Разум денег: Интервью с Робертом Пректером


Uploaded by AndreiShevchuk on 14.11.2011

Transcript:
R. ó Robert Prechter D. ó Douglass Lodmell
Welcome to the "Mind of Money"
My name is Douglas Lodmell
and today my guest is Bob Precter. Bob is author of "Conquer the Crash",
as well as "The Elliott Wave Principle".
And, Bob, thanks for joining me.
R.: Yeah, I'm glad you took the time to come see me. D.: Yeah, it's a pleasure.
So i wanted to really start off withÖ I follow your work, I think it's
fantastic, it's very enlightening and it helps me
really in a very practical way.
But many of the viewers are going to be unfamiliar.
So if you could give an elevatorÖ
Öan elevator summary of, you know, how you see the world and what your work really is ó
that would be a great place to start.
R.: Yeah, the work we do is so different from what other people do, that
sometimes you can feel foreign to people.
Most people look at news and events and so-called fundamentals to decide
where markets are going.
I actually think those are not causes, they are actually results,
that markets are buffeted by waves of social mood,
that those changes in social mood are endogenously regulated.
What that means it arises naturally from human interaction:
people become more optimistic for a period of time,
they could become more pessimistic
for a period of time.
And we track this according to a model called "The Elliott Wave Principle", which is
a model of fractal movement:
five waves in one direction, three against the trendÖ
Öagain and again. And those iterate into larger and larger patterns,
all looking roughly the same: five lives in one direction, three against the trend.
Nothing is always crystal clear and nobody has that perfect knowledge
of the future,
but I think people using the fundamentals are mostly lost, because the
fundamentals lack
what the market is actually doing.
What we are trying to do is track the market in real time, and if you can track it
while you're utilizing this wave model
you can often anticipate
important turns and even describe in advance the kind of not only
the kind of change you'll see not only in the market
but also in society in general, and we're seeing some pretty dramatic
changes there today, and those are the kinds of things we try to anticipate.
D.: Well, let's go back, because you have some history, so let's put someÖ
R.: That could sound
two different ways, "you have some history".
D.: Well you wrote "The Elliott Wave Principle" in 1978,
so you did make some predictions in there so we do have a little bit of
a track record, so in '78Ö R.: Oh, there is a track record of the Elliott wave practicians going back to 1934.
D.: Really? R.: Uh-huh.
D.: Okay, so when you pick this up and you wrote that in 1978,
what did you see for the world?
R.: Well, my co-author A.J. Frost, who now is deceased,
decided we wanted to write a manual about the Elliott wave model,
how to apply it and so on.
And when doing so
you can't help
but explain where you are in the current juncture, because when you're labeling
the progress of these waves in the model
D.: You have to start somewhere R.: You start somewhere and you have to be somewhere
when you discuss it.
What we call the orthodox top true peak in the great bull market from
1942 did in 1966, and from that point forward we've been
in a bear market
We're writing a book in 1978, the Dow is around 800
when the book came out and we said: "This is a fourth wave in our model, that means
there's one great
big bull market ahead, very much like the 1920s", in fact we said:
"This is going to be much like that roaring twenties".
Little did we know it would dwarf the roaring twenties by three times, but we
were predicting crazy numbers like that of 4000
when it was 800, and people thought,
you know, "These people are out of their minds"
and then later on they said: "Well, you were not bullish enough".
Well, we did call for mania in stocks, an institutional mania,
individuals would go crazy, there will be new
vehicles the people could trade, and of course that's gone.
D.: Yeah, the innovation of the derivatives market and all of that. R.: Again, to lengths we never had been imagined
but we knew that was going to be the direction. But we also said something
very important.
We said that when that bull market is over, the next bear market ó
since that is the fifth wave and that ends the five-wave structure, you gonna get a big
three-wave moving in the opposite direction ó
that we'd had the biggest bear market
since at least 1929ñ1932.
D.: Okay, and in your model
that starts when?
R.: Oh, it's already started.
In fact, in real terms that started in 1999 ó that's when
the averages peaked in real terms:
they peaked in terms of the producer price index,
in terms of gold, which is real money, in terms of commodities,
the Dow and S&P all peaked in 1999 or in early 2000,
depending on which measure you are looking at.
