Investor Portfolio Preparation for the Coming Crises Opportunities
Stock-Markets / Financial Markets 2011 Jul 08, 2011 - 12:23 PM GMTBy: DeepCaster_LLC
“I’m Certain we will (experience another Crisis – Ed). It will come again.”Treasury Secretary Geithner, 5/17/11
“Wall Street banks have cut back on small business lending… [by] more than double the cutback in overall lending.… [Small business] options just keep disappearing.”Elizabeth Warren, Chair of the TARP Congressional Oversight Panel
The Warning Flags are Flying. Secretary Geithner has “hinted” he will resign after the presumed next budget deal.
It appears he is escaping, just in time… for him!
And the World’s Biggest Bond fund, PIMCO, has already “escaped” from U.S. Treasuries.
“You don’t buy bonds if no one else is.”
M. El Erian – PIMCO CEO
And Elizabeth Warren is straightforward enough to tell it like it is – the Bailouts did not help Small Business (or Investor-Citizens or Small Banks, for that matter). They helped the Mega Banks.
But some of those same Major Wall Street Banks have announced they intend to make layoffs.
Layoffs! And after all the Financial Benefits they received from U.S. Taxpayers via QE 1 and QE 2, which were after all, designed in large part to Sustain their Rich Existence.
Ellen Brown not only Documents how the Bailouts killed Local Lending but also provides one Key Clue of several Essential for Portfolio Preparation for the Coming Crises.
“The Wall Street bailout of 2008 has radically altered the banking business. The bailout was supposed to keep credit flowing to Main Street, but it has wound up having the opposite effect… today credit to local businesses has collapsed nearly everywhere.
That’s why so many states—the total is now fourteen—are considering turning to state-owned banks to get local credit flowing again.
The Bailout that Missed Main Street
The credit collapse of September 2008 was triggered by the speculative activities of giant Wall Street banks. These profligate banks, which would have gone bankrupt without federal support, have emerged from the crisis bigger and more powerful than before. The federal government has supported and subsidized bank consolidation, resulting in the elimination of more than a thousand community banks by takeover or failure.
The five largest banks now hold 40 percent of all deposits and 48 percent of all bank assets. These banks—Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, and PNC—currently control more deposits than the next largest 45 banks combined.
They are big, they are powerful, and they have lost interest in local lending. In the past three years, the four largest banks have cut back on small business lending by a full 53 percent…
Why? In 2010, the six largest bank holding companies made a combined $75 billion; and of this, $56 billion was in trading revenues—income from speculating in derivatives, futures, commodities, and currencies. If the too-big-to-fail banks win on these bets, they win big and can pocket the proceeds. If they lose, the federal government can be relied on to bail them out. In those comfortable circumstances, why lend to risky local businesses that might go bankrupt, or to homeowners who might default?...
The Federal Reserve dropped the Fed funds rate (the rate at which banks lend to each other) to an extremely low 0 to 0.25 percent. It was a very good deal for the big banks—too good to be wasted on local lending…
It can be very profitable indeed for the big Wall Street banks, but the purpose of the near-zero interest rates was supposed to be to get banks to lend again. Instead, they are, indeed, paying “outrageous bonuses to their top executives;” using the money to engage in the same sort of unregulated speculation that nearly brought down the economy in 2008; buying up smaller banks; or investing this virtually interest-free money in risk-free…” (Emphasis added – Ed)
“How the Bailout Killed Local Lending - and How Some States Hope to Get It Back”
Ellen Brown, webofdebt.com & lemetropolecafe.com, 7/2/11
If there were a commonly agreed-upon definition of well-connected “Insider” it would certainly include the Wall-Street Mega-Banks, several of whom are Fed shareholders and Fed Primary Dealers.
Yet, consider the implications of their Layoffs Announcements.
Consider that, if they, of all well-heeled, well-connected financial businesses which benefit from access to near-zero percent money, are anticipating taking such a hit that they are announcing Layoffs, they must see the future as Ominous indeed.
And they have reason to be concerned in general, and for themselves as well, given their Multi-Trillion Dollar Derivatives Exposure, which we documented in a recent Article.
These aforementioned observations suggest the following Guidelines for Portfolio Preparation for the Coming Crises.
