:59:38Z 2007-11-22T19:53:49Z

Downloadable PDF version of this article This article might be titled, How You Can Make a Fortune by Investing in Strong Banks During a Credit Crunch. In my article Monday March 5, 2007: Are Stocks Still Worthwhile Investments? I stated...

Downloadable PDF version of this article This article might be titled, How You Can Make a Fortune by Investing in Strong Banks During a Credit Crunch. In my article Monday March 5, 2007: Are Stocks Still Worthwhile Investments? I stated in reference to at that time lesser possibility of contagion in the subprime mortgage problem, "The only thing that I believe could affect the economy and equities would be for the authorities to starve the system of providing mortgage money to potential borrowers – in other words, a credit crunch."]]> The Wall Street Journal, one Bear Stearns rep stated that credit conditions are the tightest he has seen in 25 years. And the squeeze seems to be felt throughout the entire credit market, not just in subprime lending. I heard in a CNBC interview with Donald Trump that the Donald believes "cash is king." It remains to be seen whether the Federal Reserve will come to the rescue to the credit markets by lowering key rates and stating that the Federal Reserve will stand by its historic position as lender of last resort. This would be a huge sigh of relief. Ken Heebner, a respected mutual fund manager, stated on CNBC that the price of housing on the two coasts could retrace to their levels at the turn of the century. Most people would weather this adjustment as only the most recent borrowers would be affected. I mention this somewhat severe prediction as Ken Heebner has a well deserved reputation for thinking outside the box, and I believe his opinion must be given credence. This of course, would place further downward pressure on banks and mortgage issues. We are now seeing share prices of mortgage issues decimated, and even shares of strong banks such as Wachovia and Citibank are coming under heavy pressure. It is my opinion that weak banks with high subprime loan exposure could lose more than half to two-thirds of their value from their recent highs. But what may be less expected, the shares of strong banks with little such exposure may also see their shares cut substantially from their recent highs. If one takes the position of investing only in strong banks with less subprime exposure at much lower share levels, I believe you can profit over the coming years. However, it is probably going to take some time before all the bad loans are washed out of the bad banks before one should invest in the good ones. On a positive note, on Monday August 6^th, 2007, many banks exhibited a key reversal, indicating a continuation of the positive share price behavior of that day in the short term. I base the opinions in the previous paragraph on the share price behaviors of a wide range of banks during the last great banking crisis: the savings and loan/real estate crisis of the late 1980’s-early 1990's. I also stated in March 2007 in my above referenced article, "Many people are pointing to a "debacle" in sub prime mortgage loans as a possible threat to the banking system and to our stock market. You may recall the savings and loan crisis which reverberated through our banking system and stock market in the late 1980’s and early 1990’s. This crisis was portrayed by bank failures, plummeting bank share prices, and a real estate collapse. This was enough to cause a general bear market, punctuated by Saddam Hussein’s invasion of Kuwait." During the early 1990’s real estate crisis, bank shares, both good and bad banks saw their shares under severe pressure. Many banks went belly-up, and even Citibank was thought to be a candidate for failure. However, the height of that crisis would have been the ideal time to buy shares of strong banks – as from the early 1990’s until recently they have been outstanding performers. This strategy permitted me to multiply my original investments in Wachovia and Wells Fargo from the 1990’s forward. Lessons can be extrapolated from that time to the present day. No one can foretell precisely how long this credit crunch will endure, but if we keep our powder dry and keep our eye on strong banks, then the past may indeed be prologue to the future. Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.11 2007-07-19T20:11:09Z 2007-11-22T19:52:40Z

We have had many sharp and fearful declines in the market, which I have pointed out in some of my other articles – and there will be more in the future but my book helps explain how to weather these storms.

