Tuesday, November 29, 2011

"The Folly of Forecasting" and "The Myth of The Model"

"The Folly of Forecasting" and "The Myth of The Model"

It gets a little tiresome for me to, post after post, keep making the "same old same old" point about saving and investing and the almost complete unpredictability of future market events, and so it is nice for me to have recently come across two articles that say almost the exact same thing as I invariably end up saying both here and, inevitably, to most of my clients as well, until they are all sick of it/me! Maybe, just maybe, these two authors say it a little more convincingly than I have so far managed to?:

"...........the mathematical games economists play are just so much flapdoodle being dished out to an eager audience of those craving to know the future. The future is uncertain, except for knowing that government interventions, based on some economist's modeling, will make matters worse."

Complete article here


Article number two: "The Myth of The Model" by Max Borders .

Enjoy,regards, onebornfree.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others far more intelligent than myself], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .


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More About Financial Safety Services

Financial Safety Services is a private , mostly off-line, international, person to person consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as i previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Wednesday, November 16, 2011

Gold at US$2000 Within 6-8 Weeks? Commentary



Unfortunately, the truth is that gold _may_ go that high in that time frame, or it might not, there is simply no way for anyone, including Mr Waters, to know for sure.

Although gold is in historically uncharted waters, it seems reasonable to assume that $2,000 per Oz. is a significant support/resistance level .

Meaning that if and when it breaks that barrier , then it might hold and confirm that new valuation over time, or it might quickly fall back below $2000 for a year or so, or it might even quickly move up to the next logical support/resistance level of $2500 per oz.

Again, there is simply no way to know for sure- outside of pure luck/coincidence, the economic financial future cannot be reliably/accurately predicted by anyone with any worthwhile consistency.

However if an individual places his/her bets on a higher price for gold :

1] using money they can afford to lose, [and allocates a specific, not to be exceeded, amount of that money],

2] sets realistic, automated, limited, buy orders with their broker;

3] employs pre-determined, automatic, realistic, trailing stop-losses that can be raised should the market price of their speculation increase, but that are never lowered should the speculations price drop below the stop loss level [instead the speculator is automatically "stopped out"],

4] has a general awareness of probable support/resistance levels, risk/reward ratios etc.etc.,

then they will at least have protected themselves from losing their shirts[ i.e money they cannot afford to lose- a fixed percentage of which is already pre-allocated to gold bullion, regardless of its current price], should their bets on the seeming "inevitability" of a higher gold price not pan out as hoped for.

More On Speculations in Gold Bullion

As a pure speculation, for a number of to remain publicly undisclosed reasons [i.e.disclosed to clients only],I would definitely not be buying gold at around the $1800 per oz. price, as Mr Waters appears to be suggesting you do.


None clients may purchase my "Complete Guide to Safe Speculations",[currently in the process of re-editing] for $250, to find out exactly why, as a speculation, even a limited gold bullion "buy-in" at around $1800 per oz. that allocates only a small portion of money you can afford to lose, is still probably a bad idea as a speculation.

Gold Bullion as Part of A Long Term Savings Plan [not a speculation]

On the other hand, and regardless of current price per oz.,for the person who has no gold bullion at this time for their long term savings plan, buying a specific amount of gold at this time in order to commit a specific percentage of their long-term savings to gold as a constant part of that savings plan that never changes percentage-wise,no matter what happens to the daily price, is a very good idea. Regards, onebornfree.

Update [11/18/11] The both famous and highly esteemed Mr Richard Russell has also recently written on what he sees as Golds inevitably glowing future prospects, and advises his subscribers to accumulate even more gold, regardless. Although I am a great admirer of Mr Russell, I have to say that ultimately, he knows no more, or less about the future than you, me, or anyone else. Therefor I would advise extreme caution in acting on his advice- I feel that everything I said above in the main part of this post applies equally to Mr Russell's advice.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others far more intelligent than myself], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .


********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line, international, person to person consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as i previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Friday, November 4, 2011

Money Market Funds, An Investment Whose Time Has Passed? [commentary]

[edited 11/07/11] Onebornfree's commentary: The original article title, by the highly esteemed [by myself, at least] Mr Terry Coxon, had no question mark in it.[It was added by me, as a subtle part of my own commentary.]

Terry gives a short very interesting history [well worth reading]of money market funds, and how they came about as a way to circumvent government regulation and still make a profit for the funds themselves and for the individuals who chose to put money into them.

He then speculates that because these funds generally did well during the generally inflationary period that somewhat fortuitously followed their creation [1970- 82], and because the [post 2008] economic environment is entirely different from what had mostly prevailed up until the "collapse", that these types of fund might no longer be useful for the average saver/investor.

He speculates for a number of related reasons:

"Today there is little good reason to use a money market fund for substantial amounts of cash.

1. There is no material yield advantage because there is no material yield on cash anywhere – unless you are willing to take risks that mock the idea of cash. The highest yield on a money market fund I've seen since the Federal Reserve hammered rates into the floor at the end of 2008 was an offshore operation called Bank of Ireland USD Liquidity Fund, with a yield of 0.54%. How the fund earned that much (after expenses) in a world where 30-day jumbo CDs return 0.20% and one-month T-bills yield 0.04%, I don't know. But if the fund's risk disclosure was adequate, it would have included language that amounted to "Baby needs shoes!"

2. With most money market funds, there is a material safety disadvantage vs. FDIC-insured CDs since, of course, commercial paper and jumbo CDs carry a risk of default.

3. With a T-bill-only fund, the best you can say in favor of the fund vs. FDIC-insured CDs is that it's a tossup. Both are very secure."


So what do I think?

Well basically, what I think about Mr Coxon's conclusion [i.e. that Money Market Funds ARE An Investment Whose Time Has Passed] , is represented by my addition of a question mark to his title. In other words, despite the fact that I agree with just about everything in the article, I disagree with his level of certainty.He appears to be sure, I am not.

The economic future [inflation, deflation, or whatever] as always, remains unknown, so while it is not prudent to keep all of one's life savings in any money market fund [regardless of type], no more than it is prudent to keep them all in any one investment class such as: gold and other precious metals, or in real estate, or in stocks, or in US Treasury or corporate bonds, art, or even in cash under the mattress, money market funds of a particular type [e.g. those investing purely in U.s. T-Bills], might, to a degree, still serve some particular advantage for the individual saver [for example, as a convenient,liquid way to hold cash and still earn a small return in a deflationary environment. ]

Other types of money market funds [e.g. those investing in jumbo bank CD's mentioned in Mr Coxon's article] , might still also be useful, if and when inflation returns.

So maybe, don't write them off completely just yet, Mr. Coxon?. Regards, onebornfree.

DISCLAIMER : I have no financial interest in any money market fund, of any description, anywhere in the world.


DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .