Today a 40-year market veteran sent King World News an incredibly important piece that warns there are very few places to hide in the coming global collapse. This piece exclusively for KWN also cautions readers around the world to expect some major surprises in the coming year.
By Robert Fitzwilson of The Portola Group
January 5 (King World News) – Marcus Aurelius was one of the most memorable of the Roman Emperors. He was reluctantly placed in the role by his father, Hadrian. When Machiavelli coined the phrase “Five Good Emperors,” Marcus Aurelius was one of the five. The great Roman historian Edward Gibbon opined that the condition of the human race was most happy and prosperous during the period from the death of Domitian to the accession of Commodus, Marcus Aurelius’ son.
Marcus Aurelius is well known for his writings called Meditations, written while the Emperor was campaigning with his army against various warring tribes….
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Meditations is a series of 12 books, deeply infused with the Emperor’s philosophical beliefs surrounding stoicism. Stoicism was Greek in origin, and was founded in Athens during the 3rd century BC. One writer summed up the philosophy as an “unwavering conviction that the world is organized in a rational and coherent way”. No doubt Marcus Aurelius was attracted to stoicism as he sought answers to a world that was anything but rational and coherent.
Stoics also believed in Ekpyrosis, the periodic destruction of the cosmos by a massive conflagration every “Great Year”. Needless to say, there was wide disagreement as to the periodicity of the coming of the Great Year.
The Invisible Hand Exposed
We can empathize with the Emperor. As we survey the economic, geo-political and central planning landscapes, one is hard pressed to find rationality or coherence. As others have suggested on KWN, markets have ceased functioning as mechanisms of price discovery. Adam Smith’s “invisible hand” is not so invisible any more. The manipulations by the central banks have reached the height of lunacy, and are very apparent in most of the major markets.
It will not be a “Great Year” when the price has to be paid, but our own Ekpyrosis cannot be too far off in the future. Whether it will be simply an implosion or more Keynesian pump priming — leading to inflation and then collapse — is impossible to know. That our current global financial system will collapse is a certainty, however. Arithmetic, common sense and history are all on the side of that argument.
There is an eerie sense of complacency in the markets. Those convinced that the collapse is near are so positioned, out of stocks, real estate and longer-term fixed income, while holding cash and precious metals. Others have become comfortable that real estate and large capitalization stocks are the proverbial no brainers, despite extreme overvaluation for both sectors.
Investors are also lending money at negative interest rates — a guaranteed loss — but this is apparently acceptable to many. Money is pouring into Switzerland, despite the imposition of such harsh terms. Japan is tumbling headlong into financial oblivion with negative savings rates and imploding population demographics. China’s economy feels more and more like a hollowed out shell as more stories of ghost cities and factories arise. There are also reports of a mass exodus of the wealthy and the wealth out of China.
The world geopolitical situation continues to be stunning. The Saudi attack on oil continues to trigger consequences that seem almost financially suicidal. Fellow oil producers such as Venezuela, Brazil, etc. are falling out of the economic trees. The conflict between NATO and Russia ratchets ahead week-by-week. Rational and coherent? Perhaps to the central planners, but not to mere mortals. As Gerald Celente suggested, we tend to think that there is a coherent plan instead of realizing that there is no plan, just stupid and historically ignorant masters of the Universe.
Very Few Places To Hide
Wall Street is probably the one group in the bunch that has a rational and coherent plan, and that is to steal as much wealth as possible before things spiral out of control. We say “good luck” to them. For a collapse on a scale that we are facing, finding a hiding place to ride it out is not likely.
Investors should continue to maintain and add to positions representing long-term value. Precious metals and miners should be core holdings. We continue to favor energy. So far, the demand is holding up as buyers are taking advantage of drastically lower prices. Attractive opportunities in the stock market are on a short list, so stock selection will be critical in 2015.
Agility will be equally important this year. Our sense is that the wheels are coming off of the central planner’s Keynesian bus, but it has been painful to bet against them. They went “all in” before, so allocations should reflect that in case they might have a few more tricks up their sleeves.
Buying deep value in assets that have tremendous long-term utility has been a winning strategy throughout history. Given a choice between cash and real assets for a lifeboat to ride out the coming global storm, we would choose the latter. Cash in a collapsing Keynesian maelstrom could well turn out to represent its intrinsic value, which is zero. KWN will be releasing more interviews shortly.
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