Yabby,

The cause for my worry is this. While you are investing on the basis of principles of the history of stock market operation of the last 60 years I am looking at the stock market in light of the more relevant historical crisis of the 1920's and 1930's.
Did you realise the Dow index in that period dropped from 380 odd to 40. That's a ninety percent drop.
Now in terms of today it would not be unrealistic to see a drop from 14,000 odd to 1,400. Today the dow was at 7,500.
During the start of the crash there were wild fluctuations many upto and downto 20% before the real crunch set in and stocks became so worthless it was uneconomic to keep the stockmarket(Which is a privately owned business) open. It closed.
Are you nervous now ... and am I prudent to have cashed up in March of this year and am not prepared to buy on the basis of historical data and fact?
My worry is not for myself but for retirees whose funds are tied up in stock market equities. How they hell are they going to survive? And please note a ten to twenty year expectation of recovery is a tad optimistic for again historically it took the US stockmarket 25 years and a world war before it recovered to 1920 levels.

I think buying into or holding onto shares now a little unwise.

The stock market usually suspends stocks that fluctutate without good reason. Are they nervous nellies too?
Describing me as a nervous nellie is akin and as inaccurate as labelling Taras Bulba a great humanitarian. :-)

Warren Buffet recently bought 5 billion worth of Goldman Sacs shares and they have since lost a further 30%. It's cost him nearly 1.5 billion ... and likely to cost him a hell'va lot more.
Nobody, especially people like Buffet, like those outcomes.

Enough gold bars would sink my abode ... which is currently a yacht.

Dear Bennie,

Yeah ... whatever bennie. Yep I'm totally dismissive of you and your abilities.

Turn right,

I'm not going to go over ground we've already crossed, especially where you still refuse to accept detailled evidence and support for my positions. Refer to my article and refute it ... too difficult? Of course because you cannot refute fact.

To assume we've had 'laissez-faire capitalism' for the last 60 odd years is fundamentally a misconception. The Keynesian economics of this period has it's roots in consumerism and Marxism. It is also conspicious for it's regulation and unfettered Government and Central Bank manipulation and interference. I'd love to see the capitalism of Hume, Mises and von Hayek. (And of course you've familiar with them because you've read them haven't you?)

It works.

Obama's pro-choice is not the problem ... it's his and your expectation that Western Christians want to and should fund abortions. Would you as a taxpayer think it ok to use your money to fund support for BHP's degradation of the environment or of Gunn's expansion in Tasmania

Keith,

Yes I know that the Dow dropped 90% in the 30s and yes I still call
you a nervous nellie :)

What we also know is that smart investors bought assets for a song
in the 30s and did extremely well after that.

It is people like you, all stampeding in one direction or another,
which cause fluctuations in the first place! The herd mentality.

I don't think that Buffett would lose too much sleep over the
Goldman Sachs shareprice, for once again, he focuses on the big
picture. It is those who borrowed money to buy shares who are
in trouble, not Buffett with his huge amounts of liquid cash.

Unlike the 30s, today there are huge amounts of cash around the
globe, sitting waiting to pick up bargains. At some point they
will benefit from those who have to sell at any price, due to
being overleveraged.

The thing is, to spread ones risk and spread it over time. Nobody
can predict the bottom and nobody can forecast that there will be
another 30s depression. Maybe there will, maybe there won't.

I have kept my shares, for at the price I paid for them, I would
have certainly landed up with a huge tax bill, taking a large slice.
Dividends are still being paid, I've still got heaps of cash to
buy more as things keep getting cheaper. I spread my risks.

In 5 years time there will still be an economy and people will still
drive cars, eat food and go shopping. There will still be companies
making profits and others losing their shirts, through too much
debt.

Marc Faber likes his gold bars, so do the Saudis at the moment.
Its seems, so does Keith.

I'd rather have my assets in the productive economy. Every time
that Keith buys food, or drink, or goes banking, or buys a boat,
or has it fixed, somewhere I will make a tiny profit :)

Yabby,

'It is people like you, all stampeding in one direction or another,
which cause fluctuations in the first place! The herd mentality.'

