Look at the Big Picture

One thing I noticed with modern economists and that is that most of them use common language when given the opportunity. Jargon such as Quick Ratio or Liquidity Ratio – as they’ve been taught in the ivy leagues schools – has only one purpose and that is to get the average folk buried in the details of the investment analysis that ultimately leads to mass confusion. Such has been the Status Quo in the Investment/Economics arena for too long and with less than desirable results.

While I am writing this post one thought goes through my mind…”can’t see the forest for the trees”. And that’s exactly what we’re missing when we fail to look at the big picture. When Peter Schiff is considering his investment strategy he actually looks at the big world out there; contrary to the modern advise he looks at the macroeconomic picture; his focus is not on micro analysis details but in the inflationary environment, the monetary policy, and the economic growth.

On the inflationary topic, the question to ask yourself is “Are we going through an inflationary trend”? Even Ben Bernanke – after years of denial – is finally admitting that we are. One important thing to know – and that’s something your stock broker won’t tell you – is that during high inflationary times stocks eventually end up under-performing and bonds are even worse.  Commodities though will end up performing quite well, but again, that’s not what the majority of the people invested in securities want to hear today and certainly not what Wall Street is preaching. But we haven’t reached the highest point of inflation, yet, so time will tell.

Monetary policy of the Federal Reserve? With such a ballooning national debt, rapid expansion of the money supply, and a U.S. dollar on the verge of losing its world reserve status, should there be in any doubt where our currency is heading? A currency debasement leading to collapse. Simply put if you’re caught with lots of dollars in the bank, you stand to lose despite the FDIC enticement to keep your money there. A debased dollar will decrease your purchasing power and your standard of living.

Economic growth? Ha! Based on what? On consumer spending during Christmas time, on an inflated stock market as a result of generous government bailouts, or on “productivity” of the military complex? I am astonished to hear “intellectuals” talk about economic growth when, for the past decade, we’ve been programmed to consume not to produce, to spend not to save. Let the Chinese produce for us, why should we produce anything? After all, we’re the King, right?

What I want to leave you with is the idea of asset preservation, hard assets such as gold and real estate, so that when the dust finally settles your life will be least impacted by economic events.

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  1. #1 by carmenalexe on March 16, 2011 - 7:20 pm

    Ron, good analogy, thanks!

  2. #2 by carmenalexe on March 16, 2011 - 4:23 pm

    Makes sense. A society can quickly become disorderly if financial means are taken away from people. One should be in a position to protect himself from intruders.

  3. #3 by roncents on March 2, 2011 - 9:30 pm

    Great post Carmen. I would only add that you should include cash value life insurance to your list for asset preservation. More about that can be found my my financial blog RonCents.

    • #4 by Anonymous on March 16, 2011 - 3:44 pm

      Firearms, along with ammunition (lots of it) would also be a smart investment.

      • #5 by roncents on March 16, 2011 - 5:55 pm

        Firearms are a type of insurance and lots of ammunition is liking adding additional cash value to your policy. So, I can relate to this suggestion. :o)

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