Dow up 108. Gold down $10.
Yesterday was the first day of spring in the US. But it isn’t springtime here in Argentina, where we’ve just arrived. It’s fall. The leaves have begun to turn yellow and brown in Buenos Aires. The air cools. And at night the earth, like a sleeping drunk, gives off warm, humid gases.
In Florida, we caught up with an old friend:
“This global warming stuff is crap. The real driver of temperatures on the surface of the Earth is not the ‘greenhouse gases. ” It’s the sun. We get all our energy from the sun. And when solar activity decreases, so do temperatures.
“That’s how solar scientists were able to predict, 10 years ago, that the winter of 2013-14 would bring record cold to the US. But nobody listened. Everybody believed this global warming fraud.
“By the way, I went out to California and I advised [a well known investor] to go long natural gas. He made millions on the trade.”
Thin Margins
Our friend is writing a book on the very subject we take up today: how the debt bubble ends.
“Climate has a much bigger effect on economies than people realize. I was reading a Russian analyst the other day. He explains how the big moves in world politics – things such as the French Revolution and the fall of the Roman Empire – have been triggered by cold weather.
“The reason is fairly obvious. We live on energy surplus. It’s the difference between how much energy we get and how much energy we have to expend to get it. That applies to food as well as gasoline and every other form of energy.
“Back in the old days, the margins were fairly tight. Less solar activity meant lower temperatures and a smaller harvest. It also meant starvation… which made people rather cross.
“People don’t realize it at all, but today’s margins aren’t that high either. That’s why central banks are keeping interest rates so low. At higher rates, for many companies, households… and governments too… the margins disappear.
“But as it gets colder… margins shrink even more. People spend more of their incomes on staying warm. And the price of food tends to go up.”
We are on the subject of how the world ends… at least the world created by ZIRP and QE. And economists who don’t know what they are doing. This is a bubble world. And the biggest bubble is in debt.
We have more to say about this… but we just landed in Salta, in the northwest of Argentina. Now, we get in a 4-wheel-drive truck, and we’ll be on the road for the next six hours, as we make our way to the family ranch.
More to come next week…
Regards,
Bill
Market Insight:
It All Starts with Great Value at a Great Price
From the desk of Braden Copeland, Editor, Building Wealth
The investment landscape is littered with failed investors who were right about the value of an idea but wrong about the price.
The ride shareholders took with Taser International, Inc. (NASDAQ:TASR) from 2003 to 2005 is one of the best examples of the consequence of price I know.
Taser International is a simple business with a simple product: non-lethal long-range stun guns.
In 2003, the company became known for providing law enforcement personnel with something very useful: a new tool for stopping unarmed criminals without having to engage in hand-to-hand combat.
As police departments and security forces worldwide discovered how effective Taser’s weapons could be, the orders started rolling in. And Taser’s stock price soared.
Take a look at Taser’s incredible run from the start of 2003 to April 2004.
Sales of the new product were so strong it took hardly a year for shares to rocket nearly 3,000% higher.
Early investors were looking at a return of 30 times their money.
Every financial media outlet in the free world was covering the story and talking about the company’s fantastic product.
If you discovered Taser before all of this started happening, you were in for the profit of a lifetime. As shares climbed, though, investors continued to pile in.
At every point on the chart there was a buyer and a seller. Someone was buying shares at nosebleed prices, while someone else was selling shares at these prices – pocketing an enormous gain, if he had found Taser early enough.
These hapless buyers didn’t understand the consequence of price. But they were buying shares from sellers who did.
Taser’s stun guns still had the same value to law enforcement when shares of the company were selling at such inflated levels. But the share price was terrible.
What happened next was not a surprise…
Stories began to surface about more competition and even some liability concerns. And Taser shareholders experienced incredible volatility during 2004 as a result.
Finally, a company announcement that sales were slowing led to a catastrophic crash in early 2005. Take a look:
The epic slide destroyed late investors’ capital. You didn’t want to be anywhere near this mess. And if you had understood the difference between the value of a great idea and a great price, you wouldn’t have been.
I’m not the first to say it, but I’ll certainly repeat it: “Price is what you pay, value is what you get.”
Next time you hear about a great investment idea, just make sure you understand its price.
It’s a principle you’ll start hearing much more about from me: Great Value for a Great Price.
Editor’s Note: We are days away from releasing a new must-have investing report – called “Open in Case of Emergency.” Inside, you’ll find details of how to specifically prepare for the next stock market crash, including six specific stocks to buy when the next crash comes. The report is part of Braden’s soon-to-be-released investment advisory service,Braden Copeland’s Building Wealth.
Find out as soon as this valuable information is available by sending an email tobwfeedback@bonnerandpartners.