To this I just have to respond ... just could not help myself.

There is an extremely interesting interview reported in Saturday's Weekend Australian. Errr actually in The Australian Business Magazine, an insert.

I'll quote you the relevant lines, and please note the significance of the present tense.

Rupert Murdoch:

'He says News Corp is cashed up and ready to exploit any opportunities thrown up by the great deleveraging now under way.'

' ... remains concerned about a possible outbreak of protectionism ... in a slowing world economy.'

'... expects the tough economic conditions to prevail for sometime.'

'... So now we don't owe the banks a penny.'

Read his comments on borrowing and interest rates particularly. They will really stun you.

On mining and the Chinese

'One thing is certain: in the next round of price negotiations (with Australian mining companies) they are going to say it's their turn.'

Now couple that with the other magnate who, like his father, sold the family business at the top of the market, and who recently vacated all his available board positions ... well I guess you've have picked his motives.

Now really Yabby since these two have done precisely as I've done in the past year and that neither they nor I are buying right now I guess they, according to your labelling are

'people like you, all stampeding in one direction or another, which cause fluctuations in the first place! The herd mentality.'

I think you'd classify me as a flea on a rump in their herd ... eh? I'd think that very very complimentary ... and they'd think me at the very least prudent.

Yep I'm really chuckling away to myself here tonight. I'm hoping to put to sea for a while and unless I hook up in port somewhere I probably won't be around to respond. But please imagine the belly laughs I'll be having.

As for Warren Buffet I guess 5 billion to own your own NY Bank would seem cheap as it would guarantee a few seats on the NY Regional Federal Reserve. That would ensure influence and inside knowledge of their manipulation of the Federal Reserve, Treasury and Obama. ie The US economy
Oh and Guess where Obama's new Treasury Secretary has come from? That's right he was the Chairman of the NY Regional Federal Reserve (As I predicted recently).

You understand of course Warren's bank also benefited handsomely from the recent Federal Government gift of $250 billion to the New York Banks.

At the very least I reckon it would be great fun to own a bank. After all the Rothschilds, Morgans, Rockafellas and now the Buffets seem to have great fun theirs. Ownership of NY Banks does seem to have a propensity to create family dynastys...too.

I must ask where you gained your experience in business, trading and economics?

I'll give you a clue about mine: I have no formal qualifications. The initial impetus for learning much in these realms was discussions with my grandfather and father while playing billiards at home...

Yep Granddad and dad smoked cigars. I didn't but I did enjoy the cognac ..

Keith, I have the Weekend Australian, but no business insert in my
copy. But I'm reasonably aware of Rupert's opinions. He nearly lost
his company some years ago through too much debt, so perhaps has
learnt the hard way.

As for James, I don't blame him for getting out. Methinks his old
company is in hock up to the roof, not a good position to be in.

Yes, mineral prices have and will come down. It will give the largest
and best miners a chance to buy up some smaller operators for a
bargain. Long term, you still have another 3 billion people
craving a middle class lifestyle, so I have no concerns about
efficient miners in the longer term. Short term I really don't care.

I've been fortunate or perhaps wise :) so the crunch has not really
affected me. For instance I own some BWP, a boring share but
lightly geared, so they have stood up very well whilst other
REITs have crashed. Returns on my investment still run at around
13%, so I am happy with that. It makes your bank interest look
silly.

Buffett is better known for his investment in Wells Fargo, again
a long term holding and a bank that has stood up well to the US
crash. I understand he got a special deal on his Goldman Sachs
investment- for being their pinup boy.

Hey, if you are more comfortable with your present situation and
want to go sailing, that is your choice. It would not be my
choice, I'm not into sailing. But don't forget, rocks and pirates
can be far more dangerous then any stock exchange :)

I remind you that it is George's incompetence that has led to
the Fed dishing out billions to banks, all under his rule.

Sorry, but your hero is a proven dud, as all can see.

Hopefully your judgement at sailing is better then your political
judgement, or it will be glug glug glug for Keith !