The Tortoise and the Hare
Written by Jeff Nielson Thursday, 02 August 2012 11:50
Articles & Blogs - Gold Commentary
It’s easy to imagine readers glancing at this title and asking themselves “what possible relevance could this have with respect to modern markets?” Even if there was some relevance, “what could adult investors learn from this old children’s fable?”
To answer those questions properly requires first briefly summarizing the fable. We had a Great Race between a (quietly confident) Tortoise and an arrogant, condescending Hare. When the race began, the Hare immediately sprinted way ahead of the much slower Tortoise. However, over-confidence took over and the Hare began show-boating and goofing off, and the Tortoise caught up.
This caused the Hare to once again sprint to a large lead, before again succumbing to over-confidence. The pattern repeats itself, with the Hare eventually goofing off once too often – allowing the Tortoise to cross the finish-line first. The details of the fable are generally considered totally irrelevant with respect to the “moral” of this story: slow and steady wins the race.
It’s now possible to answer the questions posed in the first paragraph. What relevance does “The Tortoise and the Hare” have for modern markets? Throughout the entire history of human investing, “slow and steady wins the race” has been the dominant principle of investing…until the last 15 years. That marked the approximate turning point, from which time the fraud-peddlers of Wall Street and their accomplices in the Corporate Media have brainwashed the Investor Sheep into forgetting that basic principle.
Instead of “slow and steady wins the race”; these modern-day con-artists have programmed the Sheep to embrace a new mantra, their mantra: “bet on the Hare.” This massive paradigm-shift in global markets (and the global economy) becomes much more apparent when we shift from metaphorical analysis to specifics.
“Slow and steady wins the race” is the rational for two of the most time-honoured principles of investing: “buy and hold” and “buy low, sell high”. We know the first principle is dead, because the charlatans who manage most investing for the Sheep have explicitly proclaimed again and again (following the Crash of ’08) that “buy and hold is dead.” We can see that even the second principle has been de-programmed from the minds of the Sheep once we analyze what “bet on the Hare” actually represents.
In the fable, the Hare was both the clear race-favorite and capable of sprinting to large leads, apparently at will. Astute readers should now be able to figure out who these New Investors are who consistently “bet on the Hare.” They are the momentum-players (i.e. momentum chasers).
For the momentum-players, “buy low and sell high” is a principle which simply doesn’t exist in their universe. By definition, all momentum-players buy high: they jump on the bandwagon of asset-classes which have already soared in value; simply hoping that this momentum will last long enough for them to (a) make a profit, and (b) make an exit with their profit before the inevitable “correction” occurs.
Why did the Wall Street crime syndicate and the Corporate propaganda machine consider it essential to manipulate the Sheep from being buy-and-hold investors to momentum-chasing gamblers? The answer should be self-evident: it’s much, much easier to cheat gamblers than investors.
For those for whom this is not self-evident, I’ll elaborate. Buy-and-hold investors are comprised of two closely-related sub-categories. There are the “value investors”. These investors look at the present (discounted) value of a particular asset/investment, versus its current valuation. When the value of the investment seems to significantly exceed the current valuation, they buy.
The second group are the “fundamentals investors”. These investors look at the market/economic fundamentals for a particular asset, and when they perceive fundamentals which make it very likely/near-certain that an asset will rise in value over the longer term, they buy. More generally, both of these classes of investors are people who always “look under the hood” before they buy anything. Pretty hard to cheat such people.
Then there are the momentum-playing gamblers. They’re not interested in the actual value of assets. They’re not interested in silly fundamentals. How do you entice a momentum-player to part with his money? Just ask the bankers.
“Look how far this has already risen in value,” they hiss. “Look how much further we predict it will go up.” Those are the only lures required for the banksters to hook their fish. The evidence of this paradigm-shift is utterly overwhelming. Turn on any of the “business news” channels, which explicitly claim that they exist to serve the information needs of investors and what do you see? At least 90% of the time is spent doing nothing more than simplistically looking at price-action in various markets, and no more than 10% of the time is ever spent in discussing archaic concepts like “value” or “fundamentals”.
Then there are our markets, and economies themselves. As I’ve frequently detailed in my previous writing; our hollowed-out economies are totally starved for working capital. These horribly anemic economies are experiencing the worst revenue crisis in their entire history, with the consequence being that they are all about to collapse under the weight of their massive debts.
We can demonstrate this hollowing-out very easily by simply looking at how the bankers have managed to totally distort capital flows in the markets of the global economy. First we have the global economy, which totals somewhere in the area of $65 trillion in size. Then we have the bankers’ private, rigged casino – which they call “the derivatives market”.
Its size? Somewhere in excess of twenty times the size of the global economy. We’re not sure exactly how much in excess of twenty times that size, because the bankers have become defensive about their obscene mountain of crooked bets – and so they drastically changed how the size of their casino was “defined”.