Now, in nominal terms, because so much
"money", fiat money, was created
between 2000 and 2008
the nominal averages managed to make a new high in 2007.
D.: Right
R.: In fact, a few of them which where bullishly biassed made a new high in 2011,
just like Value Line Arithmetic Index, whichÖ
that's amazing!
Well, supposedly
due to the fact that the measuring unit had shrunk
andÖ so it's really phony gains in that sense, [real money has had the bull market].
D.: Okay, so let's talk a little bit about that phony money and what
the distinction is, because
there is reallyÖ the way I understand, there is two types of money out there:
there's th fiat money we create, the dollars we print,
and even quantitative easing money, that we digitally print; and then there's
money that's created through the credit in other words, so I'll call it
credit fiat money
and that's when the bank through fractional-reserve lending creates money by
lending it into existance.
One of those is collapsing right now and it's actually gonna send
the other one
to become more valuable.
Credit fiat money is collapsing and my fair in saying that, well,
fiat money is actually going to end up becoming the most desirable thing?
R.: Yes, I think I'd like to start
I'd like to start with the fundamental idea that
there is only one true money
and that is money that hold it's value over
eons of time.
The people naturally treat as money
that is not only a medium of exchange, but the store of value.
And the best item that's been used for that over the ages is gold.
Now, what the country decided to do back in 1933 was to go off
the gold standard,
and we entered this new world that you just described: fiat money.
D.: The fiat money which replaced the gold, the pure fiat money.\n R.: By law. It wouldn't have replaced gold,
because people always go to the better
product when they have free market.
But the government outlawed
gold as money and said:
"You're going to have to take our fiat money instead".
Now, it's interesting to me that
there is no such thing as money in the fiat money system. We use the term "money"
just as a shortcut, but there's no money there at all. In fact, the money that you
were just referring to ó the notes that the Fed prints and the credits that they offer to the banks ó
are actually backed by what?
Debt. Long-term debt
of the United States government
and some other debts as well that they've recently taken on,
but mostly treasury bonds.
So, really it's debt backing
what they issue, it's called a note
which is supposed to be another "I owe you"
or, you know, "I will give you a thing for it". D.: Right, that's the word we use when we draft a note for somebody. It's a credit instrument.
So, fiat money is actually all credit-based.
However, once
someone with his hand on the printing press
actually issues a note
that's irredeemable in anything else, that's what we have to term
for, you know, money and in this systemÖ D.: At this point that's our base money.
R.: And that can be created pretty much at will, and people often bring up
Zimbabwe,
different countries in South America or Germany in the early twenties
that had hyperinflation because someone cranked out the notes from machine.
But our situation is very different, and this is what prompted me to write "Conquer the Crash"
back in 2002
and that is that
a small amount
of that kind of bank note money
was underlining a tremendous inverted pyramid of debt,
IOUs of all types, you had as little as half a trillion,
I think it might have beenÖ
800 billion when i wrote the book
of fiat dollarsÖ D.: Credit coins and cash. R.: Öyes, supporting all of the IOUs
which then amounted to 50 trillion dollars, and now amounts to
over 70 trillion dollars,
and that if you're very conservative in counting how much it is.
So, for two reasons I wrote the book: number one ó
the five-way strucrure of the Elliott wave model was coming to an end
on the very long term basis, telling us that
social mood was peaking
and therefore was about to get more negative with the several kinds of consequences;
and the second one was the ó
if you want to, call it the fundamental aspect,
which had built up because of all the powers of the social mood,
which is all the credit,
that the creditors believe they'd get back because of their optimism,
and the debtors believe they could pay off because of their optimism.
There's too much of it, it's unpayable,
and that's a perfect storm when you're going to have the change to the downside
in social mood
with an extremely risky set of fundamentals.
D.: Well, you knowÖ I understand that, and
what I hear all the time from my clients is:
"Okay, I kind of get what you're saying,
but it can't possibly happen,
just can't, I mean, it's just in my bones, we are in the United States,
this is 2011Ö it just can't.
