Posts Tagged ‘Financial Planning’

Beware

The current Bail Out Bubble Rally will probably end in the Jaws of the BEAR !

So Dear Readers, Stay alert when the Dow breaches the 9000 level.

Where Are We In The Markets and What Should We Do?

Current FF Market Model Allocation?

Category 1 – Cash

Gold and Silver are most likely in a long term up trend that started in 2001.  They peaked in 2008 and are currently working their way down and up and down to the first buying opportunity in several years.  Remember nothing goes staight up or down.  Gold should be buy below $700 and silver should be a buy below $7 (very rough guidance).  The pot at the end of this rainbow is a few months away.

PS: This is supported by Long Term precious metal cycles, Long Term trend lines going back to 2001.  The only caveat is the concern as to how they will be affected by the next killer deflationary wave.  This will be monitored as they come back down to their long term trend lines.  Also there is a chance that I will be wrong about deflation coming next.  If inflation is next the price action in the precious metals will show their hand and we will make the appropriate investment response and buy into strength ala Jesse Livermore.

Cash is KING again.  Long live the King.  The U.S. Dollar was in a bear market for several years up till September of 2008.  It is now in a multi-year bull market.  Yes Washington DC and the Fed are doing everything in their power to devalue it BUT the following factors trump their printing press profligacy in the short term anyway.  First and foremost the massive debt accumulation over the last few years is serving as a massive short squeeze against the dollar.  This now turns into a panic for dollars.  Also, in a fractional reserve fiat money system as debt collapses, a reverse leverage works and money supply in the broad sense implodes far faster than the boyz at the fed and treasury can print it.  Add to that the dollar got way over devalued against other fiat (rag money) currencies such as the euro.

PS: This is supported by Commitment of Trader COT activity, Cycle Studies, Elliot Wave action and Point and Figure chart action.

Yes then there is the Euro.  It was in a bull market for several years and got so overvalued that even famous runway models became financial geniuses.  Now it is just Euro trash for a couple of years – if it survives.  Currency unions are notoriously short lived.  Yes I can hear all of you One World conspiracy theorists howling at the moon!  FYI I have read Tragedy and Hope by Caroll Quigley (heavily annotated)and much more.  Please read The Great Wave by David Hacket Fischer for starters and then lets chat.  If the Great Wave does not get the One Worlders the Singularity will!

Category 2 – Lending (Debt Instruments)

To be continued tomorrow.   Yes dear reader for next few days I will cover a category a day.

Since we are midstream in so many markets, it seemed like a good time to start filling out the FF Market Map.

Stay tuned for more.   And remember most of the time it is best to be patient and let the market provide its bounties in its own time.  Get in a rush and you loose….

As always, if you have questions about Category 1 Cash – please drop me a comment and I will address it manana!

Red Alert!    Red Alert!   Red Alert!

The Commercial Traders started buying the stock market in late march.  Bullish sentiment was at only 5% !  These along with the MASSIVE infusion of Rag Money into the economy and  more cool aid into the punch bowl have lead to the first real bear market sucker rally.  This however will afford many the last great opportunity to get out of the stock market before then next killer plunge.  It will be hard.  The talking heads will be proclaiming the next bull. “No bears are out tonight Father (big ben) killed them all last night”.  BUT be ready to go against the herd and your own emotions.

Will You Be Ready?

Think I’m full of BULL ?  Drop me a comment

Silver & SLV  are about to break down similar to the move in Gold and GLD a few weeks ago.

If you would like to know how to generate the above chart at StockCharts.com let me know. That way you can follow the progress of price action.

When SLV prints a Red Goose Egg in the box between $11.50 and $12.00 it will have provided a screaming sell signal.  This may happen any time over the next few days or weeks (don’t be impatient dear reader).  Then over the next few months silver should march down to the BUY Me zone.  We have been waiting a couple of years for another opportunity to add to our core position.  Silver is the worlds best secondary media1 of exchange for most people.  Silver has been a core holding in the FF Investment Model of Asset Allocation since 2001.