- When possible and protective, Go Local. The Mega-Banks and Many State and Community Banks are Interconnected to all of the rest of our detriments. (Consider how many U.S. Banks are directly or indirectly Exposed to Greek and Portuguese Debt.)
It is worth the research effort to identify banks and other businesses with less-than-average, or relatively little “Globalist” Exposure. It is wise to study the variety of publically available measures of bank, and business strength.
Think “Bank of North Dakota” as the model, as described in detail by Ellen Brown.
- Buy Protective Hedges, via e.g. Double or Triple Leveraged, ETFs and liquidate Equities-in-General at the right time, a forecast for which we issued in our latest Alert.
- Buy High Yield Securities whose Total return (gain plus Yield) is likely to exceed Real Inflation – 11.15% per shadowstats.com**, such as the high yield portfolio we recommend.
**Shadowstats.com calculates Key U.S. Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported June 15, 2011
3.57% 11.15 % (annualized May, 2011 Rate)
U.S. Unemployment reported June 3, 2011
9.1% 22.3%
U.S. GDP Annual Growth/Decline reported June 24, 2011
2.33% -2.60%
U.S. M3 reported June 18, 2011 (Month of May, Y.O.Y.)
No Official Report 1.85%
- Buy Gold and Silver, but at propitious time and in a form likely to best weather Cartel* Takedown Attempts.
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
Regarding Gold and Silver Purchases
- Understand that a Cartel* of Central Bankers and their Mega-Bank Allies have for years been suppressing Precious Metal prices.
- Understand that it is now harder for The Cartel to successfully suppress prices, because there is an increasingly severe supply shortage of Physical Gold and Silver, especially of Silver, because ever more investors are becoming aware that certain Mega-Banks do not have the Physical Gold and Silver they claim and thus these wise Investors are taking physical possession, and delivery.
- Nonetheless, The Cartel’s Price Suppression Regime is still Potent as the Early May 2011, Precious Metal Prices Takedown shows, once again.
- Realize that these Price Suppression Interventions form Patterns and reveal tendencies, aka Interventionals, which are useful in forecasting the next Intervention. They facilitated Deepcaster’s earler correct forecast that Precious Metal prices would be taken down as they were in early May (And that is why Deepcaster recommended taking profits on Silver twice earlier this year)
- Develop a Strategy for Buying at Interim Lows during takedowns (see below) and taking profits (at least partial profits near interim highs)
- If one chooses to liquidate a portion of one’s Paper Gold and Silver, do so before a Takedown begins in earnest
- Use Takedowns as an Opportunity to Convert Paper Silver and Gold into Physical Silver and Gold. Not only do you get to buy these Precious Metals “on the cheap” but you also give the Mega-Bank Market Riggers Fits, because they have a greatly diminished supply of these Physical Precious Metals, but unlimited quantities of “Paper Gold and Silver”. Deepcaster has recommended a particular Physical Form of these Metals which is resistant to Takedowns.
- Buy Food Producers and Distributors
More than Energy or Even Precious Metals, Food and Potable Water must be at the top of Consumer Shopping lists everywhere around the world. With demand increasing from the 80 million plus annual world population increase, and increased resources of a growing middle class, especially in BRIC countries, to buy more and better Food, Food Producers are in the Catbird Seat. The Problem is exacerbated by the facts that most of the World’s best arable land is already under cultivation, and that modern agriculture is very fossil fuel (i.e. Portable) energy intensive.
For example, earlier this year we recommended two such Food Producers and one Water Producer and Management Company, all of which we believe to be deeply undervalued (one trading at under $6/share and the other two under $2/share).
One is China’s largest producer and Seller of Fresh Fruits and Vegetables. It also grows Rice and breeds and sells livestock and has over 20,000 employees.
It had a P/E Ratio under 4 when we recommended and profits have grown over 20%/yr.
As we write it is trading at around 43 cents per share U.S., near its 52 week low.
Given that P/E Ratio, profit Growth and share price, you can see why we have called “Food” a “Sleeper” Subsector.
In sum, there are opportunities now to develop a Profitable and protective portfolio to weather ongoing and impending Crises. Ongoing and Impending Crises plus Government/Cartel Intervention in many markets, provide these excellent Opportunities.
Best regards,By DEEPCASTER LLC
www.deepcaster.com
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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