Happy New Year

I’d like to wish Survival And Prosperity readers a very Happy New Year if you celebrate it on January 1.

New material will appear on the blog tomorrow, January 2.

Christopher E. Hill
Editor

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Monday, January 1st, 2018 Housekeeping No Comments

Nicolas Cage And How The World Really Works

Several years ago I watched the 2005 movie Lord of War. In case you’re not familiar with the film, from the IMDb website:

An arms dealer confronts the morality of his work as he is being chased by an Interpol Agent.

Nicolas Cage plays the arms dealer while Ethan Hawke is cast in the role of the Interpol “agent.”

(Editor’s note: Spoiler Alert. Do not read on if you ever intend to watch Lord of War)

At the end of the movie, Hawke gets his man. At least temporarily. While held in an interrogation room, Cage takes the opportunity to explain to his gloating adversary why he’ll soon be released from custody.

For me, this particular scene serves as a poignant reminder that in a world full of Facebook Ph.D.’s, unless one truly roams the halls of power and is privy to the activity going on behind the curtain, the ideas and statements of many on how the world really works are merely speculation


“Lord Of War- Interrogation Scene”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Tuesday, December 26th, 2017 Foreign Policy, Government, War No Comments

Merry Christmas

I’d like to wish Survival And Prosperity readers a Merry Christmas if you celebrate it.

New material will appear on the blog Tuesday.

Thank you for your continued readership and support.

Christopher E. Hill
Editor


“A Christmas Carol- Barbara Allen”
YouTube Video

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Monday, December 25th, 2017 Housekeeping No Comments

James Rickards: War With North Korea ‘Will Likely Begin Before’ March 20, 2018

Earlier tonight I read a disturbing piece on the Daily Reckoning (Australia) website that was posted by James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author. On Tuesday Rickards wrote:

The most important financial or geopolitical issue in the world today is a coming war between the U.S. and North Korea, probably in the next twelve weeks.

How can I be so sure about the timing? The Director of the Central Intelligence Agency told me.

In a private conclave in Washington DC on October 20, 2017, CIA Director Mike Pompeo told a small think tank group (including me) that it would be imprudent to assume it would take North Korea more than ‘five months’ to have a reliable arsenal of nuclear-armed ICBM missiles. These could strike U.S. cities and kill millions of Americans.

Five months from October 20, 2017 is March 20, 2018. That’s an outside date but the war will likely begin before then…

(Editor’s note: Bold added for emphasis)

While (for me) the jury is still out on Rickards, he offered up some interesting arguments in the article.

Head on over to the Daily Reckoning site here to read the entire piece if you’re interested in what he had to say.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Jim Rogers Still Buying Asian Stocks While Waiting To Add To His Gold

Well-known investor, author, and financial commentator Jim Rogers was recently interviewed by Kitco News anchor Daniela Cambone. The former investing partner of George Soros in the legendary Quantum Fund talked about a number of topics, including U.S. and foreign stocks, Bitcoin and other cryptocurrencies, gold, asset bubbles, and how he’s preparing himself for 2018.

On U.S. equities, Rogers said:

I’m not a buyer here, Daniela. Stocks have been going straight up. I don’t like to buy straight up. I would buy Japan, for instance, and China- both of which are down a lot. And if America’s going to continue going up or turn into a bubble, they’re going to go up more.

On U.S. stock prices:

I would expect that they will go up for a while, and then go down by this time next year.

(Editor’s note: Bold added for emphasis)

On gold:

I’m not selling any of my gold. I’m not buying gold. I’m sitting and watching. I’m still waiting for gold to go down so I can buy more.

(Editor’s note: Bold added for emphasis)

For 2018:

I’m still buying shares in Asia. China’s down 40 percent from its all-time high. Japan’s down 50 percent from its all-time high. The Japanese government is doing unbelievably everything it can to get stocks up. It’s not good for Japan what they’re doing, but it’s good for me- it’s good for people like me who own shares. Anyway, I prefer to buy Japan which is down 50 percent to America which is making all-time highs.

(Editor’s note: Bold added for emphasis)


“Jim Rogers: I Have Never Seen Anything Like Bitcoin”
YouTube.com Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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Jeremy Grantham: Avoid U.S. Stocks, ‘Heavily Overweight’ Emerging Market Equities

When I last blogged about “Crash Prophet” Jeremy Grantham right after Thanksgiving, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (currently overseeing $74 billion in client assets) had just mentioned in a Wall Street Journal interview that although U.S. stock prices were high, profit margins were also are unusually high, lending support to high valuations. In addition, low interest rates make equities more attractive than fixed-income investments. As a result, he didn’t forecast a crash is stock prices as much as a decades-long reversion to anywhere near the long-term average.

Now, regular readers of Survival And Prosperity know I like to read and pick apart Grantham’s quarterly letters on the GMO website. And his third quarter letter has just been released. Grantham, whose individual clients have included former U.S. Vice President Dick Cheney and U.S. Secretary of State John Kerry, penned the following about U.S. equities in “Career Risk and Stalin’s Pension Fund: Investing in a World of Overpriced Assets (With a Single Reasonably-Priced Asset)”:

The trend line will regress back toward the old normal but at a substantially slower rate than normal because some of the reasons for major differences in the last 20 years are structural and will be slow to change. Factors such as an increase in political influence and monopoly power of corporations; the style of central bank management, which pushes down on interest rates; the aging of the population; greater income inequality; slower innovation and lower productivity and GDP growth would be possible or even probable examples. Therefore, I argue that even in 20 years these factors will only be two-thirds of the way back to the old normal of pre-1998. This still leaves returns over the 20-year period significantly sub-par. Another sharp drop in prices, the third in this new 20-year era, will not change this outcome in my opinion, as prices will bounce back a third time

Near-term major declines suggest a much-increased value of cash reserves and a greater haven benefit from high-rated bonds.

My assumption of slow regression produces an expectation of a dismal 2.5% real for the S&P and 3.5% to 5% for other global equities over 20 years, but also a best guess of approximately the same over 7 years.

(Editor’s note: Bold added for emphasis)

Grantham’s thoughts on where one might invest?

My conclusion is straightforward: heavily overweight EM equities, own some EAFE, and avoid US equities.

(Editor’s note: Bold added for emphasis)

Referring to an exhibit, he pointed out:

1) developed ex-US is well below its 20-year average and 40% below the US; and 2) Emerging is 65% below its high in 2007.

There were also these nuggets from the letter:

Pension funds should brace themselves for a disastrous 1% to 3% return in the next 10 years.

(Editor’s note: Bold added for emphasis)

And:

My view on Resources is that the cycle has turned, global economies are doing quite well by recent standards, and oil prices are likely to rise for three years or so.

(Editor’s note: Bold added for emphasis)

Yet another insightful letter from Grantham, which you can read here in its entirety on the GMO site.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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Short Pause In Blogging

As I will be writing through the holidays (save Christmas Day and New Year’s Day, when only well-wishes will be offered), there will be a short pause in blogging while I gather new material and tackle a number of administrative tasks related to Survival And Prosperity.

Posting will resume on Monday, December 18.

Thank you for your patience and continued readership,

Christopher E. Hill
Editor

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Thursday, December 14th, 2017 Housekeeping No Comments
Survival And Prosperity
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Christopher E. Hill, Editor

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