Editor’s log: Agora Financial Investment Symposium, day four…
Your editor is now back on the ground in Sydney, waiting for the flight back to Melbourne.
Today we’ll wrap up our coverage of the Agora Financial Investment Symposium. We’ve got a brief summary of our own presentation – we’ll try to be fair and balanced with the critique of our own efforts – plus some of the closing comments from Daily Reckoning founder Bill Bonner.
The master of ceremonies, ‘Chip’ Wood told us the first session back after the morning coffee break on the last day was the worst time to present – so that was nice confidence booster!
Anyhow, as it happens our audience swelled from about 300 at the start up to about 600 by the time we were half way through telling the audience that small caps are the best investment in Australia and whatever they do, don’t buy any Australian banks.
The content pretty much went over most of the stuff you’ve read about in Money Morning during the last ten months, so I won’t go through every part of it now.
Instead, I’ll cover the five main themes of the presentation:
- The Australian government is doing bad things too
- Australia has a Chinese ‘Get-Out-Of-Jail-Free’ card
- Chinese stimulus spending isn’t any better than Australian stimulus spending – it’s just different
- Buy into Australia’s new energy gold mine
- Don’t diversify!
These are all things that may be covered at the Debt Summit we’re holding in Melbourne this week.
Your editor didn’t give the audience an extensive list of the Australian government irresponsibility – we didn’t have the time. But we did cover some of the most obvious.
Cheques being sent to dead people.
‘Free’ money to buy houses. We gave the example of first home buyers in country Victoria being given nearly $40,000 to build a house. And of course all this can be done with no deposit.
It reminded us of some of the tactics the homebuilders use to help people manufacture phony savings. Such as offering to pay buyers rents as a loan so the buyer can deposit the ‘savings’ in an account. Most banks only want 3-6 months savings record anyway, so it’s not that hard to fake.
Home insulation for free, and the build ‘stuff’ brigade. Build a bridge, roads, schools, sheds… something… ANYTHING!
Then there was the Chinese ‘Get-Out-Of-Jail-Free’ card. We’d titled our presentation, “The Greater China Co-Prosperity Sphere and How to Join it – Mate.”
Alluding to the Greater East China Co-Prosperity Sphere from the 1930s and 1940s.
We quoted from the joint declaration at the Greater East Asia Conference of 1943 as follows:
“The United States of America and the British Empire have in seeking their own prosperity oppressed other nations and peoples. Especially in East Asia, they indulged in insatiable aggression and exploitation, and sought to satisfy their inordinate ambition of enslaving the entire region, and finally they came to menace seriously the stability of East Asia.”
The statement continued with:
“The countries of Greater East Asia… undertake to cooperate toward prosecuting the War of Greater East Asia to a successful conclusion, liberating their region from the yoke of British American domination, and ensuring their self-existence and self-defense, and in constructing a Greater East Asia.”
We also wondered whether the new map of the world may be something similar to George Orwell’s vision of Nineteen Eighty-Four. Except with Australia joining Eastasia rather than being part of Oceania.
OK, perhaps it’s a stretch to compare today’s Asian economies with that which existed during World War II. But the point is that it is the Asian economies – mainly China – that are looking to exert their influence over the world.
In this case it is China instead of Japan that is leading the rest of Asia away from US economic dominance towards Chinese economic dominance.
While we’re on the subject of China, what about their economic stimulus. “Why,” we asked “is Chinese government spending good, but Australian and US government spending bad?”
We had a simple answer for that. The Western economies are spending money they don’t have. In fact, in order to pay for it, the governments have to in effect steal the money from your future earnings through higher taxes.
Surely that’s the same for China right? Not quite. Don’t forget, they’ve been saving because they have produced. And yes, they’ve still taken money from individuals by way of taxes, but now the Chinese government is giving some of it back.
It may not be perfect, but we liked it to the Chinese population getting a tax refund in the form of a TV or a fridge, rather than Western populations who were just being given a future tax debt.
Towards the end of the presentation – and also in the workshop later – we made sure the audience knew exactly where to invest if they’re serious about reducing their exposure to the US dollar and want investments that will turn in double and triple digit percentage gains.
We’ve been banging on this drum, and whistling the LNG tune since late last year both here and in Australian Small Cap Investigator.
