Agora Financial Investment Symposium Day 1
There’s a fundamental rule about investing — you’ve probably heard it before: Be brave when others are fearful, and fearful when others are brave.
In order to follow the rule, of course, you have to know where the others are…and act accordingly.
In his usual wry and witty way, your humble Daily Reckoning editor opened the Eighth Annual Agora Financial Investment Symposium by suggesting that
most people — those not here in this room or reading this report in particular — are braver than they’ve ever been.
And that means the rest of us should be very, very afraid. But for some reason…this makes us laugh.
He’s right, of course. Hedge funds are taking in more money than ever…despite the questionable nature of their holdings. Twenty thousand
new condos are under construction in Miami…despite the current crisis in the housing sector and the ticking bomb that is subprime lending. The Dow
is hitting new highs…with some mainstream commentators calling it the greatest economic boom ever.
Indeed, Bill Bonner agrees it is “great.” But more like how the “Great War” and the “Great Depression” were great.
It begs the question — what should you do when you’re fearful?
“Nothing,” Bonner explains. But that’s hard when you have money. Bonds are something. Stocks are a loaded gun of something. Even if you cash out
completely — currency is becoming a more endangered something every day — especially the U.S. dollar.
So what exactly constitutes nothing?
If you’re a regular reader of these pages, Bonner’s answer won’t surprise you a bit: gold. And judging by the companies here with exhibition tables,
this is a gold-loving, do-nothing kind of crowd.
Of course…the do-nothing line of thinking isn’t unanimous. Some of the experts and analysts here think there are some very worthwhile — and
savvy — things you should be doing with your money. Natural resource expert Rick Rule is one of them.
This might sound strange…but I would encourage you to pick up a set of the audiotaped 2007 Symposium Highlights, just to get your hands on Rick
Rule’s mandatory “disclaimer” about things like conflict of interest, advice, recommendations and other SEC-required — and utterly ridiculous
— proclamations a broker must make before discussing the things he knows the best: investments. It’s as good as any comedy club routine I’ve heard
for some time.
Rule actually believes that you must be brave if you’re going to invest in natural resources. Not crazy, mind you. But brave. Meaning you have to
possess the discipline to do what is psychologically hard, but functionally easy.
Namely, buy when others are selling, sell when others are buying. This is the only way to make money in such a volatile market.
That said…there appears to be a boatload of money to be made as the bull market on commodities continues to run.
And for those who fear that this upward trend in commodities could be about to turn down, longtime Agora alum Dan Denning disagrees. And offers
up history as his witness:
“Something to keep in mind when considering where we are in the resource cycle is that prices declined for 200 years,” he told the crowd. “So the
argument could be made that this is a long-term bull market we’re in now.
You need this perspective to understand that. You have to understand that where prices are now is relative to where we’re coming from, and where we’re going. We’ll see corrections…but this trend has many, many years to go.”
You’ve got to trust a guy who up and moved himself into the Rim of Fire — Australia, to be exact — because he felt that the greatest investment
opportunities on the horizon would be found in small-cap energy and junior resource stocks. That’s what I call having the courage of your
Capital & Crisis’ Chris Mayer backed up Dan’s assertion with some pretty impressive figures.
He talked about what he called the “commodity delta” — which is simply the percentage change in demand for a particular commodity.
Now, before I show you these figures, I have to tell you that the title of Chris’ presentation was “The New Silk Road.” Needless to say, he was
focusing on the one of the biggest drivers in commodities today: China. Which means the numbers he shared with us represent the delta in China
Aluminum: up 48%
Steel: up 54%
Copper: up 51%
Lead: up 110%
Zinc: up 113%
Oil: up 30%
Nickel: up 87%
But that was just one of the many jarring facts and figures Chris shared about China today. Topping the list of eye-openers is this little gem…
There’s a lot of cash piling up in China and other countries, resulting in the rise of sovereign wealth funds. These are when a country decides to
invest some of its reserves outside its treasury. China certainly isn’t the only country playing this game…but it is holding a powerful hand.
It’s peeled $300 billion dollars off its reserves…and it isn’t afraid to spend it.
According to the Financial Times, “To put even 40% of that amount to work, they’d have to purchase 10% of the Dow Jones!”
The day ended with a wallop of perspective from the Mogambo Guru…but before I get to that, I want you to know something important.
Today is a rigorous day of laying down the intellectual groundwork for the remainder of the conference. It’s the day when attendees listen, cluck
their tongues, shake their heads — and, yes, laugh a lot.
Because the sheer insanity of today’s economic environment deserves a few laughs. If we take it too seriously, then we are, indeed, freakin’ doomed.
(Although you’ll see in a minute that the Mogambo Guru thinks we are anyway…)
But everyone knows that the best part is coming. The part where we find out all the specific recommendations that can both protect and grow the
wealth of each person in the room — and yours too, if you join us.
No, it’s too late to get on a plane. But I want to remind you that Addison made you a pretty good offer yesterday — I hope you saw it. During the
conference only, you can get your very own set of CDs of each of the presentations I’ll describe to you in this report (plus a few more because
I can only get so much down before I have to rush on to the next thing…).
We’re also working on a special report while we’re here that we’ll send you with the audio set. It will include all the recommendations that will
be made during the conference — the ones I’m not at liberty to mention here.
Plus, he threw in a $100 gift certificate so you can attend this event (or any event hosted for this crowd) in the future. If you think about it…it’s
better than free. You actually make a buck…plus get the 2007 symposium highlights — for only $99. This offer is only available while the
conference is in session…after that, the price will go up to $149. A pretty good deal any way you look at it.
OK, back to our final — and most irreverent — speaker of the day.
According to the Mogambo Guru, he has no idea what the hell he’s talking about. But we don’t believe him…and you shouldn’t either. He is the bread
and circus for the doom and gloom types…after all, don’t we deserve a little bread and the occasional circus, too?
His presentation — if you can call it that — is titled “We Know What We Know.” And the basic premise, give or take an idea or two, is that
everything in the world always comes back to one fundamental thing: money. In deference to the conference theme, he launches the first missile at
“I’ll tell you right now…I don’t know more about China than the fact that I eat a lot of Chinese food…but I do know a little more than most of the
stupid authorities on Asian economies…
“Specifically, that the effects of creating too much money and too much credit…excesses of which always drive up consumer prices…making people,
angry, very vocal and then, finally, bad, bad things happen…
“And it’s guaranteed that if the Chinese continue to adopt the same stupid practices that the Americans have when it comes to money — the same
stupid things are going to happen to them too.”
OK, if you’ve read the Mogambo Guru, you know that I cleaned up this quote just a tad. Feel free to intersperse a few classic Mogambo terms at your
discretion: untrustworthy, deadbeat, vicious, psychopathic, thieving, lying, MORONS…and you get the idea.
And since it’s completely impossible to top the Mogambo — here at the conference or here in this report — it’s time to do something I should
have done hours ago — arguably, before the first speaker uttered the first syllable.
Have a cocktail and try to put it all into perspective.
Along with the other 700 people here, I am going to attempt to be one of the first in line for a cocktail, compliments of our host, Agora
Financial. So that we can get up and do it all again tomorrow. I hope you’ll join me.
Your conference insider,