On appraising the last 10 years I searched for a heading which would fully encapsulate the flavour of the first decade of the new century. I finally hit on the word ‘debauched’, why debauched? Well the following words are associated within a thesaurus which I felt were more than befitting.

Corrupt, demoralized, lead astray, pervert, pollute, abandoned, degenerate, degraded, depraved, immoral, perverted, excess etc.

looking over this period from a financial perspective I find each one of the above can take their rightful place on the events which took their toll during this interesting decade, sometimes exciting but always with a decadent odor. Now that I am long in years it is easier to express concern when making comparisons with finer times. A study of the last decade uncovers establishment mistakes or perhaps, calculated self interest decisions spewing out all over the place.

The first farce to emerge in 2000 was the IT blister compounded by that intellectual disaster Greenspan. The investing herd was driven into a trap of huge proportions by shares created to satisfy demand from a greed demanding investing public for companies with no substance. Gullible investors and managers were drawn into this financial meltdown and were rightly slaughtered, resulting in the collapse of thousands of company pension plans and the destruction of share portfolios. Surprisingly this early warning that should have discredited the financial establishment with its wild claims and assurances was consummately ignored as the bulls were led by the nose to even more disastrous consequences.

I am happy to say that our subscribers were duly cautioned and were thus enabled to avoid the worst of the consequences suffered by most. As usual this reality check prompted many to wander off into promised greener pastures lured by glittering promises of wealth beyond imagination. They were then duly milked to the full by promises of instant gratification. As is often proved, the truth often hurts but lies kill. Those decisions that are difficult to take are usually the ones to have favorable outcomes whilst the easier and more acceptable route often prove unfortunate.

A decade earlier a certain Mr. Greenspan had written a glittering critique on the failure of the Japanese to cope with their economic problems. A decade later he then proceeded to follow the exact same path that he had so heartedly condemned. It always amazes me what these politically motivated scoundrels will do to maintain their power, protect their pals and keep their job. The man proceeded to create unreal money unaccompanied by the necessary economic growth. Interest rates were kept at artificially low levels encouraging the US public to become a mob of scavenging animals fully supported by the usually greedy worldwide gang of bankers, thus maintaining their historical position as the worlds leading shysters.

The western world appear to have had a compulsion to transfer their power and glory to the Chinese as the UK had done to the US a century earlier. Why does the human race ignore the lessons of history? The result was the credit bubble which could only end with the direst of consequences. To date the full consequences of this have not yet fully emerged. The first stage was completed after the 2009 market collapse temporarily arrested in March of this year. The false rally that followed this summer has created yet another credit bubble.

I liken the whole affair with the good Samaritan stumbling upon a drunken man and then offering him a bottle of scotch to solve his problems. This could be considered to be a sound action to give instant relief but with long term disastrous consequences. Similarly, you can draw your own conclusions on the incredulous actions of politicians to impose even further credit on the West’s proliferate squanderers with the accompanying deprivation of the thrifty via artificially low interest rates. The final phase of this drama is now probably in its embryonic stage with history suggesting that the next move will be the most damaging of all. Will the investing public ever learn as they yet again fall for the monetary confidence tricks of our politicians and institutions?

So the last decade saw the slaughter of the IT gamblers, followed by the collapse of a multitude of company pensions and then the wipe out of the credit crunch speculators including a host of crazy bankers who have brought the world to ransom with an astonishing debt burden which will weight heavily  upon our children and our children’s children. It is my fear that the decade to come could make the last 10 years look like a teddy bears picnic.           

No doubt my rant over the recent past against the stupidity of our political and financial institutions could invoke a sense of despair. This could well be fitting for the conventional…being ordinary might indeed be perilous! Going with the crowd is often a precarious path to take but in this current politically inspired environment it could well be disastrous. 

Protection during this disturbing epoch will entail anticipation of the unlikely, and then require an effective defense. This will not require making predictions but lining up scenarios which could possibly generate future problems. Fortunately for every financial tribulation there is an effective antidote with promises of outstanding returns for those with the scope and knowledge to fully participate. As markets develop during the first year of the decade (history suggests that it will be a difficult year) we will be developing the arguments for problems ahead followed by the development of countermeasures. During this process it will be important not to foster a negative attitude but cultivate a positive approach by developing your personal knowledge with the promise of substantial rewards. It is always helpful to realize that great industries and great personal wealth of the 20th century was often initiated during the 1930’s.

With this in mind the most exciting year of the decade is now upon us…lets get going to make a silk purse out of a pig’s ear. My observation of a ‘constant phenomenon’ will get us on our way in my January ‘Where To From Here’ by taking the first step to being ‘extraordinary’ I have a reputation in the City for being a bit of a maverick…they haven’t seen nothing yet!

Sincerely,

Fred Stafford




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