Downloadable PDF version of this article It would be all to easy for me to espouse various stock market investment theories – when to be successful in investing, I argue that one should stay the course of longer term investment as described in my book, A Way to Wealth – The Art of Investing in Common Stocks. Sure, we have had many sharp and fearful declines in the market, which I have pointed out in some of my other articles – and there will be more in the future.]]> A Way to Wealth – The Art of Investing in Common Stocks, sold on my website, I present a method of investing that is easy to understand and that most anyone can apply. Further I have found that the method is capable of producing sizeable gains in a portfolio of stocks and equity funds over time. Over the time I have been using the method I describe in the book, my invested assets have grown very well. In many of the mutual funds in which I have invested I have multiplied my original investment. I chose most of my funds in the manner described in my book, by doing some very basic, but I believe very profound research. This research begins with perusing the mutual fund rankings as presented periodically in Forbes magazine. I discuss the necessary further research elsewhere on my website and in my book. Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.10 2007-06-12T00:20:18Z 2007-11-22T19:48:24Z

Downloadable PDF version of this article In my eBook, A Way to Wealth – The Art of Investing in Common Stocks, I outline my investing journey through both good and awful stock markets, and tell how I am to the...

Downloadable PDF version of this article In my eBook, A Way to Wealth – The Art of Investing in Common Stocks, I outline my investing journey through both good and awful stock markets, and tell how I am to the current date winning the battle for long term profits in equities and mutual funds. The eBook profiles my unique technique for profitably investing in stocks and mutual funds. Much of my results have been achieved and profits retained by choosing stocks and funds more conservatively.]]> eBook for more specifics on both investing in individual stocks and mutual funds. Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.9 2007-05-08T22:52:25Z 2007-11-22T19:47:26Z

Downloadable PDF version of this article In my eBook, A Way to Wealth – The Art of Investing in Common Stocks, I share my philosophy and practice of selecting mutual funds managed by value managers in order to build wealth...

Downloadable PDF version of this article In my eBook, A Way to Wealth – The Art of Investing in Common Stocks, I share my philosophy and practice of selecting mutual funds managed by value managers in order to build wealth over time. Most of the funds in which I have personally chosen to invest fit that category. So far, my original investments in most of the funds in which I have invested have multiplied over the years and I have by and large been satisfied with their performance in both up and down markets. My funds have included the Templeton Growth Fund, First Eagle Global Fund, and the Royce Opportunity Fund (sold). I think the investor before purchasing a fund should look at the track record of his prospective choices, preferably over at least one full market cycle (bull and bear market performance). Look for funds which perform well in down markets as well as bull markets. You will be grateful you did if these funds are again able to sustain comparable performance when there is a bear market. I discuss this in my ebook as well as in the FAQs of my website.]]> Downloadable PDF version of this article ]]> tag:www.reiznersway.com,2007:/articles//1.8 2007-04-23T23:53:26Z 2007-11-23T18:41:39Z

Downloadable PDF version of this article In the last three and a half decades we have encountered both periods of relative stability in the price of gold, but also periods of extreme volatility. When President Nixon took the United States...

Downloadable PDF version of this article In the last three and a half decades we have encountered both periods of relative stability in the price of gold, but also periods of extreme volatility. When President Nixon took the United States off the gold standard in 1971, the result was a 9 year bull market in the price of the golden metal. There were two inflationary waves in the 1970’s, the first peaking in 1974-5, and the second more severe wave peaking in the late 1970’s and early 1980’s. This period was also marked by escalating oil prices, driven by the actions of an Arabian cartel. Eventually, the gold price rose from its fixed price of $35 to its peak of almost $700 per ounce (London pm fix) in 1980. ]]> Inflation and the Stock Market: Does Anyone Remember the Seventies? It is interesting to consider from a technical point of view (though I am no chartist) just why the gold price started to accelerate after 2002. Gold is after all, a commodity, and the price of commodities can be known to turn on a dime. Sometimes it pays to keep this analysis on the simpler side. If one draws a simple trend line on a monthly gold chart across the top of the gold price in 1980 through the top in the mid 1990’s, one would find that the gold price broke that downtrend line on the upside in 2002 when gold traded past approximately $300. As I was late to this market, I bought the physical metal myself four times: one time in the mid $300’s, twice around $400, and once again in the mid $400’s. I realized upon looking at this monthly chart, that we were talking about a longer term swing upward in the gold price. A breakout of this magnitude is much more significant than one on a daily or even a weekly chart. Well, enough about charts and technical analysis. In my opinion, the only time charts are readable in relative isolation is when one considers commodities. The gold price is an indication of inflation in our economy. It has even trended upward at times even when our dollar has risen against other currencies. I believe the jury has rendered a verdict of “bull market.” Downloadable PDF version of this article ]]>