Let me repeat this basic fact, since it is one to which the Average Joe is obviously totally oblivious. The total amount of bets on the global economy exceed the total size of the global economy by a factor of more than twenty. Put another way, more than 90% of all the “capital” in capitalism is now devoted to gambling on the global economy, while less than 10% is devoted to fueling the global economy.
Can readers now see how/why our economies are totally hollowed-out? Can readers now see how/why our revenue-starved economies can no longer even fund basic services which our parents took for granted?
What is the “solution” advocated by the fraud-peddlers? “Austerity.” Take even more money out of the real economy, and then funnel it to the banking crime syndicate (in the form of subsidized 0% “loans”), so that they can increase the ratio of their gambling still further.
How did the derivatives market ever become the largest bubble in human history (by a factor of 100)? Year after year of the banksters hissing to the Sheep “look how far this market has already risen, look how high it’s predicted to go.” The derivatives market is the Ultimate Hare: the scam-to-end-all-scams.
We now know with the banksters’ $350 trillion LIBOR-fraud out in the open that every one of their paper-products (including all Western bonds) are now hopelessly/permanently tainted with this LIBOR-fraud. Every “Hare” in the Western world is now being peddled by confessed criminals, and already infected with at least one form of fraud.
It’s time for the Sheep to stop listening to the Corporate Media. It’s time for them to stop handing their money to the worst financial criminals in the history of the human race. Instead of gambling on the Hare it’s time for people to return to investing in the Tortoise.
For nearly 5,000 years, humanity’s Ultimate Tortoise has been precious metals. Today, while the banksters’ Bets Bubble has grown so large that literally no human being can even comprehend the size of the number, investors are holding only about 1/10th as much silver and gold as they have held historically – making precious metals the most under-owned asset class on the planet.
Put aside the fact that fundamentals for gold and silver today are much more favorable than they were when this bull market began more than 10 years ago. The bankster crime syndicate has simply given investors no choice: gamble your wealth in one of their fraud-infested Hares, or invest it in one of the few assets which they cannot taint with their serial fraud: “physical” gold and silver bullion. Remember: slow and steady wins the race.
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written by Jeff Nielson, August 07, 2012
could you briefly remind your readers what you recommend instead of austerity? In Greece, for example?
MrPaladin, this is a question which appears deceptively simple, because as one tries to answer it, it's like "peeling an onion" -- and we see additional layers of strategy/policy required to fix our ills.
As the (simple) starting point; burn all the bonds. As I've written frequently (and do again in today's commentary); most of the money owed by Greece and other Western governments is based upon MULTIPLE layers of banker fraud. There is no rational/legitimate basis for doing anything with this paper OTHER than burning it. Problem solved.
Or is it? If you don't get rid of the Banking Oligarchy; after default wins a nation its temporary freedom (at a TERRIBLE cost) the banksters will just enslave the nation with debt AGAIN.
Obviously the entire Western banking cabal must be smashed into little pieces as the BEGINNING of any long-term solution...
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written by MrPaladin, August 06, 2012
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written by Jeff Nielson, August 04, 2012
It is interesting that your analysis begins at precisely the time CNBC et al, were arriving on the scene.
Their distorted analysis, game show host personalities, hand picked "analysts", octo-boxes of talking heads, and rodeo clowns like Cramer, have filled the public mind with exactly the wrong advice.
So what have they helped engineer?
The dot com bubble, housing bubble, Treasury bubble, and a complete misunderstanding of the Federal Reserve, banking, and investment scams.
Who have they served?
The bankster cabal,of course...
Bobbbny, thanks for the detailed observations. In particular, your observation about the "coincidence" of all the "business news" channels appearing at PRECISELY the time that fraud/scamming went exponential is certainly worthy of further expansion.
These propaganda-mouthpieces serve two purposes:
1) By spending ALL their time talking about price-action in markets they gradually (but inevitably) brainwash ALL investors into becoming trader-gamblers. The ONLY way to avoid becoming a "trader" (gambler) is to simply NOT watch their gambling siren-songs.
2) They RUSH vast amounts of information past the eyes of "investors" (i.e. the Marks) as quickly as possible. Similarly, they NEVER show investors the Big Picture (i.e. long-term charts) with ANYTHING. The goal is both to only allow them to become semi-informed AND to make them think it is NATURAL to gamble one's money while only being semi-informed.
This is EXACTLY the same tactics used by the con-men engaged in "Three Card Monty". Shuffle the cards in front of the Chump so quickly that it's impossible to follow, while you keep telling them with a steady banter how "smart" they are to play this game.
Lol!!
THAT is our "markets": nothing but a glorified game of "Three Card Monty"...
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written by Earl, August 04, 2012
Great commentary!!!