So far it’s paid off. In fact, as you may have seen, we recently sent a recommendation to subscribers to sell Bow Energy at 95 cents which was 458% higher than the 17 cents we tipped it at.
But that’s just for starters.
Already our remaining three LNG picks are showing big gains with plenty more to come. In fact I’m convinced that one of the stocks has the potential to get to $7. Today it’s trading for less than 80 cents.
Not only that, but the LNG stock we tipped last month has already more than doubled. But again, that’s not enough. I’m hoping for a fivefold increase on this stock from where it is today!
That’s right, it’s currently trading for less than 50 cents, and it really could make it over the $2 mark by next year.
Finally, we wanted to make sure our American brethren weren’t being fooled by the biggest, fattest propaganda lie propounded by the funds management industry.
You know the one, about how you should “diversify your portfolio.” Yeah, sure let’s diversify into a whole range of different shares and assets and just leave it there.
Hasn’t performed too well in the last ten years has it?
The fact is, fund managers need you to believe that diversification is good. The more you diversify, the harder it is for you to manage your investments and therefore the greater the need there is for someone else to manage them for you – say, a fund manager perhaps?
All diversification does is lower your returns.
The reality is if you are serious about building your wealth you need to actively manage your own investments. That means you need to have a risk management programme in place, and…
It also means you need to shrewdly pick your investment and then back yourself. If you really do believe that gold is going to AUD$2,000 then why wouldn’t you back yourself and invest 20%, 30% or 50% of your portfolio in gold.
If you believe shares in supermarkets offer the best return, why wouldn’t you just invest 80% or 90% of your portfolio in Woolworths or Metcash?
Fund managers have been spreading this rumour around for years that you need a diversified portfolio. However, the opposite is the case.
Sure, it does mean you have a greater exposure if the investment moves against you. That’s where your risk management strategy of using stop orders should come into play.
If you’re serious about actively managing your investments then investors need to move away from the myth of diversification and instead back your convictions.
But it wasn’t all about your editor. There were other speakers too.
Bill Bonner, founder of the Daily Reckoning, wrapped up proceedings in the main Ballroom with a thirty minute summary of the 2008 global financial bailout fiasco.
Bill started out with “As you all know the depression is over!”
The crowd loved it, with Bill saying that “You know something is over when a bank declares it.”
The comment was in response to a recent news item that had quoted a Wall Street banker telling reporters that the recession was over.
As Bill pointed out, not so long ago, these were the same bankers that were laughing stocks. They were pariahs. Now the same news networks that failed to predict the crash are now relying on the same bankers that caused it!
Madness.
A sampling of Bill’s other comments painted out how the economic picture really looks. You know, the one that the mainstream press isn’t telling you about.
“If we calculated unemployment the same way as during the Great Depression, unemployment would be 20%, not 10%.”
He went on later with this comment about politicians and economics:
“1971 was a critical point… [President] Nixon didn’t know whether he should interrupt an episode of Bonanza to announce the closure of the Gold window.”
And then there was this about inflation and stimulus:
“Caesar Augustus got the slaves in the silver mines to work night and day so they could produce more silver. That was a stimulus. They got more silver and it created inflation.”
“Then Nero worked out he could put less silver in the coins so they could make more coins. 300 years later there was no silver at all in the coins. That was a stimulus, and it created inflation.”
“In Spain… they brought Gold back from the new world and spent it. The increased supply of Gold was stimulus. It created inflation.”
It’s amazing how many of the knuckleheads in the mainstream media and mainstream economists somehow think this time things will be different.
So, that’s it. The Agora Financial Investment Symposium is over for another year. Your Money Morning will resume normal service tomorrow.
{ 2 comments… read them below or add one }
I love all the comment which knocks the “sacred cows” of the economy.
The world lives a lie in regard to religion and now in regard to economics.
Keep up the good barbed criticism as we simply cannot allow proven failures to once again dominate the economic vista.
The US Dollar is way overvalued and when it unravels we will all be very badky affected.
i here what you are saying about inflation and deflation , if we do not put our money out there where in the world do we put it to make a return on our money. i try to invest in the news we get from you and other folk. let me say this money is round to go round give us the good news and no bull as we always get what others say that sounds good but is it. Good info which is not speculation can help all that trade. david.