We can't go into something like that, I just don't see it,
somehow they'll solve it, they'll figure it out".
R.: You're right, that's that permeates a lot of people's thinking and
I don't know what to say, because if you study history
you know that the history of social man is one of extreme cycles,
not just moderate cycles, but extreme cycles.
One of the anologies I have today
is that I think 2007 and somewhat like 1937.
people were dancing to benny goodman and having a ball and it wasn't that a few
years later that world war two start
uh... in the world was so different
three four five years later uh... that it
hit with its just stunning
now if you can see around the corner you can see things like that happening but
with the with the way it while you can often see around those corners as we did
in nineteen seventy
yeah well and b
it began i'm coming from and
standpoint were my mandate is a fresh lisbon
uh... and nasa protect attorney to protect from and unlikely but
potentially devastating event that's for the last several years
and today i see that set up in the market uh... i'd can see how likely it
is
on but the marched and were likely i'd right assigned that possibility
and though
the fact is potentially
devastate
the word unlikely is an interesting word them i think that it's applica bowl
statistic if you talk to a statistician yourself highly unlikely ratner okay
but if you talk to a historian
for someone with a model such as ours which is a model change not the kind
economists is really
linearly extrapolated everything extrapolation of frontal models and look
changes coming
it would questions how big it is
i went out so far out on the linen in that book
listed on a one-armed economist i don't see any other outcome in one on
describing here
so uh... it went from unlikely
to certain took virtually certain
i would go as far as they would we all know exactly what the future bring
banana
is closed as certainly as i believe
uh... i can get and therefore
what's the downside for being safe
you know i was asked if we go back in nineteen eighty two and we were saying
you won't load up on stocks
we were kind of nervous because if we were wrong there were people dot four
hundred on the death penalty
uh... people get hurt
but this time with it
i can't hurt anybody but i've been advocating sixty and i know that you
that's what you do as well
well uh... that's really the whole message is that
if you're not sure let's just let's say that the you signed fifty-fifty chance
of are maybe twenty counts doesn't matter
what's the downside of getting safer than what you're hearing
well some people say well i'm going to be to state because a lot of things that
the people who have kids safety
uh... recommend don't have enough yield for me don't yield
or you know i don't have enough uh...
excitement of one of the answer
markets that are moving rapamycin that is no i didn't go to vegas but if you're
in the second half
you can take a small percentage of money for
speculating on speculate on the downside sir and you can use
uh... the futures market to make a lot of money happening and outside of the
down side as well as the ups
right inappropriately hedge it really if you have uh... you know most of my safe
and to prevent it was your money safe and uh... that's ok hear motions will be
too wrapped up with a few minutes late as well
uh... but the fact of the first part that your part
uh... there's an old adage it's nice to get a return on your money but you need
to make sure you get a return of your who has ever entering a time when
that risk is going to skyrocket yeah
dislike people found out who bought sub-prime mortgages backing away right
returned to their coming back around again and have a second round of
sub-prime crisis minute it you know this shot across the bow people saying i'm
going to get a chair and go get some sun yeah i i just uh... its
through some things this partial recovery
and when the market bombs in march of two thousand not uh... we came at that
time there were only two percent pools
uh... recorded by the uh...
daily futures
uh... tally
that trade futures dot com kids
and that's when we stepped up and wish that were at the bottom
it's a clear five ways to know that we have a three-word comfort remove it's
only a bear market rallies i could go to a new hotmail
you get out of the way
and even said in a pro two thousand it is just a few weeks after the bomb
that was a top came no one would believe it was going to have reagan would have
adopted the bull market idea at they would say the fed rescued a monetary
system the government's programs work
uh... the economy's in recovery
arsenault over yeltsin the president would get more popular
testifying on not write a radical of march april may
their it was a speech
and popular t_v_ when the market topped and all those are all aspects of
positive social yeah
well we've come down since the end and i think we're going to be we had an affair
kuwait down
that's that's going to the larger
than the two thousand
uh... seven to two thousand ninety sonya did
you should be
as safe as possible in this
twenty-mile right now we're the highs that we just saw that so that we see in
the last vote yes and we can talk about some of the market analysis that i think
goes along with that
yeah fifties the
people you uh...
