THAT
FUNNY LITTLE FEELING
by Mike Hoy
October 8, 2004
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I feel that this is a very timely article simply because the elections are winding down to an end and a whole new party may be about to begin. For the past several months I have had an uneasiness that just never goes away. This uneasiness is centered in the back of my mind and I just can’t seem to kick it. I think I know exactly what it means, in the end, but on the interim I have no idea of the timing, games and stupidity that can happen to postpone the inevitable. The most important lesson I have learned over the last twenty-five years is patience and I have still yet to master the art of patience. I believe the “esf boyz” have been very hard at work for a very long time. I think that the web they have been weaving has trapped more people than we can possibly imagine. The most ironic point to this is the fact that it may not be finished yet. I believe a very small possibility exists that the spinsters could talk themselves into one more rally in the traditional markets. I think the odds are against them but I think the possibility exists just because I give the market credit for wanting to devour every morsel of food on its plate as well as all leftovers; it’s the leftovers we are talking about getting into the game now. I think another rally would be all it takes to suck all available outside funds into the market, for the final burial. It would be like the NASDAQ hitting 5000 back in 2000. I believe that this up movement would be no-where near as powerful as the movement of the NASDAQ in reaching 5000. Whether this happens or not is irrelevant to me because I have no intention of even thinking about being long the traditional market. If the market does rally I believe that this may be the last opportunity to sell at prices we may not see for a very long time. Again, I mention NASDAQ at 5000 for a reason. Now back to that funny little feeling; I don’t know if any of you have these feelings but once in awhile I do get them and I have learned to listen to them. This feeling is a little like the feeling you have when you meet someone for the first time and you shake hands with an individual with a cold and lifeless handshake. There is something about a firm handshake that tells the other party that you have substance behind your make-up and you are glad to make their acquaintance. There is also something about a lifeless handshake that sets off all kinds of alarms with me. I hate weak and lifeless handshakes; they show a lack of true character to me and raise all kinds of red flags.. A person giving a weak handshake really has no knowledge of what shaking hands is all about and I find it a little insulting that the other party thinks so little of himself to not show others what he or she is made of; unless they truly have no character in the first place. To make this long story short I find it difficult to willingly give my trust to someone like this without first having taken the time and special care to learn more about him or her. For those of you who may be timid and shy I do make exceptions for and understand how personal contact can make you feel uneasy and I apologize if I may have insulted some of you. It is amazing how often this feeling is proven correct. It is easy to assess this feeling in just the first few minutes of being introduced to someone new. I will never understand how someone does not understand that the first few minutes in meeting someone are so important and to allow a slimy handshake to leave such a negative impression is beyond me. I want my handshake to let people know who I am. I like meeting people and I hope they like meeting me. That funny little feeling is now reminding me that we are now in the month of October and historically there has been some very ugly things happen in the month of October. This time around could be no exception and the way the table is set I think an October or November massacre could be in order. The only reasons I believe things have not gotten real ugly so far is the fact that the incumbents would not be happy with the outcome. There is no question in my mind that the boyz have done everything in their power, for quite some time, to make sure that all economic data show, what they feel to be, improvements in the economy. Whether or not they are successful through the elections makes no difference to me as I believe that anytime one can exit a stock position within or buy within 20% from the ultimate top or the absolute bottom an average investor has done well and will be happy over time; the 60% in the middle is a pretty good return. Unfortunately most investors usually get most excited when the stocks they own are being bought at or sold at the 20% range on the wrong end of the totem pole. It gets back to that emotion thing that I have talked so much about in the past. Do not be fooled by the “spinmeisters” when they try to suck your hard earned capital into the markets after a small correction has ensued. I can clearly remember, and still have, a release from the brokerage firm that I worked for back in the past that sent all its brokers a release after stocks had pulled back by 25% pounding the table for their brokers to step up and take advantage of the weakness in their favorite stocks. I will never forget the wording, it goes like this, “hock your family jewels and margin your accounts and double your positions.” Their two favorite companies were $16 and $18 per share