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The
BIG Picture Transcript
JOHN: Well, Jim, when things start to swing – up and down, of course. That’s good times, because then you have movement. That’s the time to make your moves, not a time to panic, and a lot of people just tend to start panicking with what’s going on right now. With energy prices pulling back, oil stocks selling off, we’re getting a lot of those panicky emails from listeners and others. It looks like investors are jumping out of windows, doesn’t it? JIM: It’s rather interesting, because as you mentioned we’ve gotten quite a bit of email – “I’m gonna sell my stocks” – I’ve got people selling gold stocks, selling oil stocks, and a panic mode has sort of set in. And it reminds me to some extent, a number of years ago, there was a baseball movie made by Kevin Costner, called For Love of the Game. And one of the comments he made as he was a pitcher on the mound, when he had the crowds booing him, [with] all the distractions, maybe he threw a bad pitch. It was called ‘clear the mechanism’ where you just kind of shut out the noise, stop, get focused and think. A number of years ago when that movie came out, I was part of a businessman’s group that used to meet once a month for lunch. Two of the members of the group, one was a professional baseball pitcher actually with the Padres, and the other gentleman, who used to be a professional pitcher (actually he had a baseball scholarship) and I [asked], “Do you guys really do that when you’re on the mound?” “Absolutely!,” he said, “you have to." Because depending on where you’re playing, you get boos, you’ve got people yelling at you, maybe you threw a pitch and a guy got a homerun off you, and you could really begin to panic, and what you need to do sometimes is just stop, clear out all the noise, and ask yourself – for example, coming to investments with this energy sell-off or this gold sell-off – what has changed in the last month? In other words, since September we've seen energy prices spike: oil went up to over $70/barrel, oil stocks were the number one performer along with gold. You need to ask yourself, "Do the same assumptions still hold today as compared to let’s say a month ago?" In other words, has demand gone down, have there been new discoveries, new sources of supply? What has changed? Have the assumptions for owning oil stocks changed at all? Is the energy market frothy, for example? Do we have a bubble in energy stocks? If you find the same assumptions still hold true for owning energy stocks, then what you need to do is stay focused, buy on weakness, and have the courage of your own convictions. One of the things I did is I wrote a market wrap-up on Thursday and I had a quote from John Templeton, which has always stuck in my mind: “The
time to buy a stock is when the short-term owners have finished
their selling, And that was mentioned by John Templeton – I think it was on Louis Rukeyser’s Wall Street Week. I forget where I got that quote – but that is what has happened today. We’ve got short-term panic selling along with a lot of it being forced by margin calls on the hedge funds. A lot of it was the frothy money that came in the beginning of September, late October when we got hurricane Katrina, the money that was looking for $85-100 oil. But the most important thing you have to do is ask yourself, "OK, the prices have changed. Have the assumptions of making an investment in the energy sector changed or do they still hold true?" And that’s why I think it’s very important to ask those self-thought-provoking questions before you stand on the ledge and jump overboard. [4:06] JOHN: Well, let’s answer the question. Are energy stocks in a bubble? And in reality, you answered this authoritatively in the market wrap from Thursday. Everyone needs to go to our website at Financialsense.com and read that. [article] JIM: You know, when I wrote the article on Thursday, I went back and looked at the energy sector from integrated oil companies to oil and natural gas producers. What I found was that the energy sector is selling, John, at the bottom of its historical P/E band. It didn’t matter if you were looking at Exxon, Chevron, Apache, or Devon, the whole sector is grossly undervalued – Period. [4:43] JOHN: Can you give us some examples from the WrapUp? JIM: Let me just start out, as a point of full disclosure, we are heavily weighted in the energy sector, all across our portfolios that we manage and for good reasons. Now, I just wanted to get that out, so if somebody’s going to say, “Well, he’s pushing energy stocks.” You know what, if you go out and buy Exxon, you’re not helping me – today, Exxon will probably trade 22 million shares – and if you go out and buy 100 shares, it’s not going to do me any good. But let’s take Exxon and Chevron – two companies that have experienced big block selling this week – I think on Monday or Tuesday there was a $1.4 billion block of Exxon sold at a discount – and I think on Wednesday or Thursday there was a $6 million block of Chevron that sold that day. Let me start out with Exxon. If you look at a five-year period, go back to the year 2000 and 1999, and when the stock market peaked in January of 2000, Exxon was selling at over 36 ½ times earnings – Exxon’s P/E ratio – and that was roughly on January 28, 2000, and of course all stocks, whether you were looking at technology stocks, financial stocks, even the energy sector – even though it was a lagging performer – the price of energy stocks went up. What happened over the ensuing 2 years? Number one, we got a recession in 2001. We got the events of 9/11. Oil profits went down in the year 2000 as the price of energy got back down to $20//barrel from the oil spike of 2000. And as the price of energy stocks went down – Exxon in particular – as you can imagine, the P/E ratio also went down. It was going down for 2 reasons: earnings were going down and the price of the stock was not going down as fast as earnings were. So the P/E contracted. Then we got to 2002 and earnings actually went down that year, but stocks were moderate. People were sort of getting defensive, so the P/E jumped. But beginning from the end of 2002, earnings just flew and began to increase, and increase rather substantially. Now the stock price began to go up towards the end of 2003, beginning in 2004, but the point here was that earnings were going up at almost twice the rate of the stock price.
The same thing happened if you looked at Chevron-Texaco, Chevron basically reached its peak in early 2000, and then went down in almost the same pattern that Exxon did. In fact, we have these graphs in a Storm Watch Update that I wrote called There is No Plan “B” – so you can kind of follow along with what I’m talking about here – but it’s P/E peaked in 2000, went down just like all stocks from 2000-2002, jumped again – P/E rose 2002 because earnings fell faster than what the price of the stock was doing – then beginning in 2003 when we saw this upswing in earnings the price began to go up towards the end of 2003 – but the price did not go up as fast as earnings were going up. So as a consequence, the P/E ratios of the major oil companies continue to fall. So for example, Chevron's P/E is 13.3, the high was reached in 2000 at 26, almost 27 times earnings, and the low P/E ratio on Chevron-Texaco was 8 ½ times earnings, and that was basically reached in September 2001. Chevron is currently trading at 8.2 times estimated earnings for this year, and that is the bottom, the very, very bottom of its P/E range.