you speak to you know or interested in the technical aspects of things but that
is our conclusion well you you didn't credible video in the last uh...
theorist which is available there is that
andy from five diamond that's where i would point people to fit because it was
an incredible analysis and and you really explained in ways that uh... was
uh...
just on a mobile to draw the conclusion
on the parallels are to blackouts are twelve unavoidable but but
vast majority of people
there are two cancer yeah i find this message
there's the recovery camp
and they all dat on the economy's going to bloom within normal uh...
you know we start time in history we just came out of recession is a great
and some of the people who run funds uh...
you know very famous people were down as much as fifty percent just a moment
noceda viewers hoga
now the other two
you would think but but i would be a good enough
or are the bear is who say the outcome is going to be hyperinflation brett so
you wanna own commodities and
and uh... metals
and uh...
land and so on and well
real estate just made a new low for the entire declines in two thousand six
silvers already seen sciences
down more than forty seven percent in the recently
uh... commodities mater high three years ago in two thousand a_k_ recovery rally
perfect sixty-two percent retracing yeah
which is one of the percentage of cases that week that we uh... pay very close
attention to
uh...
the only thing that held up his golden that's what's keeping them you know
believing
it's it's serve
it's to me somewhat of a
for because
they'll hold on to the last bull market until it finally rolls over as well live
mahe manipal because people always focus on we were the last thing going up is
when i was going up the most remember how much everyone love will african's
going up now and i'm forty seven fifty yeah
dollars of their own
it was the craziest over valuation history while everybody believe the
people are gonna run out back in two thousand they believe that uh...
technology was so amazing that they should on nasdaq stocks etc
uh... hundreds of times earnings thousands attorneys and use of the notes
i don't know where and for that yet
so there's always a fun little story and of course the final story behind the
wheel right now this type of collision will ever get out
i do want to say one thing
hai
as i said at the very outside of our discussion gold is the only real money
or some other experiments coming out to find very interesting uh... did you
yeah uh...
and uh... but
for now the uh... the only real money is gone so
which doesn't necessarily mean gold is going to five thousand because we're
stuck in this fiat money
system that you talked about our right the house
this means all of the debts that we talked about or denominated what
conducted involving all dollars have contracts
you know you can go on a until nineteen thirty four monroe's altogether
so they're all denominated in dollars that needs to pay back the deaf people
have to come up with what
politics convert your goldenthal and
this is another step we've had for quite a while we're very bullish on the u_s_
dollar
not because we think things are going to be great
because we think that debt is going to implode and people are going to be
demanding whatever dollars remain
pay off those debts right well uh... that's that's uh... dots that look very
important understanding because this
distinction
really makes a difference you can see
gold as real money and still understand that it's not going to be five thousand
it'll still buy as many girls off of oil pump
deborah recipients would be stupid to say that it's been able to buy it for
uh... does announce global always by two hundred thirty exactly and so that's
real money and that that's what it means
uh... it doesn't fluctuate first say with really fluctuating is the value of
the few racked up and uh... right hand of his uh... lost a lot about in terms
of real money and since nineteen ninety nine two thousand one
uh... but i think that's about to change because of the dead inclusions that's
beginning to
reignite
and has this debt so we have if i can
picture this
we have this discredit fewer money which is this the debt which is just
dozens of pop artist bertrand
we have the fiat money enemy of gold over here that's not allowed to really
playing the game but that is representing right at this point the
fiat money
so as this spirit collapses
from from the top down
the fiat money that is left is going to be competent credible about exactly now
this little bit at the bottom let you talk about those of the dollar's had
been created printed a similar roles right
but those
all of the debtors all
in fact faithful
seventy trillion the conservative you can make a case it's in hundreds of
trillions in debt
of dollars that
then suddenly the credit decide they want to now
you know there are enough
service and all of his own defense is going to print print print in they'll
never stop printing money
uh... in my view
uh... this is uh...
