You Know Opportunity If You Saw It?
by Bill Sardi: Colonoscopy
There is a
somewhat dated story, said to be originally told by mid-day radio
Harvey (deceased), recirculating in this era of financial
uncertainty, about a man named Wally and his close friend Arthur.
Wally was a
developer of many things and took Arthur for a car ride one day
to a then remote area outside of Los Angeles. Wally said he was
going to develop the land that he had just purchased and suggested
his friend Arthur buy the property next to it, as its value would
certainly rise. Wally said Arthur could join him in building hotels
that would be needed once this location became a major destination
for tourists and locals as well.
see Wally’s vision. The land was vacant and Arthur was wondering
if his friend needed a dose of reality. Actually, his friend was
in the business of real fantasy. Arthur passed on this "opportunity."
Walt Disney. Arthur was Art Linkletter, a popular radio and television
personality. The property that Wally wanted to develop became Disneyland.
The rest is history. Or as Paul Harvey would say it, "now you
know the rest of the story."
know an opportunity if you saw it?
Would you know
opportunity if it came knocking on your door? My mother didn’t.
My father was a prop maker for the movie studies and had helped
build Disneyland. One day dad came home with stock certificates.
He had purchased some shares in Disneyland. My mother ridiculed
him, I can remember very well. The next day, my brother and I were
in tow behind our mother as she walked up the street to a brokerage
and sold those shares.
Over two decades
later some men dressed in suits, one holding a camera, came knocking
on our front door. They wanted to know about those shares of stock
in Disneyland that were now worth millions of dollars. My mother,
who had a Depression Era mentality, and had hoped to get rich someday,
had passed up on the biggest opportunity of her lifetime. I’m sure
all of you reading this have similar stories of missed opportunity
of opportunity are blowing in which direction?
So many people
today are trying to read the direction where the winds of opportunity
are blowing. But did you invest in Starbuck’s coffee when its shares
were first offered to the public? Starbuck’s had worked out a model
for success and was expanding. They only had a couple dozen locations.
If you had bought in early, Starbucks would continue to grow to
15,000 locations in 50 countries. It was a sure thing then. I guess
you missed it.
trust the stock market today?
no longer search for opportunity. When it comes to their money,
they search for safety.
got a stock market that is so manipulated that it offers over-hyped
ventures like Facebook that do not offer any value-added proposition.
Investors have now grown wary of putting their money in individual
advisors tell their clients to put their money in mutual funds or
other group investments where market savvy investors can play the
markets. But mutual funds have come under criticism for extracting
management fees, sometimes making more for the fund manager
than the client. And many people who have elected to place their
money in tax-deferred 401k accounts need to recognize the average
two-income family will have $155,000
in fees (a third of their investment) extracted from
their account over its life.
IPO as an opportunity
I keep asking
people who push "opportunities" in front of me, "where
is the value-added" to my investment dollars?
I get plenty
of people contacting me to invest in a gold mine somewhere. I’m
told the mine has been assayed to yield two ounces of gold per ton
of rock. But unless my money invested in a gold mine stock is going
to be used to actually start a mining operation by purchasing mining
equipment, there will be no value added and my investment will be
a gamble where existing stock holders simply dump their stock off
on another party.
initial public offering (IPO) was a classic "pump and dump"
operation where existing stock holders were profit taking and dumping
shares on nave investors. Just how Facebook was going to use investors’
money to add value to the company went unexplained. In fact, Facebook
had a couple billion in the bank and more in asset value, so what
did it need the money for?
But so many
people called me to ask if I was going to buy shares in Facebook.
I don’t believe in gambling. Fast money is not my game. As far back
as the Bible, quick profits were to be avoided. Today the stock
market has become a casino and via fast electronic trading (70%
of market trades), only insiders profit.
In the end,
Facebook’s Wall Street promoters had to buy shares to buoy-up the
first-day on the Nasdaq and were left holding the bag on a stock
that fizzled. Usually IPOs are intentionally undervalued to produce
a "pop" for the initial investors who stick their neck
out. But that was not the Facebook IPO. So maybe we have learned
a bit from Facebook about what not to invest in.
get back to my main question: how does one go about recognizing
opportunity when you see it?
How about gold,
what Richard Russell of The Dow Theory Letters says will be "the
last man standing”?
to that question is to wager when the great financial apocalypse
that experts like Peter Schiff, Jim Rogers, Marc Faber, Jim Willie,
Doug Casey, Gerald Celente, and so many other authorities say is
The spot price
for gold rises when all other forms of money appear to offer vanishing
returns. Gold may have to sit on the shelf till doomsday occurs.
As then end nears, the price of gold rises. Then financial elites
cover up their sins one more time, and the price of gold waffles.
with gold is that so many have accurately predicted the demise of
paper money and the collapse of real estate values. But the big
money boys have averted financial Armageddon by reducing interest
rates on borrowed money, which has kept America, and so many other
economies that rely upon debt, afloat.
