I see a 2008 depression as opportunity.

X-Message-Number: 12741
From: "George Smith" <>
References: <>
Subject: I see a 2008 depression as opportunity. - A clarification.
Date: Sun, 7 Nov 1999 11:48:23 -0800

I want to first of all apologize for creating an impression of "doom and
gloom" when I mentioned demographer Harry Dent's prediction of "the Mother
of all depressions" hitting in 2008.  That was not my intention.  My
intention was to alert the good readers of this forum that there were two
sources of demonstrated high success in identifying future trends.  Harry
Dent's extremely successful two-decade predictions of the world's economies
being one of these.

Please take the time to read Dent's books, the older one THE GREAT BOOM
AHEAD as well as last year's offering, THE ROARING 2000's.  He carefully
outlines his suggestions for broad-based investing well through the 2008
collapse of the DOW.  If anything, I find his views incredibly heartening as
well as fascinating and, of course, so far very accurate in the long term.

I would caution anyone from "going short"in equities to take advantage of a
falling market.  I would equally caution anyone from participating in the
purchase of futures.  In the case of futures you can experience (and these
happen!) gap down days in which trading has been suspended while the price
of your contract continues to plummet.  Day after day.  And when the dust
settles, you must also settle up immediately on the losses you have
incurred.  Shorting stocks also opens the same yawning "bottomless pit"
chasm.

This is why many investors will turn to options which have the drawback of
wasting away over time but at least prevent you from losing more than the
premium and commission which you used to initally take your postition (read:
place your bet).

When you purchase an equity, say 100 shares of Microsoft, if the price drops
dramatically you can hold on and hope it will someday return to where you
bought it or higher. You have staying power.

When you purchase a futures contract or sell a stock short, you are locking
yourself into having to perform (come up with money) if your investment goes
the "wrong way".  You lack staying power.  (Yes, you can "roll over your
futures contract" but many investors following that "proven" policy were
wiped out in the last year's commodity price collapse).

With options you also lack staying power (all options expire) but you do at
least limit your loss.

In a nutshell, purchasing futures contracts or shorting stocks can open you
to virtually unlimited loss.  Barings Bank went under because just one of
its managers invested in selling options but without offsetting his
positions (called a "credit spread") if the prices moved in a substantial
manner.  When the inevitable exception to the rule occurred, Barings Bank,
one of the oldest and financially sound institutions in the world, went
bankrupt.

Unlimited potential loss is dangerous.

(For the same reason, - avoiding unlimited potential loss - I always
recommend to those who love life and wish to continue, that they sign up for
some kind of cryonics service immediately.  I consider it a "credit spread"
on my life's energy).

Returning to 2008's deadline, there are two very heartening aspects
involved:

(1) It may simply not happen because of the rapid and incredible growth of
(only) computer-communications technology to boost our intrinsic wealth.

Aside:

I still laugh until tears come into my eyes when I read some posters who
honestly can't see how amazingly rapidly the world has transformed for the
better in this century alone!  Like fish in the ocean complaining about
thirst!  Professor Ettinger has from time to time suggested the potential
value of seeing a cryonics-based "religion" or religious philosophy, but I
would content we already have one of these present amongst some of our
posters: the worship of the Great God Murphy (as in Murphy's Law - "anything
which can go wrong, will go wrong".)

I, personally, would have been dead more than 15 years ago if not for the
antIbiotics developed in just this century.  My wife would have been dead 10
years ago if not for fiber optics aided surgery, invented in just the last
25 years.  My daughter and son would have been dead 3 years ago if not for
computer-assisted auto braking systems invented in the last 5 years.

Oh ye worshippers of the Great God Murphy!  You are unlikely to convince
this unbeliever that the pace of technology is not going geometric and that
each problem that you suggest will undercut our future good will not have
multiple answers - perhaps even before you have finished typing your
dogmatic pronouncements of gloom.  It's hard for me to not notice I am still
breathing.

But enough digression.  The other reason the probable 2008 depression offers
opportunity for those who anticipate its effect is...

(2) Asia will then be the most probably place to shift investment
attentions, especially Japan which by then is expected to have risen from
its own failures in single-sided (inflation-based) investing.

I might also suggest that Warren Buffett who (last I heard) is the only
billionaire who made his fortune through investing in the stock market,
should also be paid attention to. Recently he has been dramatically lowering
his equity exposure, and increasing his share of bonds, as well as investing
in silver.

Now it is absolutely true that any one of these prognosticators I have
mentioned (Dent, Reeg-Moss & Davidson, and Buffett) will suddenly be proven
wrong.  I actually expect that Dent's 2008 depression will be by-passed
because of technological forces which will (for the first time in history)
overwhelm the population demographic forces.  But I could be wrong.

So to summarize this all too long posting, I want to emphasize it is very
useful to listen to those who have been consistently successful in
predicting world trends based upon some kind of historical perspective and I
do NOT feel pessimistic in regard to a (probable) 2008 depression.

It does make sense to buy "when there is blood in the streets".  But please
be careful you are buying something that has the staying power until the
streets are clean again.

George Smith
www.cryonics.org
When investing for the future, don't forget to invest in your OWN future -
Cryonics.

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