myopic view of what the fed actually does the fed actually takes on what they
believe the pristine assets matt again i don't use the that
animation notes off of that
uh... at some point
i believe the fed i've been saying all along the fed is going to stop
for two reasons
number one we're going to be worried
about the value that underlying collateral
they took some tremendous risks in two thousand eight lovable
mortgages attracting a lot of fannie and freddie paper but they got the
government to guarantee it so it's almost as if they don't even really
sticking pretty much to the safest
that you can get unplug the phone your replace never happened
uh... but i think the only reason uh... this is what i've been saying all along
as well
the change in social it is going to bring in monetary conservatism and
politics is going to basically make them stop
and you saw what happened itself we've learned how to write that perhaps there
was no kiwis recently had sex
as everyone down the road if there's a lot of pressure right now
if it has internal dissension
dot external of criticism
and again i think they're looking at some of the people inside the federal
timber portfolios and your we'll some of this we don't want to hold a lot of
really junkie stuff yeah people ruin
the reserve bank
so their stock we've created that created she would step through the
through the system you know that that has to be repudiate
well let's talk a little bit about that the average guy i'll so
somebody with it is a crime on
uh... or who's watching this video and they have a little dealing with one of
yours isn't exactly an average well maybe not you know the average guy but
definitely have urged millionaire next door let's cut your you know they have a
little bit of money its summit
there are two metres favor investigate say they've worked very hard for this
mind this is not somebody with that was given to their didn't start with in most
cases
and it's what they've got they've got it and they need to retirement uh... it
needs to be there for them
um... and they they already think i'm in the safest thing so they don't make they
put cash
they put it municipal bonds to a group a large extent
almond upper into conservative growth stock portfolio manager by mutual fund
or something of that nature
what would you say that
that person well i would say that you're not in cash
okay every single thing you know has an obligation them
every single thing
if you think you're in cash in the bank guess what
uh... if you know the law
and if you read the
prospectuses banks
they are not keeping your money safe
now they're not safe keeping your money now they always what's in your cap at
the end up in the month caso your bank balance is nothing but an i_o_u_ yeah
uh... if you own stocks
uh... that's very nice you have a percent portion of the company
uh... mess
sort of a tangible thing yeah
however what they also are saying is
we owe you a lot of evidence yeah
and someday they might not be able to use it
when you talk about municipal bonds or any other type of bottles are obviously
newsround
you know they said we will tell you those dollars with props
so up
to actually get into the really safe the composition is not an easy thing for
most people there that's why i had to write have a book to explain how to do
it now
yeah so so the answer is is that
you think you're being safe right now but you're not because those assets even
the cash in the bank
may not be accessible to you and we have this
d leveraging this credit money system collapsed on top of that yet my system
what you're going to be able to get to as the hundred-dollar bills the threat
of those if you have
buried in your of a backyard
mobile images of the funeral
right in that must build on the ballot keep any extra
but it whatever you have is what you're going to have
on so you won't be able to meet him and get them with it's possibly
yet but i think that's an eventual result of the problem
uh... but whatever the net bank count may not be a successful to thinking
about this
what is backing
the the
deposits that you have
megagate when you look at what they say oh i'm fine ok six dollars m
what is backing of what's really if you've got to take a total of all what
you get a fight
happened by sat there
a box of mortgages yeah
well that's ok in good times uh... or just keep their value now but as we've
seen lately and i'm pretty surprised that people have got word that banks in
the state yet
uh... haircut value of oranges fallen dramatically now
as value of housing has fallen dramatically and that's the collateral
was back in the morning chancellor which is the collateral backing your
euro deposit at the bank
in my view
this is becoming more and more of a dangerous situation
nobody following me his is taking those kinds of risks
uh... we've already determined ways to pretty much avoid that kind of thinking
ribs
well and what i tell my clients is exactly that would save money do you
think you have in the bank is not
really as it did you think it is
on the municipal bonds uh... even though that say you bought that top grade the
highest one percent of the value did know the grading above
on it doesn't mean that they're exam from whence occurring here because this
is
reminiscences systemic this is not a fan individualized thing that that
table that was sent
that's correct but
some people such areas
view that
that knows the bond market really well uh... some specialists
i know if you are the people who are really good at picking the safest
imaginable bonds have
you know there's probably an edge there them
uh...