But dear reader beware!  When Silver and SLV get down into their buy zone they may not be a buy.  We will do a thorough analysis at that time.  If long term trend lines are broken, the COT readings are negative and price action does not provide a clear buy signal, it may mean that the deflationary Tsunami that is sure to follow the current Bailout Mini Bubble is going to sweep silver much lower!

We won’t know till we get down to the buy zone and examine the battle field.  Stay Tuned

This is presented to provide a peek into how asset allocation decisions are made for the FF Investment Model.  I often use Point and Figure Charts (its all about price action) to provide timing signals that help in verifying what other tools are signaling.  P & F charts are a great tool for confirming the timing of Event Expectation Scenarios provided by Austrian Economic Analysis (Austrian Econ is not good for timing BUT excellent for modeling what to expect) and for timing of investments based on activity provided in the COT Commitment of Trader reports.

Want to be an insider and get my complete analysis when silver gets down into the BUY Me zone?  Drop me a comment

In the immortal words of Cap’n Flint “Pieces of Eight, Pieces of Eight” & ” Welcome aboard the FF Ship Matey”

PS: If you found this valuable or interesting PLEASE drop me a comment !

Notes

1 I will explain the praxeological difference between secondary media of exchange and money and its importance for investors in a subsequent blog  (hint for those of you that can’t wait look for it in the index of Human Action by Ludwig von Mises, free pdf of the book and study guide available at Mises.org).   Silver was demonetized after a historic struggle between the banksters and society in the 1900s and early 20th century.  Remember the Sin of ‘73!  The battle to debauch money & demonetize first silver then gold is one of the most fascinating intrigues in all of history (It would make a great historical novel starting clear back in ancient Greece) When the great fiat money con finally blows up, silver will be re-monetized by the market (you and I).

In previous Financial War Room posts a potential decline in Gold and GLD was spotlighted starting on April 5th. Here is an updated chart showing progress of the decline to date.

The original breakdown below 88 (sell signal 1) has been followed by a break of the 45 degree (blue) trend line (sell signal 2). A print of trading at 84 will constitute sell signal 3. The Buy me box shows the approximate range I expect GLD and Gold to begin to look attractive for accumulation again. This is not a slam dunk though. I will be looking at several other tools if we get to this buy range such as Commitment of Trader activity. Stay Tuned For More.

At the appropriate juncture the FF Market Decision Model will flash a Green Light for GLD and Gold.

To participate in this multi year Golden Opportunity with detailed instructions and guidance, drop me a post.

PS: If you found this valuable or interesting PLEASE let me know by dropping me a post !

The Primary purpose of this post is to demonstrate what kind of research supports the asset allocation decisions on the Market Decision Dashboard.

Doesn’t  Real Estate ALWAYS goes up in price.

Wrong! During most of our lifetimes that has appeared to be true because of the constant debasement of the dollar by the Federal Reserve with the approval of congress (primarily responsible), the senate, the president and the “sleeping on the job” supreme court. But the chart below tells the real story in constant dollars.

The following chart is a constant dollar price chart published by Robert Shiller. The average constant dollar price from 1946 to 1998 was 111. The index started at 100 in 1890 and after the recent bubble blow off has dropped back down to 145. But it is still headed down. Dr. Shiller has indicated that Real Estate still has a lot more downside potential – risk.

That is why Real Estate still has a Red Light on the Asset Allocation Model. There is a time and a season for every investment. I will let my clients know when it is safe to get back in to the Real Estate water.

PS:  The Shiller Constant Dollar Residential Home stats and the Case-Shiller Housing indexes are only part of what is monitored to maintain an accurate Map of Real Estate.  Every campaign requires an accurate map of the battlefield.  This is one of the key pieces to success in battle according to Sun Tzu in the Art of War.

