As you can see from the SWC chart, Stillwater rose from about $6 to just above $25 in the ensuing two years. This was the first and only trade that I posted from “Z”, although other private recommendations over the course of the three decades of our acquaintance were similarly successful. Had I acted upon what he described at the time as a, "Christmas gift," in early December, 1999 to, "Exit Stage Left," in reference to the tech bubble, I would be absolutely retired from this business, or any other business well before I turned 50. Some of his more dire predictions have yet to come to pass, as the equity markets continued to rise from the March, 2009 lows.
But that was then and this is now. “Z” called me, unexpectedly as always, this past week in what started as a philosophical-laced nostalgia of our times. The course of our conversation brought us to the subject of change and how no matter how prepared we think we are for the future, we are only truly living when the future takes us by surprise. In Z’s words, "Its the only way to live.....and the only satisfying, fulfilling way to die." I have no idea what that last caveat means, but of everyone I have ever known, this guy gets it.
This post isn't about whimsical reunions with intriguing characters from our past. It is about the second time Z has allowed me to make public one of his financial observations. It came only after I lamented that had I cashed out of my technology portfolio in December of 1999, how different my past 12 years would have been. Z, now very advanced in age in life, said he had a purpose for this call that might dovetail into that particular theme of regret.
Getting to the point of this blog and to paraphrase my friend, "Z", Europe, Asia and all global emerging markets are toast. When asked about North America, there was silence, followed by his observation that money that would normally be flowing into hard assets or other economies is disappearing. The billions being printed by the central banks around the globe is simply vanishing. Chaos is spreading across the very top echelon of the world's financial order. The central banks and their puppet masters are not squirreling away money in secret Swiss bank accounts, nor are they funneling these funds into safe havens, there are none. There is no secretive grand "New World Order" scheme, but a burgeoning, temporarily veiled, panic. This will not end well, says Z, if it ends at all.
Still paraphrasing, Z surmised that the slew of bearish global equity etf's will explode not unlike the tech bubble of 1998-1999. But he emphasized that while these bearish bets will likely rise commensurate with the declines world's economies, these gains will be short-lived. Paper assets of all kinds are destined to become worthless; stocks, bonds, currencies, anything paper. There is a window of opportunity to profit from shorting currencies and going long bearish etf's, especially those of the European Union and developing markets, but don't overstay your welcome, paper is going to zero in the next 18-24 months, as well as whatever the value of what is supposedly backing it all up.
Have a nice weekend.
A