certainly if there's an implosion systemically a lot of that goes under
some will probably survive
but i'm not smart enough to pick those up and in front of the pressures of i
don't know yeah which i will use
you tripoli at the start of the depression and remain tripoli throughout
the entire departure and i was through the u_s_ government bonds back in the
thirties yeah
so you can say at the end you know that's that's a great thing all right
through the depression but uh... offense at the time i can't even say for sure
that that u_s_ coupons over remain tripoli
at least
one outfit is has denigrated them from tripoli september so uh...
you can see the kinds of stresses there already occurring in the system
monitors
i don't think you can regret
tuesday
right with the rest what's the downside
so little bit of interest
yeah a little bit of interest which apparently is what foreperson tax-free
interest with somewhat yeah right
if you're fairly wealthy person star with uh... you should respect
five-year right
or if you are risking it you should
you should pick the the point at which it's it's comfortable to get out most
people when they finally make up their minds
prices are down twenty point twenty five percent happen people ops
uh... and and and as someone just out all of the colossus
that's the flip side of a new my interest yeah
may stick in their maybe they get lucky and they can put their coupons right at
the end
that maybe they get unlucky
and they own the minister bonds tremendous ability that goes under
now uh... fulton county down in atlanta was far from tobacco counties in the
nineteen thirties right
and this is that the big thing that came in and i love the the word your
saying about how
with the l_a_ with dozens is forecast based on
how people react to really looking at the people and the system of how we
interact with each other which
doesn't really change or has a really changed a lot
palm it's evolved and we do it differently and we do a different
technology which
actually just be set up an accepted her
uh... i don't see how it's going to be different this time
well you know the reigning you know
paradigm for many many years
has been and still is the efficient market offices which does not really
uh... include anything about emotional human nature at all packed up for
auction rational doctor price like cheese and bread in everything that
center
behavioral finance his chipped away at that for quite a bit of time
but from the very beginning when frost and i wrote a book in nineteen seventy
eight lisa financial markets are psychological nama and i'm a radical on
the other side just as the official market people are here from as far as
you can do here because i think all of the movement in the market
are based on which the social moon their occasional short term emotional
reactions to news but they're very transient
there could be over with my reprisals for forwarded in the model anyway
uh... and that's a very different way of looking things
at things
but it's so useful because with that model you can use to be changes
in the things that the official market guys think far far pricing stocks as the
fundamentals right
and and now you're seeing tremendous changes
and fundamentals remember how bad the earnings were a couple upon negative
order
before for a few thousand yet
actual losses for the first time on record
and in the market goes up for two years ago we had
now the best earnings at record earnings followed the market they do not leave
yahoo tonight with
t_v_'s sometimes when it comes to the jury is reportedly what's not
now that's the opposite of the weight you should think if you wanna make money
in the market yeah
well that's it
it's something that when you look at it becomes apparent but frankly most people
don't really hasn't been here for some reason people can look at that ah...
ah... still doesn't think it because they're so stuck in me
billiard ball mechanical
causality up
mode which is that well nothing's gonna change unless event occurs nine and we
said look we can predict the event
because its human beings
changes
human beings changes in in their social move
causing them to take social actions
end up being events and showing up in the newspaper that so if you wait for
the event you do it
denmark is already down in immediate reaction to those changes and move
were in this worry provide down in the and the wave
palm where does that go from here with the timeframe incidences though in the
wave model wealth um...
hi tend to jump the gun on financing like like it sees fit
structure
uh... released i believe i can in the future so i get so excited about uh...
changed okay were coming into a lovely very real exciting sometimes it takes a
few more months to get their yeah the same thing atop a complete in a lot
longer than i ever thought
uh...
so i don't know if
you know people should rely so much on on
time
forecast it's going to happen when it happens and the bottom of the bottoms of
that will recognize the structure when we get that however
because i can't help myself i still do a lot of finding work
and uh... from several different approaches which i discussed on a video
that you may have uh...