The same thing with Exxon. Exxon is trading at 10.7 times estimated earnings and that is below its low average reached over the last 5 years. So, whether you’re looking at Chevron, whether you’re looking at Exxon, whether you’re looking at Conoco-Phillips – doesn’t matter – all of the major companies are all selling at the very, very rock bottom of their price earnings ratio, and that’s just the opposite of what you would find in a bubble. In other words, if Exxon was selling at 36 times earnings, as it did let’s say back in the year 2000, or Chevron was selling at 27 or 28 times earnings, then I might say, “Yeah, you know, things have gotten out of hand. the oil stocks are overpriced. We definitely have a frothy situation here.” But that’s just simply not the case.[9:42] JOHN: How can we best explain this disparity then? JIM: Once again, what happened is this. Beginning in 2002 oil prices sort of bottomed and we have begun this climb that we’ve seen ever since then – oil prices have gone from $20 to close to $60. And because the price of oil actually went up 3-fold, what happened is the stock price did not go up as fast as the earnings were. Remember, John, when oil went to $30/barrel, everybody said it was coming back to $20. And then when we hit $40 a barrel, they said it was going back to $30. Then we hit $50 and it was going back to $40. All the way up to almost $70, there was a lot of denial and disbelief of this. And so, the energy sector hasn’t gotten a lot of attention and respect on Wall Street. A lot of people on Wall Street don’t like rising energy prices, because what does that spell? It spells inflation. And if we take a look at – as I wrote in my article – for example, earnings for Exxon have gone from a bottom of 11 ½ billion in 2002 to this year earnings for Exxon will be somewhere around 31 billion. So the 3-year rate of change on Exxon’s earnings are 169%, but the stock has only gained 61%. So, you almost have earnings up 3-fold versus the price of the stock. You’ve got Chevron whose earnings were up a 1000, almost 1100% - part of that came from its buyout of Texaco – but its stock price is only up 72%. You’ve got Occidental Petroleum, it’s earnings are up 278%, but the stock price is up only 150%. Look at petroleum producing companies: Apache’s earnings up 313%, the stock is up only 114%; you’ve got Devon Energy up almost 2400%, the stock price is up only 155%; Burlington Resources up 363% in earnings, and its stock price up only 217%; and Anadarko Petroleum...I could go on and on and on. In other words, the companies are selling at the very bottom of their P/E bands historically, so it’s just the opposite of what people are saying, that the Energy sector is overvalued. As we’ve shown with our analysis, it’s grossly undervalued if you take a look at historical perspectives. [12:15] JOHN: Well, if we swing around and turn the spotlight on industry fundamentals, could we say that they have changed? In other words, are the same assumptions for owning energy stocks still in place as they were before? JIM: Let’s take a look at things. Energy prices and energy stocks rose rapidly in the wake of Katrina and Rita. I mean when Katrina first hit, oil prices shot up to almost $70 on September 1st, and then from that point, even with Rita coming afterwards, oil prices retreated and have fallen steadily since that time. I think what you saw was a lot of disappointment. The speculative money has now been exiting the market, looking for the next trade. Predictably, the result has been fallen prices. A second thing that happened is Wall Street went heavily short the energy sector. If you look for example at the end of last month, the short position in Exxon was 10-12% of the outstanding stock. So you’ve got Wall Street going heavily short against these stocks trying to drive it down. And I also believe that Wall street was taken by surprise with the rise in energy stocks and they want to get back in. So what do you see? You have seen analysts talking down the stock, saying the run up has been overdone, the companies are overpriced. In the meantime, the big Wall Street firms are shorting the oil stocks trying to drive the price down in the hopes of accumulating these stocks at a cheaper price. And I think what you have is, for example – you’ve seen this on CNBC – many on Wall Street are claiming energy stocks are overvalued. We discredited that with the piece we did on Thursday. Some analysts believe the bull market in commodities is over. Others believe the energy market has made a top. As I pointed out in my article, I strongly disagree. If you look at what’s happening fundamentally, demand globally is still growing and the demand-supply imbalance remains decidedly fragile at the moment. There is very little slack in the energy markets. There is very little room for weather, geopolitical uncertainties, or any other form of supply shock. Demand has fallen or weakened. But John, you know, that‘s normal this time of the year. We’re in what we call in the energy business, the ‘soft shoulder’ months of the year when we transition from the warm weather of Summer and Fall to colder temperatures. The summer driving season has ended, the family vacations are over, the motor homes and SUVs are parked in the garage, and the country is experiencing milder temperatures. The result is there is less demand for energy during this time of the year. However this is only temporary. Colder temperatures are directly in front of us. And most weather experts I look at – whether you’re looking at the national Weather Service or even the Farmer’s Almanac – are calling for colder temperatures this Winter. A couple of other facts: while demand for energy is expected to pick up with the arrival of cold weather, supply will be insufficient. For example, hurricane recovery is still underway. It may take several months before we get a complete recovery. I heard the estimates are somewhere between March and April of next year. As of mid-month, 3 refineries are still shutdown as a result of hurricane Katrina, 4 refineries are shutdown from Rita, representing 1.9 million barrels per day of refinery capacity that still remains offline. And according to the government, 67% of the Gulf of Mexico crude oil production and 60% of natural gas production remain offline. As of October 6th – first week – there are still 20 natural gas processing plants in Texas, Louisiana Mississippi, that are not up and running. And by December, if everything goes well, shut in capacity is projected to average roughly a little over 33% for oil, which represents over 10% of total US oil production and 20.6% for natural gas will remain shut in. That is roughly about 5% of natural gas production. Meanwhile oil demand is expected to slow, but still remain stronger over the next 2 years. Worldwide oil demand is expected to grow an average of, let’s say 1.8% this year and next year. Now, that‘s down slightly form 3.2% in 2004. But