If you want a call when Real Estate gets the Green Light, email me:

Michael@fibonaccifinancial.com

PPS: Yes, I know Real Estate is a “Local Phenomenon”. Local market conditions are discussed with clients

PPPS: If you found this valuable or interesting PLEASE let me know !

Michael@FibonacciFinancial.com

One of the Real “Secrets” to

Rapid Wealth Creation

Is Leveraging Your Resources

One of the pervasive facts of life is that RESOURCES ARE SCARCE (contrary to what is being peddled by those who exploit the arrested adolescents among us who desire to hang on to a magical world view). One of the scarcest resources we encounter is the incredibly short life span we each have. But, dear readers, there are power tools to help us gain massive amounts of leverage over our time and money.

Are these tools in your “Living Optimally Tool Box”?

La Vida LOCA – Yes, if you are not living La Vida LOCA, you are definitely squandering a lot of time and money (and missing out on a lot of fun).

The 80/20 rule is an incredible tool for getting much more out of life.

Optimal F (a money management tool) will move you towards your wealth accumulation goals faster than a shot of NOS. This is the ultimate wealth turbocharger.

La Vida LOCA – IS The Ultimate Win-Win Strategy

If you want those little fibonacci bunnies working overtime for you, learn to live La Vida LOCA.

One of the most powerful and little understood laws of economics is the Law of Comparative Advantage (LOCA).

Nobel Laureate (1969) Paul Samuelson was once challenged by the mathematician Stanislaw Ulam to “name me one proposition in all of the social sciences which is both true and non-trivial”

It was several years later that he thought of the correct response: comparative advantage. “That it is logically true need not be argued before a mathematician: that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them”

You’ll notice that Noble Laureate Paul Samuelson indicated that its power was not grasped or believed by many important and intelligent men (I am sure all the intelligent women got it the first time). It is imperative for my readers to learn and understand the LOCA. Fortunately Jeff Tucker at Mises.org wrote a brilliant short essay exlaining the LOCA. Take five and let Jeff explain the LOCA to you.

The short explanation of the LOCA goes like this:

There are two primates Super Sapien and little Bongo. They both know how to make stone tools and grow bananas. Super Sapien is better than little Bongo at both tasks. BUT Super Sapien is far better than little Bongo at making tools. That is Super Sapien has a comparative advantage in tool making and little Bongo has a comparative advantage in growing bananas. The counter-intuitive fact is that if Super Sapien concentrates on making tools and if little Bongo concentrates on growing bananas and they trade tools for bananas – THEY BOTH WILL END UP WITH MORE TOOLS AND BANANAS !!!. I know Super Sapien will be sorely tempted to do both because he is more efficient at both tasks (It can be very counter intuitive to pass off a task to someone who just can’t do it as well as we can) If he does, he will end up with fewer tools and bananas. I know little Bongo will want to do his own thing to avoid exploitation by that big monkey. If he does he will end up with fewer tools and bananas. Follow common sense and ignore the power of the LOCA and it will impoverish you. If you skipped reading Jeff’s article, you won’t really Grok the LOCA enough to unleash its power in your life. So, go read Jeff’s article

Of all professionals, dentists seem to really get the LOCA idea. Every dentist can perform the job of a dental hygienist and clean/polish their patients teeth. But instead the dentist hires a dental hygienist and makes $150 an hour drilling teeth instead of $35 an hour polishing them. I still smile as I watch highly paid professionals with very little spare time doing their own personal accounting. Most of them bring in a lot of revenue but never seem to have a handle on their finances. The simple solution once they Groked the LOCA would be to hire a personal finance bookkeeper and they would both be far better off. Besides both being better off financially, the piece of mind the professional would have would add many years to their life.

Now go LEVERAGE YOURSELF and Live La Vida LOCA and Rica

Want to live La Vida LOCA, focus on whatever you are really good at (your comparative advantage) and outsource the other stuff !!! – You will have more time and money if you do! DO THE MATH.