hike they believe we've got about five
down the years
uh... to to wash out the financial system to get to a good bob
and let's bring upon more topic
what you're trying to do with your clients
when i'm trying to do with people who loosening the protect
her ability
to buy
that's so that when the real world columns real bargains are there
they've got the wherewithal to do
yeah and that's the time you're gonna wanna have that cash in your going to
comment
measured by a fifty dollar stock is selling any
hysterical anything more interesting to me
uh... i think the kind of multiples you get when you buy into the true bucknell
like nineteen seventy-four track nineteen eighty two
eighteen forty three
the first few years off the bat one stocks go up
ten and twenty times
and that's the real money but the right at all weekend
yeah exactly record one again this is just part of the strategy of of
you don't divide your assets take uh... uh... it's safe in most of it if you
need that juice if you need to play it if you need to be in the market will
take a bit of it and culpable he actually you know that's the fun part
wheat wheat track
uh... mark short term as well maybe even have a guy who follows a dinner date for
people in the traders breath
there are three times a week update
it's is focusing on these changes short term and with so much volatility
recently
took philosophy of a place where not write some crazy right
but uh... if you catch a few swings up-and-down into different religions but
a lot of some p plans
sometimes what kind of person you are most people are traitors and i believe
most people should not be traders yeah
it's really one in ten thousand that's copy emotional makeup too
to learn how to do well winter
uh... so most people should avoid
but i think if you take a position that's not overly leverage
yeah i think you can make some that's where you get your interest yeah
instead of having that risky bond
uh... why not just uh... help of the few futures contracts and shortly recipient
your food
right when most women simmer companies if you really
oakland for
popped up again
predicate act exactly
so arm uh... on legal fees because it you know i'm a class when my class
called and said he's got a million dollars tanenbaum cell right now
physical and and
was act
uh... cat i couldn't believe it
on and that was most of its
it's it's dist
dancers monuments just can't have that
massive well
gold is real money and eventually it will
it won't go zero with the stock now
so uh... definitely
the same people that got everyone caught up in silver in nineteen eighty-one were
blowing up this time of death almost to the same dollar yeah
and uh...
instead of you know what we try to do what i try to do as i try to get less
bullish is a market goes on
yeah and and more bearish thereafter wasn't in there
as it goes down i i wanna get less bearish answer
but people who are married to a position such as uh...
uh... peak oil
are running out of oil
they can't think of any possible reversible time so the idea well going
from a hundred forty-seven down to thirty four dollars
in five months we'd never cross that line and that's exactly what happened
there
same thing with a presto people uh... especially in silver people it's it's
gotta be two or three hundred dollars an ounce and then you can imagine
fifteen percent
and those
when you get into the when when you use those kinds of fundamentals now you're
setting yourself up to get really hurt
personally i think uh...
you know coldest park
but i still advocate holding whatever gold you brought in earlier years
natcher if you're on
overly invested
uh... that i would see diversify little not a big fan of diversification
but at the same time i think uh...
shouldn't have every single agency yeah
so i'm
as we go there's there's going to be some key frame from key moments that i
think in forget timing but this
there's going to be some things that occur
you see those what the in your mind how you see those those key for a moment
movement in the coming years well um...
yes what one of the things sick people are going to want to do plainly decline
abandons and when we get into it the second recalling facing
which were in
that's when bad news tend to just poor
gives the that's the calls but course is not as a result of the high you can see
that newsreel on the news was great record earnings
sort of thing
and as we go or more more bad news will come out one of the
results of a trend toward negative social mood the polarization of groups
no conflict among the groups
you can see there's already been watching the least they've actually
changed governments over there no they said well united states is nice and
calling all of a sudden a few weeks ago what happens with the demonstrations on
wall street now they're marching all through manhattan spa pickup and other
cities have
when you ask them what they're angry about
they've got a few vague ideas
but really they're just angry that's just one express exactly right and
that's what social it is all about it some people expressing randomly kind of
like that protesting
yeah you know they're not sure what
and other people uh... actually mobilized forces and expressive uh...