John, that’s still a rate of growth that we’re seeing in the global oil markets. In contrast to growing demand non-OPEC, oil production is expected to remain weak with number one, the loss of production in the Gulf of Mexico, we’re seeing repaid production declines in the North Sea, a slowdown of Russian oil production, spare capacity is at a 3-decade low. The only one left with spare capacity is Saudi Arabia. Meanwhile OPEC production is flat out. OECD oil inventories have not increased significantly due to increasing demand, the net result is that at a time when demand is growing faster than supply, there is no spare capacity left in the system to handle a loss of production in the Gulf of Mexico. Bad winter weather, which is expected by the weather forecasters; geopolitical risk in Iran, Iraq, Nigeria, Venezuela – you know what? – we may be heading into the perfect energy storm. [17:50] JOHN: In other words, if we’re to dodge this bullet, everything is going to have to go well, basically is what you’re saying? JIM: Yes, there is absolutely no room for mistakes. There’s absolutely no room for any margin of error. To avoid a crisis, everything must go well. It must be perfect. What are the odds of that? [18:13] JOHN: I’m listening to you talk about this. Aren’t there also problems with growing production declines? In other words, this is independent of some of the other things you’ve been talking about. JIM: The geologist Ken Deffeyes, who we interviewed in our peak oil series on his book Beyond Oil, gave a very simple formula for figuring out production declines. It’s basically this: you take annual production from a well and then divide that by cumulative production from that well, and you basically plot production as a percentage of Q – which is quantity. What you get is a linear progression of what happens to an oil field. Once that ratio crosses 50% – in other words, oil produced divided by the cumulative production is greater than 50% – you begin to see decline curves in production. This is basically a simplification of the Hubbert peak oil formula. Remember King Hubbert in the mid '50s used this formula to predict US peak oil production in 1970 and the guy was spot on. And what we saw historically in the United States, once the lower 48 states hit that 50%, we went into decline. And when I say 50%, I’m talking about close to 50% or a little over that. For example, Texas oil production peaked at 54%. The North Sea oil peaked at 52%. Since 1999 the North Sea oil production has fallen rapidly. It’s down 20% since then. What has never been seen is an increased production beyond that 55% ratio and that’s why Saudi Arabia now looks like it is peaking. [20:03] JOHN: We hear talk about increasing capital expenditures for oil extraction and then there’s been talk as well of alternatives – say for example the tar sands or something like that – how does this factor in to this? JIM: Well, let’s take a look at for example Texas increased spending in the '70s to the point where the number of wells in operations increased by almost 14-15%. However during the '70s, despite increased capital expenditures and despite an increase in the number of wells drilled, production fell by 30% over that 10-year period time because Texas oil production had peaked. If we even look at – for example in Canada, because people say, “well, gosh! there’s all this oil in Canada’s tar sands,” since 1999 for every 3 barrels of new oil produced in Canada’s tar sands, conventional oil production has fallen by 1 barrel of oil per day. On top of that, it takes one barrel to produce 3 barrels of oil from the tar sands. So the net effect, including tar sand production, its net-net production is only increasing by 1 barrel. So even if we take into consideration tar sands or increased expenditures, whether you’re looking at Alaska, North Sea or whether you’re looking at the 48 states here in the United States, once you reach that 50% ratio on that Hubbert formula, what you begin to see is oil production decline rather rapidly. And it doesn’t matter, John, when you look at global oil production. What happens with one well applies statistically to wells across the globe. And so you can’t say, “Well, the wells some place else are much different.” Once you reach that 50-55% ratio, you start to see production declines. [21:55] JOHN: Let’s see if we can tie this back together again. You still believe that fundamentals remains as strong as ever, that the whole sector is grossly undervalued, and so it would seem an investor should ignore a lot of the noise, which is more transitory – clear the mechanism as you’re fond of saying. JIM: John, one of the lessons I’ve learned as an investment adviser over the years is to be non-conformist in my thinking. I had an epiphany in the stock market crash in 1987. Up until that time, I read BusinessWeek and Barron’s – that was pretty much it – and I went along with all the consensus thinking on Wall Street. In other words, I was part of the group – whatever the group thought, that’s what I thought. With what happened in the 87 stock market crash, I said, “ wait a minute, something’s happened here.” I read everything I could as to what caused the crash. I just wasn’t buying the excuses. It profoundly changed the way I began to think as I began to do more research and began to take a look at economic issues and financial issues. And then I began to question the thinking on Wall Street a lot more. One of the books I read back then was the The Art of Contrary Thinking by Humphrey Neill and that had a very profound effect on the way I began to look at things. And I became sort of a contrarian. What I found in my industry is there is a tendency within the financial industry towards ‘group-think’ or sameness in thinking. You don’t want to go out on a limb or think differently. You feel much better, if you’re bearish on the stock market and everybody else is bearish. If you’re bullish, if everybody else is bullish you feel much better – in other words you become part of the crowd. And if you look at market behavior when the masses of people succumb to an idea, they often run off at a tangent because of emotions, because the crowd begins to think with its heart versus let’s say a solitary individual who thinks with his brain. As a contrarian – really as a money manager with a contrarian bent – my job is to challenge generally accepted viewpoints on the prevailing trends, whether it’s in politics or social economics, financial markets. And what I’ve found over the years is that popular opinions are frequently found to be 1) untimely, 2) wrong, and 3) misleading. Even with the advances we have today with computers, technical analysis, I doubt whether the charts will ever completely enable investors to overcome their inherent traits of hope, greed, and pride of opinion. And that’s what makes the art of investing difficult to master. [24:43] JOHN: But it makes for a great movie script.
