My $7.65 (long)


#1

Some additions for those of you who may have already read this.

I’ve delayed selling my stocks for a couple of years, out of laziness and focus on other issues. I know how to analyze the fundamentals. I owned Clayton Homes stock back in 1993, long before Warren Buffet or I heard of Lonnie. I am selling all due to what I see as poor current and future fundamentals of my current portfolio.

You will note that during the Depression, Agriculture and other food companies were stable or did well. Entertainment (e.g. the movies) did well. Also it was the burgeoning era of electronics. More and more uses were found for electricity. TV was heavily developed through the depression and was commercially introduced in 1941. Today we have the explosion of the digital age. Who doesn’t have a cell phone, Playstation2, Wii, etc. I believe some of these companies will be well-positioned when we exit THE GREAT DEPRESSION II in 6-10 yrs. I am also planning on buying silver as recommended by Bernd and others.

Sorry, Ryan, I think the DOW will hit 4000 before it is over.

Lin, I’m with you. Yes, people put their hard-earned money into 401K etc. But a great deal of the growth of those funds and stocks was artificial due to excessive lending to the poorly performing underlying businesses that bought others, e.g. the financial, mobile home, energy (Enron), and housing industries.

Folks, re-read the history of the Great Depression. The fundamentals of much of our then new manufacturing were shaky, coupled with excessive lending to people putting stocks on margin to sell to the greater fool for a profit. Someone realized too many stocks were overvalued and began to sell. As usual, the emotional (stock) market over corrected and excessive selling led to the crash. We will see over correcting again.

Good news, the dollar has only lost 48% of its purchasing power (as compared to consumer price index) since 1984 (25 yrs). It lost the same 50% between 1975 and 1985 (10 yrs). So all in all, we’ve had a good run for the second half of my life. However of note, is that despite little NET change in purchasing power from 1920-1945 (25 yrs), you could purchase 31% more with your dollar (if you had one) during the height of the Depression in the middle to late thirties. Cash is always king!

Some are asking what should I do, what should I do? I say, get the money out of the hands of lost and confused investors and put it into your business, pay them a nice interest of 8-12% and make money with what you know best.

My recommendation is: Due to panicking stock marketeers and the planned printing of trillions of dollars, get your hands on as much of that cash as possible. Cash flow, cash flow, cash flow. Cash is always king!

Steve

p.s my dollar today could buy $7.65 worth of goodies when I was born.


#2

Steve, I agree that the climate for business is horrible. I can see no bottom in the stock market due to an inrease in government interference into business operations and of course higher taxes reducing capital that would otherwise have been put to productive use…not much reason to hope for improvement.

As for your recomendation to build a network of investors to fund this MH biz; I have began down this road and so far, so good. A problem that I have yet to solve is one of timing. It seems that potential investors may contemplate investing in a note for a long time, but when they are ready, they want it NOW.

I, on the other hand could use a little more lead time to replace the cashflow that I “sell” to the investor. Have you any suggestions to smooth out the flow?


#3

Excellent question, Shawn. I am probably facing that issue right now. i.e spoke to cautious potential buyer. I’m ready to give her $250/mo cash flow in exchange for her $10K. However, she has a cautious history and may take 1 month to 1 year before she comes back to it.

Will I be ready when she is?

As much as I’d like to get her $$ working for me, perhaps we need to take a slightly different approach. Maybe, rather than hanging out our tongues with anticipation, we need to be more like the infamous Bernard Madoff. By enticing investors, rather than begging them.

“So, Mrs. Jones, surely you can see the value of earning XX% investing with me/us in these times, yes? Well, great. Because of how our cash flow works, our next available note for sale is April 10th. Would you be ready then? The next note available after that is not until June 4th. There ARE a few people who have expressed an interest. How about I call you the first week of April?”

I’m thinking we could pace ourselves based on projected replacement time for that “lost” cash flow.

Steve


#4

Announced this week the FDIC will be insolvent some time this summer so all of our savings will have no government guarantee at that time. What should we do with our savings? Leave it where it is with no guarantee at 2%? Buy gold or silver? Take it out and put in the back yard? Pay down on assets? Of those tangible assets which would you pay down? Mobile home loans, mobile home park loans, loans on personal residence or auto loans?

Dr. B why buy silver and not gold?

Mike


#5

IMO

Publicly offered investments are inherently fraught with the whimsy and skittish emotions of the public. e.g. recent volatility of stocks.

Most of us get pretty excited when we see a large stack of $100 bills. I know I do when I know its about to be mine. Precious metals are even more exciting to most humans. They too are publicly traded commodities and legal tender. Gold carries with it centuries of excitement and fascination e.g. Temples of gold, palaces of gold (actually gold leaf), the gilded cage, The golden ram or bull, The Goose that Laid the Golden Egg, The City of Gold, gold jewelery, “draped in diamonds and gold”, “if you have xxx, you are golden” “it’s as good as gold”, try and win a gold medal, etc.

Replace the word gold with silver in the above and it goes flat. There is less excitement, fascination and focus on it by the public. So, silver tends to be less volatile (that is, relatively) than gold.

Disclaimer:

I am not giving legal, accounting, health care, automotive, literary, aesthetic, spiritual, astrological, or investment advice, I am doing what I think makes sense for me and telling others about it.

Steve


#6

Silver is consumed in industry. Just about everything these days seems to have silver in it (cell phones etc) and because the amount is so small it is not feasible to recapture it. Silver is the superb conductor.

Gold is not consumed in industry. As I understand it, the amount of Gold today is pretty much the amount we have always had. It is not rare.

Because Silver is consumed, it is becoming rare. Silver and gold have a pattern of value in relation to one another that has been in existence since about the dawn of man’s appreciation for precious metals.

Silver is no longer trading in that range which makes it look likely to jump dramatically.

The price of silver is still low which makes it affordable for most folks to buy while gold is not (trading at $930 per oz. today).

The Gov’t dumping trillions of dollars and advancing more and more socialistic agendas has alterated the capitalistic market. The dollar has held its own so far but how long can that last when we are dumping that kind of money into the supply?

Lastly the price we see quoted for silver is not for the actual, phyical silver but rather paper notes stating you own silver that is supposed to be stored somewhere. Problem is, as I understand it, we have sold something like 8 times the amount of silver on the planet ON PAPER!. When those who think they own real siver call and ask for it to be delivered it will become a game of musical chairs and most of the chairs will be missing. Many will find that their piece of paper that they bought at such a low quote is not actually backed by real silver. Think of just how bad things got because of fractual reserve banking… this is even worse in my opinion. How this is not considered fraud is beyond me.

People who own physical silver in theory will ride the price up when the panic occurs and people are seeking the safety of tangibe metals and industry is seeking the metal to produce the goods we still consume.

Tony