more uh... pointedly and that's how you get things such as separatist movements
uh... riots
revolutions and all those things that that we think are are likely to come
during this wave as well
and by the bottom
number of people afraid people work for the first quarter two thousand nine now
to buy the stock market i a and you can always look around and point out reasons
now
uh... we have all those reasons that the awful we'll touch stocks the ten-foot
pole a crazy person would do and when you hear that that's when mission that's
what nokia
exactly
uh... well uh... i mean this is still helpful
it's it you know it's not that the view you here
and rashmi
mean we've got uh... you know this this this media that just seems to follow and
and promote different perspective and you know my understanding of how we work
as humans loses we really did mehrotra believe
on and it's very hard one to the american any belief to get out of it but
the greatest challenged in the greatest reward lies in in challenging on believe
and if your beliefs
are substantially motive
by unconscious social move right
you don't know why you're expressing them
and that's kind of thing that i'm trying to explain
uh... that
social mood permeates all kinds of people's thinking they'll come up with
rationalizations yeah
not realizing that they are calling reasons why they should on this
particular item
not a two hundred fifty dollars an ounce but nineteen hundred explanation on this
talking on the twenty dollars a share but i did sixty dollars a share why they
should own twelve on it
nine dollars a tentative eleven dollars a barrel
ninety hungry the hundred and forty dollars a barrel there are always great
reasons to do the wrong thing we're going to come from
they come from rationalization in the rationally sit rationalization is
motivated by it was so no wonder people today are saying
you know as you said earlier uh... and nothing bad can happen and it will be
fine were in a major top-tier
now that some people think at those times uh... bottoms they think
we're told will never recover
united's lowest if we always do and and uh... uh... somebody send meaning of
evidence that
uh... through talking about the dollar and uh... very bullish on the dollar
because of what we just talked about if it seems like the top companies don't
agree with you and i said and that's exactly my point so
like dollar i would say
have been in this business and sit seventies right
has been the most one-sided market i think i've ever seen yeah
certainly on the downside death
uh... the amount of vitriol expressed for the u_s_ dollar in the past few
years has been unbelievable
an incredibly the dollar hasn't made a new low it's two thousand eight bob
and and i thought a few months ago and held a book that lol during a
the most amazing pummeling
verbal that overheard and you know you need a vatican city needed by the
foreign currencies did about these commodities
i think that's the wrong way to go here and innocent
so one-sided i could make a bet the dollars going up on that basis along and
the recent bounces attracted a few people so shaken up for going on ur now
but you're absolutely right
uh... you'd have to have the courage of your of your convictions as an
individual yeah
and absolutely
do not follow what the extreme consensus sometimes consensus is right for a while
that has actually
cosby's takes over the year diplomatic strained historical extremes reach
uh... but
if you stay out of a crazy market your you'll be happy
the year two later
and you have a minimum of time comes you'll have money to give him and and
have uh...
true bottom ah... and get crumbled
on one of these i would say that's your money act like it
and uh... surprise because people don't act like a pig their they're afraid to
call their prime broker and sell because they don't one f end of ninety five
conscious
shock but
germany man act like it didn't take the first responsibility to ensure that
there is another uh...
select psychological
for cork that i think misra funny and that is that people think their job is
to buy stocks compact you know once narrowed by that i only saw one that i
want to buy something
but the point is that
make money right now so that means
all your ultimate goal is is the money
if it's not just to amass doctor if you really love stocks thing and all the who
cares if they go down fifty percent and i realize that you are the role of the
fact that there are now and i was a bit you know if you really do what's up
which i think at the bottom middle
disavow your heart you can buy
plenty more than people germany now and wait
exactly
well bob this has been fantastic i really had fun thank you for joining us
and uh...
you know this is something that i really hope that people listen to a hope it
opens their mind i hope that had make them question hope of that drives them
to you on your website and uh... uh... left to give and i think i appreciate
your for because so many times particularly video interview should be a
you know
or twenty seconds yeah
it's hard to covered again but we did pretty good chance that we did a great
job and uh... and i'll be happy to come back up and do it again and maybe a year
when we see where this all goes within check and say we're right and we were
around exactly side
rnfk for friendship president mind of money thanks for joining senate
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