JOHN: Well, speaking of contrary opinions which is what we were talking about – you know, you must admit it takes real hutzpah, there’s something instinctive in us which likes to run with the pack. I don’t know what it is. So if you’re doing news work and taking unpopular opinions, or investing that way, you do have to have a certain amount of intestinal fortitude. And speaking of intestinal fortitude, a contrary view of yours is that we are more than likely to experience inflation than deflation. We’ve talked about this before and in essence you still think the deflationists are wrong. Is that a fair assessment? JIM: Pretty fair. I mean, if you look at what inflation is, which is an increase in the money supply, and the monetary aggregates. John, since we went off the classical gold standard back in the early part of this century in 1933 in the US, and then when we went off the gold exchange standard in August of 1971, we have had non-stop monetary inflation ever since then. Whether you look at M1,M2, M3 growth, the money supply has continued to expand. But now with the securities market, part of the credit supply that comes into an economy and financial markets is fed through the financial system – versus the traditional credit expansion that comes through the banking system. And if you look at the consequences, especially beginning in the '80s, the net result has been we have had a series of one asset bubble after another – whether it was oil and real estate at the beginning of the '80s, real estate towards the end of the '80s, stocks in the '90s and now real estate, mortgages, consumption, bonds – all of this is a result of inflation. In other words, inflation has two forms, it can go into real goods or it can go into assets and we have had one asset bubble after another. And if we take a look globally, we’re seeing all kinds of signs of this. The monetary base globally is growing at 20% a year for the last 2 consecutive years – and I’m sure we’re almost up there this year at the same percentage – and your starting to see inflation show up everywhere. In other words, it’s getting harder and harder to hide. I mean the average guy in the street is looking at what he’s paying for things and it’s become obvious that we’ve got inflation. The real problem I think you have now is this – and I think this is the real problem the Fed has – hiding inflation is getting harder and harder. Obviously rising energy prices and gasoline prices, rising natural gas prices, rising utility bills are pretty obvious, but the Fed seems to be blaming natural disasters like Katrina and energy as if it’s the fault of the energy market. But it’s obvious for example if we take a look at the last, let’s say, 12 months as of August, gasoline prices were up 31%, gas and electricity prices are up almost 8%, things such as sporting tickets up 7½%, college tuition – article in the Wall Street Journal this week – up almost 7½ %, delivery services up 6 ½ %, veterinary services up 6%, parking costs up over 5%, cigarettes up over 5%, dental services up 6%, repairs of household items 5%, child and nursery care 4 ½ %, intra city transport up 5%, legal services up 5%, movie tickets up 4%, prescription drugs up 4%, and I can just go on and on and on. Everywhere you look you’re seeing price increases, and what is happening right now is inflationary psychology is starting to take hold: people are anticipating rising prices and that gets dangerous for the Federal Reserve. And what happens when inflation psychology completely takes over? The Fed loses its ability to keep inflationary factors in check. [29:18] JOHN: Well, that’s because it loses the ability to tell people which way to run, basically. And when we talk about monetary inflation, there’s a lot of confusion out in the marketplace. People confuse monetary inflation with what they see at the pumps and that gets very blurred most of the time when you see it on the talkies. JIM: Well, you know, inflation has and always will be caused by the money supply. An expansion of money supply is inflationary. Deflation is caused by a contraction of the money supply and there hasn’t been a contraction of the money supply since the early days of the great depression. We’d have to go back to 1930-1932 to see a contraction in the supply of money. What often gets confused is that the price swings in the marketplace are caused by changes in demand and supply imbalances. In other words, if there’s a greater demand for energy than there is supply, prices are going to go up. That is the marketplace as an adjustment mechanism. Another example would be if there’s a big harvest in corn, then there’s more supply of corn than there is demand, then the price of corn would go down in value – this has nothing to do with the supply of money. Another thing we see common in manufacturing – for example, if there are more people making personal computers today, or let’s say, flat panel TV screens, what happens is as increase supply comes on line, production costs go down, because you can amortize your fixed costs over a larger number of units, competition comes into the market and increases supply. As a result of increased supply, the price of goods go down. These goods aren’t falling in price, because nobody has any money to pay for them. In other words, a drop in PC prices has nothing to do with monetary inflation and that’s why Wall Street and Washington are always trying to confuse people over what is inflation and deflation. Inflation has and always will be a monetary event. Increase the supply of money and credit and you’re going to see the consequence and effect of that as rising prices somewhere, either rising asset prices – whether it’s stock or real estate or the rising costs of goods. [31:49] JOHN: OK, but if you notice and you’re listening, the Fed's talking about inflation, and the financial markets are talking about deflation. JIM: I think the Fed is, number one, playing a poker game, and I think the financial markets have become confused. If we look, for example, at the last 35 years, M1 growth over that period of time has increased by over 700%. If we take a broader measure of monetary growth which is M3, M3 growth has been 1600% over the last 35 years. All this talk by the Fed about inflation is just a bluff, John. They know they’ve been inflating; they know they have a real inflation problem; they are continuing to inflate while keeping the financial markets fooled that they’re fighting inflation. I mean, if we take a look at where the real rate of inflation is today, we’re probably closer to 8%. If we take a look at the Federal Funds Rate at 3 ¾ %, in other words, real interest rates are below the rate of inflation, and that is inflationary.
The only deflation that we will see is in the future. The purchasing power of the dollar will decline much faster than real nominal prices can increase, which is what we saw in Argentina, which is what we saw in Germany in the '20s, Turkey and Russia. The Fed’s game plan – what they’re trying to do – is use moral suasion to convince the markets that it can keep the markets in check and under control, when the real plan is to counter inflation psychology, while they continue their inflationary expansion. In other words, the Fed is trying to keep a poker-face and hide their real intentions of inflating in order to fight deflating asset bubbles. The result is we’re starting to see real prices in the economy of essential goods as they’re beginning to rise. The only real risk of asset deflation, that’s about the only thing we may see in other words, we may see asset deflation in real estate, but that will be counteracted by massive reinflationary efforts. Real estate prices over this period of time, John, have increased by 1000% over the last 35 years. I doubt that individual incomes have increased 1000% over the last 35 years. So, individual incomes are falling further and further behind and the real reason is inflation, not deflation. People are falling behind because their wages aren’t keeping up with the pace of inflation that we’re seeing in the real economy or the pace of inflation that we’re seeing in the financial economy. Whether it’s stocks or bonds, high P/E ratios above normal are a sign of inflation, bond yields below real inflationary rates are a sign of inflation, low mortgage rates are a sign of monetary and credit inflation. All of this is inflationary. [35:07] JOHN: Well, I will have to say this much, Jim, so far you’re being proven right if we go back to the Fall of 2004 when you wrote your piece on The Great Inflation and it’s following through quite nicely to this stage. And of course, the other thing it does by the way, if you have money in savings, let’s say 50 years ago you would’ve put $30,000 away in saving, the buying power of that $30,000 was much greater then than it is today, and so your money erodes in an inflationary environment, and you must constantly paddle upstream to stay in the same position. You have to keep doing something with that money to just even have it preserve what buying power it had when you first got it. It’s actually an invisible form of taxation.