Ok, time for Brain Share – please give the LOCA some serious thought and share your ideas with the other readers on how to exploit the power of the LOCA in both our personal and professional lives.

PS: If you found this valuable or interesting PLEASE let me know  by dropping me a comment!

Grok This First!

Don’t Invest Without Understanding This

Investment Wisdom Begins With…..

Understanding that we live in world dominated by one overwhelming investment reality – the entire world went on a FIAT Money Standard in 1971. Fiat money, besides being a tool of virtually invisible confiscation, inherently creates systemic risk and distorts our perception of what is happening in the world. This core reality informs all the asset allocation decisions that we will recommend to our clients and subscribers. Again, I beg that you read the prophetic words of the most eminent economist of the 20th century.

Read Very Carefully What Keynes is Telling Us

” Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they do not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. the sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their just deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

John Maynard Keynes, C.B., The Economic Consequences of the Peace page 235.

How could this happen to us ???

With the drafting of the US Constitution, our founding fathers attempted to protect us from the devastating results of “rag money”. But unfortunately after decades of manipulation and disinformation, powerful banking and finanical interests won out. For one of the best explanations of HOW we lost sound money and what the founding fathers originally intended for us, read a short monetary history of the dollar by one of the most brilliant scholars I have ever had the pleasure of reading. Edwin Vieria, Jr., please take the stand. If you can ever get a copy of his magnum opus on the dollar “Pieces of Eight” lock it up. It is eighteen hundred pages of U.S. monetary scholarship that is breathtaking in it content.

Are you outraged now ? You should be ! ! !

Fiat money and the havoc it wrecks upon the investment world is the first and most important reality on our investment map. We will show you how deal with it.

The volatility created by a fiat monetary system can be protected against and used to accumulate wealth.

For a free initial half hour consultation email me at: michael@fibonaccifinancial.com

But I Thought Housing ALWAYS went UP ;-(

Read All About It

At the Incredible Mises.org

Also just hot off the press – The Commercial Real Estate market crash IS JUST BEGINNING !

Fibonacci & The Birth of Modern Finance in 1202 A.D.!

The Most Powerful Financial Tools to Hit Europe in Over a Thousand Years

It ALL started when an Italian monk named Leonardo de Fibonacci published “Liber Abaci” in the year 1202 A.D. This book introduced Hindu-Arabic numerals to the Italian businessmen and launched a new era for financial information. Those enterprising Italian merchants then invented Double Entry Accounting! Is it any wonder why modern finance started in Italy? Before the introduction of the Hindu-Arabic Numeral system to Europe, merchants could only add and subtract those unmanageable roman numerals two numbers at a time with an abacus. This was a very awkward and time consuming process. The invention of double entry accounting was formally introduced to the world by another Italian monk by the name of Fra Luca Paccioli in 1494. Goethe,the great German poet described double entry accounting as “one of the finest discoveries of the human intellect.”

And Now the Fibonacci Numbers

In Fibonacci’s book “Liber Abaci” there is a paragraph discussing the logarithmic growth of bunnies. This sequence of numbers 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89…….. became known as the Fibonacci Sequence (you probably remember it from Dan Brown’s bestselling book “The DaVinci Code” ). This sequence of numbers can be found through out the natural world and the universe. Just exploring their almost infinite applicability is an adventure in itself.

There you have it, the name Fibonacci is associated with the birth of modern finance and rapid growth.

This site’s goal is to help you harness the tools of modern finance to grow your networth rapidly (just like those fibonacci bunnies).

Homework Assignment

Go google Fibonacci.

Go to Amazon.com book section and enter Fibonacci.

DaVinci and Fra Pacioli

FYI: Leonardo DaVinci and Fra Luca Pacioli were close friends. DaVinci even illustrated Pacioli’s second most important manuscript De Divina Proportione (”Of Divine Proportions”). Pacioli taught DaVinci about perspective,proportionality and the Golden Ratio. These tools aided DaVinci greatly in painting “The Last Supper” and many of his great works of art.