respectively. By the time it was all over the $18 stock was broke and gone to the world and the $16 stock was bought out at $6. The margin calls never ceased until positions were sold out. The same thing will happen all over again as the market breaks down. For traditional investments and investors there is a time to make money and a time to take care of your money; for traditional investors, now is a time to take very good care of your money. There is absolutely nothing wrong with a 1%- 1.5% return when all other traditional returns are negative. For those of you who believe that the metals and natural resources are the place to be; you will be handsomely rewarded, in my opinion, when the true picture of what lies ahead continues to unfold. Anyone should be able to understand that rising interest rates and rising oil prices are going to have severe negative effects on our economy over the long term. As consumers are forced to pay more out of pocket money to drive their cars, heat their homes and for some corporations, manufacture goods; leaving less money for the toys and leisure items that the consumer has become so accustomed to having. At the same time as interest rates rise the housing market will inevitably take a turn for the worse. It is no accident that Fannie Mae is having the problems they are having now. Do you see what I mean? None of this is rocket science and anyone can figure it out if they are not running for public office or being paid by or should I say “Bought Buy” the securities and financial sector. This is a time to sit back and listen to that funny little feeling as it may have something very important to tell you. This, I believe, is a time when the guru’s should step up to the plate and caution investors about the risks associated with traditional investing. There is another factor I believe that we should consider and that is the fact that George Bush is not too popular with the terrorists and I feel that the terrorists would be happy to exchange him for John Kerry. Whether this is a good thing or a bad thing is not the point; the point of this is the outcome of the elections in Spain and how they were influenced by a terrorist attack. We should be on our highest individual alert as I think the possibility exists that the reason we have seen no domestic terrorist attacks since 9-11 is the fact that they may have been waiting for the proper time to hit us when they have the absolute most to gain. I hope I am dead wrong but we do need to be alert as the possibility exists that we may catch them before they can strike. That same funny little feeling is also telling me that the next leg of the bull market in metals is ready to begin. I feel there is no question that the policies of our government, be they Republican or Democrat, are going to be hyper-inflationary. These people will do anything and everything they can to keep the economy, market and financial industry afloat for as long as they get to make the rules. This to me is why cycles exist; if these people would act in the overall best interest of the Country and not the selfish interest of the individual voter groups I believe that we could lessen the extent of the Depression when all the “illusionary magic” has failed to produce an outcome that never had a chance of success in the first place. The only question I have, when it is all said and done, will be the fate of the rest of the world. Will the financial system in China fail? Will the rest of the world be able to avoid the tough times that face the United States? I believe the rest of the world has a chance to avoid the pitfalls that await the U.S. economy and if this is the case then there will be some very interesting opportunities unfold as China and India enter the 21st Century. I want to sell these developing countries the raw materials they need to develop; I do not trust them at this stage of their development to invest in the belief they truly do want to abandon their old Communistic ways. Yukos and Nevson can vouch for the fact that things are not where they need to be for one to truly have faith in the safety of one’s capital overseas. Besides I have plenty of companies that I really like without the risk of a flashback, in China, Russia or any other country to some very unsavory times. Some of you at this point are thinking that we could have the same thing here in the U.S.; we did before. Although I have read that no one who possessed bullion was ever charged with a crime for not giving it up. If our politicians tried to do this again I believe they would be very surprised at the outcome. After all, I am sure that some of you vote; besides this would be a situation where we could finally get some really positive help out of the legal field. Even they have it in them to do right at times. I don’t think any politician in this country would have the guts to go after the nationalization of our mines. After all, why would they nationalize when all they have to do is print up a little more worthless paper and pay, what is perceived to be, fair market making everyone concerned a happy camper. Why risk votes when you can buy true wealth and votes with a little more worthless paper. Yeah, that funny little feeling just keeps poking away at me and I thank my lucky stars it does. My first article is about to be sent to those of you who have signed up for my e-mail list, thank you for signing up and for those of you who haven’t; there is still room. Mike
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