I learn a lot from the responses. Thank You all.
bobbbny,
Jeff, is like a teacher to me. You, are like a "coach".
Thank You
Earl
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written by bobbbny, August 04, 2012
It is interesting that your analysis begins at precisely the time CNBC et al, were arriving on the scene.
Their distorted analysis, game show host personalities, hand picked "analysts", octo-boxes of talking heads, and rodeo clowns like Cramer, have filled the public mind with exactly the wrong advice.
So what have they helped engineer?
The dot com bubble, housing bubble, Treasury bubble, and a complete misunderstanding of the Federal Reserve, banking, and investment scams.
Who have they served?
The bankster cabal,of course.
People have become so accustomed to this endless financial babble that they have been led to believe they can do things like day trade, using software happily provided by the $7 trading houses.
The market, as you observe, long ago gave up it's function as a means of financing genuine business enterprises, and works now as a casino where sheep are slaughtered every day.
For a reminder of just how corrupt and greedy this is, one need only look at the Facebook IPO.
This questionable business enterprise was hyped daily on the financial game shows, including things like the "countdown to the opening"for FB shares.
The stock was, of course, widely distributed to eager individual investors, which is never the case in the rare world of hot IPO's.
These "investors" are now down almost 50%.
The market has become the playground of computer controlled quant traders, and of algorithms that spit out blocks of stock for 1/100th of a cent profit. When you trade billions of shares, it adds up.
Meanwhile, back at the New York Stock Exchange, volume has dropped to twenty year lows.
That these computer driven markets can be much more easily manipulated is evidenced by the crash (hacking?) of Knight Financial this week.
Between MF Global (by the way, where is John Corzine?), the Flash Crash (another hack job), the LIBOR manipulation, and Knight Financial, I doubt anyone would put a nickel into these markets if it weren't for the cheerleading of the financial game shows.
"What fools these mortals be".
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written by Jeff Nielson, August 03, 2012
I am with you guys on this one. My kids have inherited some nineteenth century French gold roosters that have remained in the family and passed on by my deceased spouse. I have also told them never to sell the physical I will be leaving. The mining shares and Sprott type ETFs are for trade in the future if some better investment ever appears.
Exactly Jimha.
The beauty about becoming familiar enough with the miners to diversify into them is that they provide both excellent growth vehicles AND excellent trading vehicles for those who want to take SOME advantage of the peaks and troughs.
For all sorts of reasons it makes no sense to trade our bullion. So we HOLD our gold and silver (hoping we won't NEED IT) since that's our insurance, and engage in more conventional investing with the miners.
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written by jimha, August 03, 2012
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written by Jeff Nielson, August 03, 2012
... Unlike most investors in PMs, my patience is fairly infinite in that my stack is for the grandkids, and my advice to them is not to sell either metal until the GSR is under 10 and the price of silver is at least $400. After all, even the USGS postulates the planet will run out of silver, perhaps within 20 years, even though the bankster operated Silver Institute continuously and artificially inflates the potential supply numbers. Fortunately, my grandkids have the time to wait.
Apberusdisvet, you've hit upon another theme where the effects of our brainwashing is plain to see, and where the prevailing attitude -- even amongst many PM-holders -- surprises me greatly.
"When do I sell?" is a question I hear frequently.
When my answer is: "If you don't NEED to sell, never," I know I've totally lost some of them. The bankers have now brainwashed us into believing that the old line "you can't take it with you" is literally a mantra we should live by.
SPEND every penny while you're alive, because Heavan forbid that you should actually have some sort of INHERITANCE to pass to your descendants. This is part of the campaign to turn us all into serfs. Force each new generation to literally start from scratch, and you'll make sure that the pesky poor don't get any DELUSIONS about improving their status in life.
In particular, I'm disgusted by the prevalence of reverse-mortgages. The most spendthrift generation in all of history, who ALREADY mortgaged the futures of their children/grandchildren with the PUBLIC debts they have amassed are now busily selling off their real estate to BANKERS at PENNIES on the dollar -- just to make sure they don't commit the CRIME of actually leaving any inheritance for their children.
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written by apberusdisvet, August 02, 2012
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MrPaladin, this is a question which appears deceptively simple, because as one tries to answer it, it's like "peeling an onion" -- and we see additional layers of strategy/policy required to fix our ills.
As the (simple) starting point; burn all the bonds. As I've written frequently (and do again in today's commentary); most of the money owed by Greece and other Western governments is based upon MULTIPLE layers of banker fraud. There is no rational/legitimate basis for doing anything with this paper OTHER than burning it. Problem solved.
Or is it? If you don't get rid of the Banking Oligarchy; after default wins a nation its temporary freedom (at a TERRIBLE cost) the banksters will just enslave the nation with debt AGAIN.
Obviously the entire Western banking cabal must be smashed into little pieces as the BEGINNING of any long-term solution...