JOHN: And speaking of taxation, my gosh, is this a good segue or what Jim? I think we’re about to be touchéd by the tax overhaul panel. I was listening to some of the open sessions of this panel and I have a fundamental rule of thumb – actually two of them, they go hand in hand – 1) if they didn’t see it coming, they won’t know what to do when it gets here, that’s sort of like the perfect financial storm, and 2) never appoint the people to get you out of the unsafe position that got you into it in the first place. And a lot of the panel themselves may not have been in that position, but the people behind them are basically Treasury-types who, if we look at the tax overhaul panel in reality, all they have done is tinker around the edges. There’s nothing really substantive there. And if we don’t do anything by what, next year?, certain things expire as well which means taxes go up. So, in essence, this panel isn’t really proposing much of anything. JIM: Well, John, there’s an old saying that whenever Congress talks about tax reform, hold onto your wallet. And I go back to the Reagan years and I remember the tax reform bill of 1986 and the proposal was they were going to bring tax rates from 50% down to 28%. And remember, prior to the 50% tax rate, they used to be as high as 70%. Reagan brought tax rates down from 70% to 50% in his '81 economic recovery bill. But beginning in '86 with the tax reform bill, what the government basically said is look, we’re going to take a lot of this monkey business that’s going on with tax shelters, all of this stuff that was going on in the '80s and we’re going to simplify the tax rates. We’ll have 3 tax rates - and basically the highest tax rate is 28% - and in exchange for lowering the tax rates, we’re going to get rid of a lot of things like the IRA deduction or exclusion that you got on the front page of your tax return. We’re going to get rid of sales tax deductions. We’re going to lower the amount you can deduct on your medical expenses – in their words, they had to exceed 7½% of your adjusted gross income. We were going to get rid of certain itemized deductions, in other words, things like miscellaneous deductions had to exceed a certain percentage of your adjusted gross income. So in exchange, they got rid of the tax shelters. They phased out a lot of deductions or made less of those deductions applicable to your tax return. They enhanced the alternative minimum tax – the alternative minimum tax is just another way of catching you and making you pay more taxes if you had a lot of itemized deductions. And everybody said, this is a great idea. However, in the year that they passed the tax bill in '86, they got rid of all the deductions and lowered the tax rates. They phased in the lower tax rates over a 3-year period. So, the only year you got the 28% tax rate was in 1989. In 1990 George Bush comes in office and he breaks his ‘read my lips’ and raises income tax rates. So we went back from a 28% to a 33% tax rate. Then what he also did is he added the Medicare tax, which used to stop once you reached a certain wage limit – so you had to pay an additional 1.45% Medicare tax. If you were self employed, you doubled that up to $125,000. Then Clinton comes in office and he raises the tax rates to 39.6%, increases social security taxation – up to 85% of your social security became taxable – then on top of that he also lifted the curbs on Medicare tax, so that you paid that Medicare tax on all your earned income or salary income that is. And so now, if you take a look at what they’re doing, they’re proposing for example simplifying tax rates to 4 income tax brackets: 15%, 20, 30, 33%, and that’s not much different than where we are today at a 35% tax rate. However, what they’re going to do is limit mortgage interest deductions to somewhere between $172,000 and $312.000. In other words, if you had a mortgages on your home over $312,000, they would phase out this mortgage deduction. Now, they have a caveat on there, depending on geographic region – I guarantee you, if you live in New York, or on the coast, or in California, a $300 thousand mortgage is a joke, most people have 5, 6, 700,000 and million-dollar mortgages. They would eliminate the marriage penalty, but also they would put a new limit on health insurance coverage provided by your employer. In other words, as an employer we provide healthcare coverage for our employees – I’ve got several employees where it costs us $900 a month for medical premiums. What they would do is put a limit on that per employee for families and individuals. Anything over that would become taxable income to the employee. They would also reduce capital gains tax and eliminate the double taxation of dividends, which I wholly go for. Most people don’t realize this – and I love it when the left gets angry over this as pandering to the rich, as if ordinary people don’t own stocks in this country, over 50% of the country is now invested in the market – there are a lot of people now in this country who own stocks, but dividends paid by a company are taxed twice, first a corporation pays a 35% corporate income tax on the earnings that it makes and then when they distribute those dividends to the shareholders, the shareholders pay an individual income tax. So that same dollar of earnings is taxed 35% at the corporate level and then taxed as much as 35% at the individual level. Now, with Bush’s tax reform, he lowered taxation of dividends to 15%, but that’s due to be phased out over the next couple of years. But John, they’re taking away a lot of itemized deductions. They will end some taxation for dividends, but they wouldn’t lower the tax rates all that much: lowering the top tax rate from 35% to 33% - whoop-de-doo!. [42:45] JOHN: It also seems as if you look at everything, if we benchmark everything going back to the Reagan era reforms, that the vector lines always move in one direction – in other words, we do a slight reset, lots of promises and bright sparkly descriptions, but in reality what we’ve done is we’ve done away with deductions and ability of people to shelter their incomes, and then taxes continue moving upwards. Here we’re talking about taxing health insurance, but you have to realize health insurance per se is going crazy already. How would it affect self-employed people, who have long fought to be able to deduct their health insurance anyway, like any other employer. Remember for a while you couldn’t even do that. These burdens really come slamming down on the middle of people who are self-employed. JIM: Yeah, when you really examine all of this, little by little it's the rising taxation. Social security taxes go up each year. Medicare tax goes up each year as more of your income is subject to this tax. So for example, if you get a pay raise of say 4% to keep up with inflation, well that can push you into a higher tax bracket – and on top of that, more of your income is subject to the social security tax or the Medicare tax. Then they make more of your deductions less deductible by raising these limits. So, they take these things away little by little. I can remember, John – I started out as a certified financial planner in the late '70s – you could walk into my office prior to the '86 tax reform bill, let’s say in 1985, you could’ve walk into my office on December 1st and I could have zeroed your taxes for the year with tax deductions. I remember one of my wealthiest clients at that time was an ophthalmologist – he was doing Laser surgery as a pioneer in the field – and this guy was making 2 or 3 million dollars a year. His wife was a real estate agent. This guy was just piling his money into real estate with negative cash flow and was zeroing out all of his taxes. He could zero out with real estate. He would call me up and he goes, “Jim, I have a couple of hundred thousand dollars of taxable income that I need to get rid of. Put me in a tax shelter.” So we would go into a tax shelter, a 3 to 1 tax shelter. After 1986 tax reform, tax shelters went by the wayside. A lot of the tax shelters we were involved in came back through what we call recapture, so you ended up paying the taxes anyway because they went under and the tax deductions were disallowed. You end up paying not only back taxes, but penalties and interest. But as a result, a lot of these tax shelters were done away with –the amount of things we could use in terms of tax deductions – so, if you look historically there has been a climb, not only in government revenues from taxation – in other words, taxation is occupying a greater percentage of the economy today, as government has gotten bigger. And so, anytime they look at tax reform as they’re doing today, what they’re looking for collectively – because remember, when George Bush Sr. broke his pledge on raising taxes, he was defeated in a second term, people remember that – when Clinton raised taxes in 93, the full effects were felt by 94, the Democrats were voted out of office. I mean, the surest way to get defeated if you’re a political candidate, say, "Hi, if you vote for me I’m gonna raise your taxes.” How popular is that? What most politicians will do is say, “You know what? You vote for me, I’m gonna give you more goodies –more candies, lollipops, things like that – and it won’t cost you anything, because we’ll just tax somebody else.” But we know taxation is unpopular with the public because we are overtaxed to begin with. When you take a look at a 35% tax rate and you add a 15.6% social security tax, on top of that you add a 2.9% Medicare tax, on top of that you add state income taxes – in California, 9.3%, you add sales tax of 7 ¾ %, you have real estate taxes of as much as 2% or more – and then on top of that all the fees that you have to pay. We’re taxed to death. And so, what they’re doing now is trial balloons. They need to raise taxes, but they have to do it in a subtle way and sell it to the public like you’re going to be a winner and that’s what they’re doing right now. These are all trial balloons. But the government is looking for ways to raise taxes. Anytime you hear the words " tax reform" in Washington, look out, hold on to your wallet! [47:49] JOHN: Last week we were talking about the fact that we’re headed into a recipe for economic disaster: rising inflation; rising interest rates; rising taxes – all three. And then the scenario of your perfect financial storm is a currency crisis, financial crisis, economic crisis, all converging simultaneously. Any one of which would be bad, but put them all together and the effect is breathtaking.