Right now the
financial world is on another precipice, returning to a scenario
that is worse than the economic collapse of 2008. Each time the
Federal Reserve Bank chairman has risen to the podium to say the
US central bank will pump more bailout money into the world’s economies,
the value of gold soared. Mass inflation would soon follow, predicted
soothsayers. Paper money would be exposed as monopoly game money.
of doom were accurate at the time where were issued, and advice
to buy gold was appropriate. But banksters cooked their books, broke
rules over reserve requirements and overvalued their real estate
assets, and hid many home mortgage foreclosures (4 million and counting),
that one wonders just how much longer the financial industry can
paper-over its sins.
in gold have been stymied in their effort to get ahead of the greatest
financial collapse on record. Financial elites, particularly big
investment bankers, are able to gain direct access to the Federal
Reserve Chairman’s office to inquire about future changes in policy
and money supply, etc. The average investor has no such insider
for giving access to a favored few, Mr. Bernanke at the Federal
Reserve said the Fed would not change interest rates on borrowed
money for a couple of years. But the Fed has launched other covert
maneuvers that simply skirt around its commitment to stabilize the
are cunning. When there were no foreign parties willing to purchase
US Treasury Bills that fund America’s over-spending habits (the
national debt), the Fed simply arranges for gasoline prices to soar,
for a country like Saudi Arabia to sell over-priced gasoline to
the US market, and then the Saudi’s agree to use its profits to
buy US Treasury bills at zero percent interest in return for the
US military defending their country.
unwittingly pay for the nation’s over-spending habits at the gasoline
pump rather than face an unwelcome tax increase or face an official
devaluation of the dollar. This maneuver side-steps democracy –
the requirement of a vote on taxes we pay (taxation with representation).
Taxes are not voted upon now, they are transformed into an increase
in gasoline prices which is then funneled back in the form of US
Treasury Notes (loans from foreign countries) to pay the government’s
So what do
the savviest investors see as opportunity? They don’t, they are
just trying to minimize their losses. For example, experienced bond
fund managers like Bill Gross of PIMCO, whose $250 billion bond
been forced to invest in low-yield (less than 2%) government bonds
that yield less than the target rate of inflation (~2%), is betting
on losses, but the "safest" losses because government-issued
bonds are backed by the bank of last resort – The Federal Reserve.
As Richard Russell, editor of The Dow Theory Letters says: "he
who loses the least wins."
And here again,
the Federal Reserve quotes the target rate of inflation, not the
actual rate of inflation, which according to economist John Williams
is 7% to 10%. As long as the Federal Reserve keeps fudging the numbers,
the price of gold will be less attractive. Gold bugs, as they are
called, have been left to chase a greased pig.
expert in precious metals says there is no overt manipulation in
the price of gold, per se. But there certainly are delay
tactics to push the day of financial Armageddon to some indefinite
date into the future. And that is when gold makes its ultimate play
as money. That is when gold soars to $3000, $6000, even $12,000
an ounce say some gold prognosticators.
At that point,
whole economies become focused on gold and panning for gold, India
finds new wealth in its family-held gold jewelry, and paper money
becomes second-class money.
of economic collapse: gloom, boom and doom
Dr. Marc Faber,
Swiss money manager and author of the "Gloom,
Boom and Doom Report” says there are three stages of
a fiat-paper money/ central-bank economic system. Government overspends
and then central bankers print money to cover for debts. As central
bankers increase the money supply, temporary bubbles in the economy
are created which are followed by an even greater financial collapse
-- the gloom, boom and doom cycle that Dr. Faber has coined.
reality we are in a gloom, boom-boom-boom-boom, perpetual boom cycle
as central bankers and governments figure out ways to delay a doomsday.
Instead of a day of reckoning we have successive bubbles, one after
another, the most recent greater than the former.
bugs" wring their hands for the day when this shiny metal will
soar in value, the central bankers figure out new ways to thwart
such an event that would create an alternative to their increasingly
worthless paper money.
We are living
in an endless string of bubbles that have artificially propped the
stock market, the bellwether of the economy. The result is that
the wealthy have their investments protected, the rest see their
wealth in real estate and savings accounts lose value.
That was a
long explanation to find an answer to the question, is investing
in gold today an opportunity? Yes, but only in the long run (unless
you bought gold ten years ago when it was $350/ounce). Many investors
want to speculate short-term on precious metals, unwary of the many
manipulations that tamp down the price of gold.
the price of gold rising even at the modest rate of inflation (it
would have been worth ~$2275 per ounce in 2010 if it kept up with
inflation since 1980), those who hold gold may now have to wait
for a total collapse of the paper money system to cash in. They
may not have long to wait though.
there will be little gold to buy, the poor will convert their gold
jewelry to pay bills and the rich will buy it to protect their wealth.
Those who buy gold now probably will have their last chance to turn
it into an "opportunity."
winds of change
Heed the change
in the direction of the winds of opportunity.
Seed for food
crops, guns and ammunition and home security, are other opportunities
in a changing economic landscape. Just how college degrees (and
the cost of paying back student loans) translate into jobs and greater
income in this rapidly changing world should be re-thought.
The world is
slowly retrenching from an era of working to accumulate wealth toward
working just to survive. Buying a single family tract home that
is a depreciating asset may no longer be the American dream. However,
of farmland is booming. Does the woman of the house see
herself living on a farm with three kids and some chickens?
In the near
future, fresh food is likely to be bought directly from growers
rather than from retail stores. Buying a small ranch house with
a few acres of fruit or nut trees might be the new American dream.
of chestnuts trees can yield between 2200 and 6000 pounds per acre
and sell for $6.00/ pound. A 5-to-10 acre farm could
yield $66,000 to $132,000 a year. Walnut prices are at an all-time
high and a California
walnut orchard might yield 3900 pounds per acre and fetch
over $3.50 per pound for light halves and pieces. A 10-acre walnut
orchard might yield up to $136,500/year. That is far better profit
than a rental property.
is a knocking!
him mail] is a frequent writer on health and political
topics. His health writings can be found at www.naturalhealthlibrarian.com.
latest book is Downsizing
© 2012 Bill Sardi Word of Knowledge Agency, San Dimas, California.
This article has been written exclusively for www.LewRockwell.com
and other parties who wish to refer to it should link rather than
post at other URLs.
Best of Bill Sardi