JOHN: Well, one of the things that’s sort of on the street controversy out there, Jim, is whether or not peak oil is actually real or is this just part of an on-going scam on the part of the oil companies to take their already dazzling profits – as some people would allege – and make them even more dazzling. And in line with the emails, we did get an email [citing] an industry insider. I'd like to read this. It’s an anonymous letter and it has to be done for this reason:
And name withheld here on the show. [56:16] JIM: Well, John, here you’re hearing from an insider. The first thing I’m always amazed at is anytime the price of oil rises – and this probably goes back to the breaking up of Standard Oil with the muckraker Ida Tarbell who went after and did a series on Rockefeller’s oil trust - [muckracking begins.] You’ve got to think about it. These people bring us energy, the lifestyle that we enjoy today, the wonderful technology, being able to heat and air condition our homes, being able to get in a car and be able to drive across country, or get on a plane and fly anywhere in the world on the same day, [all of these things are] brought to us by energy. And instead – even if you look at for example I mentioned the Fortune article about the oil industry and what it did and the events of Katrina and Rita – these guys are heroes not villains as we are constantly trying to portray them. Nobody complains or vilifies the government when they double or increase your taxes. Nobody vilifies any other industry as they make greater than 9% net profit margins as the energy industry is making. But that is indeed the case. And what we’re failing to come to grips with, which is why I think we’re headed for continuous crises, is this: we’re in denial. We’re pointing fingers at everybody and saying these are just greedy oil companies. They’re gas station owners trying to price gouge. And yet we fail to take into consideration oil discoveries peaked more than 40 years ago, production in non-OPEC countries peaked –of the 45 major oil producers in the world, 33 have already reached peak and just like the North Sea where it peaked in production in 1999, and since then its production has fallen 20% – these are the questions things they aren’t liking. When you get to these conspiracy nuts, if it was an oil conspiracy, then please explain to me the '80s and '90s, if there was that much control by the oil companies and the oil cabal, why did we have a twenty-something bear market in energy? Certainly, if they were as powerful as people make them out to be, we would never have seen $20 oil. We would have stuck at $40 oil as we were in 1980 and 1981. It’s just absolutely amazing. [58:47]
JOHN: Well, sometimes Jim, in doing the Big Picture we have lost track of the fact that we really need to sum things up and take an overall view of just where we are at each point rather than doing the in-depth that we’re doing. We’re starting a new segment here called summing it all up – how obvious! JIM: Well, what we’re going to do each week is sort of take a look at the top 20 industries in the market in terms of investment performance, in terms of momentum and value. And I’d like to start out with momentum and value. And you’re going to see some commonalities here:
And those are basically the top 10. If we look at an overall broad industry – and this is just from a private database we have that tracks about 9,000 companies in over 200 industries – if we take a look at for example the IBD top 20 industries:
What we also find is the biggest increase or change over the last 3 months has been transportation equipment. It is now ranked number one, 3 months ago it was 139; insurance brokers is now number 55, they were 187 three months ago, gold, which was 149th place three months ago, has now moved up to 30; automobile manufacturers have moved from 190 to 74; financial services moved up, commercial service security has moved up, computer manufactures have moved up, and computer software, transportation and computers. But if you take a look at not only top performing industry groups, if you take a look at the top 10 for example in our private database: integrated oil, domestic oil, oil well drilling, construction materials, almost half of your top producers are in the energy sector. And, once again of top performing sectors, energy is a leader, will remain a leader and I think you could see these sectors even move forward as we get towards the end of the year. Remember, we’re in that soft shoulder period of time from now probably next month when the draw downs begin in natural gas and heating oil as we head into the late Fall and Winter months around this country. We’re already seeing every indication of that in the weather temperatures – whether you’re looking at the government, the National Weather Service, the Farmer’s Almanac – all of them are talking about colder temperatures. And even as we speak today, we still have a good bulk of our oil production in the Gulf of Mexico offline, a good bulk of our natural gas production is offline, and a good bulk of our refinery capacity is still offline, at a time when we’ve got tight supply-demand imbalances, and that is one of the reasons I wrote There is No Plan “B” last week as we’re still in denial and we need to start taking this seriously. And then yesterday’s wrap-up which is Still Cheap After All These Years, I wanted to point out just how cheap the energy sector is. In other words, it’s not frothy as many claim. So, once again top performing sectors – year to date and currently in the last 3 months – still overwhelmingly involved in the energy sector. [1:03:13] JOHN: Well, here’s our first question, Jim. This comes from Alan. He says, “what is static accounting?” And my definition is counting the number of lightning bolts during a thunder storm? How’s that? JIM: What he’s referring to – static accounting – often refers to the way the government accounts for things. Let me give you an example of this. Let’s say the total economy, the sum of all the goods and services produced in the United States is $1 million a year – I’m just using this as a simple illustration – and let’s assume that the government takes 10% of the gross of that economy in the form of taxes – so 10% of $1 million would be $100,000 – that would be government revenue. Now, when they’re doing their planning, they’re saying, “Well, we need to spend more money and in order to spend more money, we’re going to have to raise taxes.” So, they might say, let’s raise the tax rates to 20% of the economy. So therefore instead of getting $100,000 if we raise the tax rates from 10% to 20%, we’ll get $200,000,” and this is what we call static accounting. In other words, if we take a given set of numbers, $1 million for annual GDP output and we raise tax rates from 10 to 20%, we’ll collect double the tax revenues. What static accounting doesn’t take into account is human action, individual behavior, in other words what mitigating actions will individuals take as a result of higher taxes. Number one, maybe wealthy people will start sheltering more of their income? Instead of investing in stocks, they shift their portfolio into tax-free bonds. Number two is tax rates go up. Businesses have less profits to spend and expand their business, whether it’s hiring people, building new plant or equipment, so business begins to contract. If individuals have less take-home pay, they obviously don’t have the money to go out and spend, if you double a person’s taxes. So they spend less too. What happens is the economy contracts and as a result of a contracting economy, the government actually takes in less tax revenues. This has happened over and over again. It happened in California in the '91 recession. The state legislature raised income tax rates to over 11% from 9% and as a result of that -- for example here locally, our largest employer here in San Diego, General Dynamics just folded shop, closed down all their plants, and moved to Tucson, Arizona. So employment fell and revenues fell to the State. I can remember I was doing news at this time. They were actually empowering research panels to figure out why tax revenues went down. It’s because they used static accounting. In other words, if we increase the tax rates and the economy remains the same (in other words there is no change in economic behavior), therefore the government gets more revenue. That’s static accounting. It doesn’t work. JOHN: Well, basically, there’s something corresponding to that in taxes, which Congress never seems to learn, or State legislatures – as the World Bank put the figure between 9 and 11% - as tax rates exceed 10%, we’ll just say nominally, the revenues collected actually decline. It goes into reverse rather than a positive correlation. So the more you raise the taxes – sort of like the Soviet Union did, remember, nobody paid taxes, you were considered an idiot if you did until Putin slashed the tax rates down to something really reasonable. JIM: One of the movements that’s afoot right now is the movement for flat taxes. More and more countries in Europe, including Russia and Eastern Europe, are lowering their taxes to a flat tax rate. Greece is about ready to go to a 25% flat tax rate. And as a result, John, whether you’re looking at the Soviet Union, as we went to lower tax rates, guess what, tax revenues went up. And this has got people like the French and the Germans just scared to death, trying to fight this – these tax treaties – because the tax rates are so high. And that’s one of the things that happens. You’re right – when taxes go up, governments can get less tax revenue. [1:07:49] JOHN: Great place to go swimming, San Clemente, California, Bob is there. He says, “Jim, it’s been a very bloody week for the resource stocks. Having been in them – water, natural gas, oil, uranium, and of course, gold, and silver – for 2 years now, I’m still in the black, but huge drops in price are very difficult to stand is this a buying opportunity or a time to get out. I wait patiently every Friday evening for the blue light to come on so I can listen to your show. Thanks for all your insights and your wonderful guests.” I didn’t realize we were in a blue light district, so... JIM: Well, you know what I would suggest to do, yes it is a time to buy and what I’d recommend you do is on our website go to Thursday’s wrap-up and read what I wrote – Still Cheap After All These Years – and I think that’ll answer that question rather definitively. [1:08:38] JOHN: Mike is saying, “a little creepy to be pushing that peak oil argument and see prices collapse over 15% in a matter of weeks. The entire commodity complex is under distribution and liquidation. At one point you guys call off the bull market in gold and oil, and notice how the retailers, Google and Sandisk and all the gadget companies are taking off big after hours, seems like you guys got bullish on the wrong sector.” JIM: Hardly. You know, the number one performing sector as I just went over in the previous segment, half of the top performing sectors are still energy. There were 2 – actually a number of factors here – number one was the hot money that moved into the energy sector after Katrina and Rita. When prices started to come down, then this hot money began to exit. Then on top of that, add the liquidations that are occurring in the market as a result of Refco’s bankruptcy and you’re seeing a lot of margin calls and selling as people try to get liquid, and the full consequences of all of this is rather important. In answer to that, Blane was kind enough to send us an email that I want to throw in here, and he said, “I was reading a tag line on Bloomberg TV a few days ago when I noticed the announcement that Refco’s CEO Bennett owed the company well over $400 million. Like Donald Coxe says, this was a page 16 article that goes unnoticed for the most part. On Don’s next weekly conference call he made mention of the Refco implosion and his suspicion that this was the reason behind the dramatic sell off in oil stocks. He called it the Refco effect, and he indicated he didn’t know how long it would take to work through to the end, but that it could be painful for oil futures and for the oil stocks. He mentioned Goldman Sachs had passed off on their Refco attempt to IPO, and that Bennett’s attempt to IPO was a secret and desperate strategy to raise the cash needed to save Refco. Coxe suggested that other companies might be negatively impacted by the Refco implosion. On October 8th, Wall Street saw a huge, single transaction for a billion dollar block of Exxon by Goldman Sachs. This move by Goldman Sachs accentuated the dramatic sell off in the oils, that same day I posted the following comment on the COP message board: the Goldman Sachs trade of such a huge position in Exxon today is ominous, and makes one wonder how much they have been hurt from their association with the Refco debacle. It would be remarkable if the oil casualty from Refco’s demise was Refco, usually there are others. Stay tuned the oils are continuing to sell off big time and everyone in the financial media was proclaiming the death of the oil rally. Everyone in the financial media was expounding that the market was saying that crude was going to fall a long way, and that the oil stocks were going down big. Meanwhile, all of us on the Yahoo COP message board were wondering just what the heck was going on, there are a lot of savvy people on this board who know nothing had changed fundamentally and their is no real justification for the huge sell off. We only knew that something was going on and that it couldn’t last." [1:11:50] JOHN: In other words, don’t let the bumps bother you during a flight. Jared is in Minneapolis, and he says, “Dear Jim, I love your show. I am considering a move from Minneapolis, MN to Vancouver, BC due you know any reliable sources for economic and investment information in Canada? What is your opinion on the future outlook on the Canadian economy versus the US economy? Thank you so much for your wisdom.” JIM: Well, I can’t recommend individual brokerage firms, but the outlook for the Canadian economy I think is rather bright. Canada has just about everything the world is looking for in natural resources, whether it’s oil, natural gas, lead, zinc, gold, silver, water . It’s probably one of the most blessed nations in the world today. And when you consider its abundance of natural resources, the outlook for Canada’s economy is very bright. It has a balanced budget. It has surpluses on the governmental side and it has surpluses on the trade side. So things look bright. [1:12:51] JOHN: Basier [phon.] is writing from Plano, Texas, “I have a question regarding fiat currency, and more to the point, alternative currency to the dollar. As a small investor I don’t have the luxury to open a foreign account where I can have a portion of my savings in Euro, or Swiss Francs. I know about the precious metal market as well as services such as gold mining. How would a small investor diversify into fiat currency? How can I own Euro, GBP, or Swiss Francs. Too bad our national banks don’t give us the opportunity to have a portion of our savings in different currencies. Are CDs the only option.” JIM: Well, there are a number of options. You can look at for example a foreign bond fund and you might want to look at – most mutual funds will list what they own so you might look at the top 10 holdings – where are they buying bonds. Are they buying strong currency bonds, such as Canada, Australia, Switzerland and also look at other natural resource areas. For example, a great performing market this year, not only from a stock market point of view, but also from the value of what happened to their bonds and currency, is Brazil, because of its strong economy and its position as one of the largest producers of natural resources in the world. So, you know, a mutual fund is a very obvious example whether you’re looking at an open-ended fund or an exchange listed fund. Also, you might want to take a look at money market currency funds, which you can look at too as well. So the obvious choice would be to look at a fund. [1:14:27] JOHN: Lois is listening in Vancouver, BC, Canada, “Dear Mr. Puplava, the premise of your article is incorrect.” – [John] she’s talking about No Plan “B” – “First, there is no supply and demand connection to the price of oil. Approximately, $40 US dollars in the current price for a barrel of oil is a result of speculation and manipulation of the price and has nothing to do with the supply, in fact the overall demand for oil in the US has been reduced as a result of the decimation of the industrial base. The neo-cons at the time of the abandonment of the Bretton-Woods financial system in fact were responsible for what was presented as the controlled disintegration of manufacturing and industry, as the world moved into the so-called information age. What resulted was the growth in the so-called service economy. Peak oil is an illusion, in fact more and more experts in the scientific community are concluding that oil is actually the result of abiotic processes, which means oil is constantly being replenished in the earth’s core. It is not the fossil fuel we have been brainwashed to believe in, check it out, you can start with 21st Century Science and Technology magazine for a description of the scientific and abiotic processes. I am in no way a fan of Ayn Rand, ‘Bubbles’ Greenspan's favorite philosopher, however she did reiterate constantly that one’s axiomatic thinking must be revisited.” – [John]This by the way is what Aristotle used to say, “know your assumptions.” – “Always, always check your premise. I do not present myself as an expert, but I have studied the issue and can only concur that peak oil is a lie, because the obvious question to ask is cui bono?, from this lie. So, if you really care about truth you’ll reexamine some of the foundations of your current analysis, and in addition to reviewing the 21st Century Science and Tech magazine...” And she gives some other references there. JIM: OK, that is more political opinion in terms of what she’s saying. If demand has gone down during the soft months as we see here right now, why is it that the US is importing 60% of its energy needs, and that need in percentage terms is increasing each year? Why have 33 out of the top 45 largest oil producers gone into decline, each year producing less than the year before? If oil is replenishing itself, as you are asserting here scientifically, then the well would just simply get replenished each year. Maybe over millions of years that may happen, but certainly it’s not going to happen in decades. Peak oil is a reality and the more that we stay with this denial I think we are heading for real serious problems. Furthermore, to imply that $40 is imbedded because of speculation, I have no idea where you come up with that number. Peak oil is real and I think you need to open your mind. I’ve looked at scientific studies. I’ve read just about every positive book. We’ve interviewed people that have been positive. I’ve looked at the assumptions and yet they don’t line up with the facts. Peak oil is a reality and we’re seeing it. The longer we stay in denial, the bigger problem it’s going to be when the crisis arrives. [1:17:42] JOHN: Bob writes us from Oklahoma, “Dear Jim, do you suppose that the IRS would allow me to use hedonics on my income tax return? I’m sure I wouldn’t owe any income tax, lots of luck, what’s good for the goose ought to be good for the gander. You provide a great service to the community and the fundamentals confirm your views. JIM: You know I’d love that idea. Yeah, we could hedonically adjust your income. In other words for example, if you made $100,000 a year, you could hedonically adjust that income downward, because of the quality or the extra output you’re giving your employer. So for example, you put in a couple of extra hours of work one week, well, you need to adjust your income down. Even though you got a $100,000 dollars – you really received less because you put in a few more hours. And so what you would do is subtract that from your income. Yeah, I’d love to see the same thing. It would be great, if we could play by the same rules. [1:18:38] JOHN: I always like it when politicians go, “well, everyone should pay their fair share.” And the first thing I blurt out is there is no such thing as fair at all about this system! What are you talking about? You’re simply obligated to pay the legal tax due. There is a big difference on it. Anyway, out of time right now, Jim, what are we looking forward on the show in the coming weeks? JIM: Well, John, we’ve got a lot of great programs coming up. Next week we’re going to talk with Tony Blankley The West’s Last Chance Will We Win the Clash of Civilizations?. On November 5th we’ve got Larry Williams Trade Stocks and Commodities with the Insiders. And also, that same week we’re going to have a roundtable, “Are the markets rigged?” with my roundtable experts, John Embry, James Turk and Bill Murphy. So we’ll have a double-edition of Financial Sense Newshour. That’s in the first week of November. The following week we’ve got Raymond Learsy Over a Barrel: Breaking the Middle East Oil Cartel, he posits the fact that there is no peak oil – so once again going back to the emails we look at both sides here – on November 19th Ike Iossif will be back with Ahead of the Trends, November 26th Deborah Weir Timing the Market, the last week in November we’ll be doing a broadcast from the San Francisco Gold Show and then – let me see, what do we have? – December 3rd Eric Weiner What Goes Up: the Uncensored History of Modern Wall Street as Told by the Bankers, Brokers, CEOs. and Scoundrels Who Made It Happen. So we’ve got a lot of stuff coming up on the program in the month ahead and also into December. In the meantime, as John mentioned we have run out of time, we’d like to thank you for joining us here on the Financial Sense Newshour, on behalf of John Loeffler and myself we’d like to wish you a pleasant weekend. [1:20:18] ©
2005 James J. Puplava, Financial Sense
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GET OFF THE LEDGE, CLOSE THE WINDOW, SIT DOWN & CLEAR THE
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