"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

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Twitter: @kherriage

Wednesday
Oct222008

The Talking Heads

Anyone watching CNBC, and listening to their advice, is getting their heads handed to them in this market.

They are doing everything they can to be positive and "talk the market higher" and of course they are dead wrong. This recession is going to be the worst of our lifetime and 99% of the population is not prepared for it.

Moody's reported yesterday that over half of the country is already in a recession, and that only about 5 states still show a growing economy. Record debt levels will be the difference maker and its why I am so pessimistic about our chances for a short term recovery.

Oh...if you watch Jim Cramer and Mad Money... please view it only as entertainment. He can be brilliant in his thinking, but he changes his mind so much in the short term that it is impossible to make money with him.

Today will be ugly....back below 9000....likely for quite some time.

Kip

    

Tuesday
Oct212008

m2 Wealth Conference

How time flys...the older I get the faster that clock ticks. Remember when you were a kid and it seemed to take forever for that school bell to ring at 3? I guess this means that we just have to take advantage of every waking moment. I like that game plan.

I really look forward to seeing everyone at our upcoming Wealth Conference in Marco Island, FL (Nov 21-24).

Featured keynote speakers include these infamous gurus; G Edward Griffin, Mike Maloney, Chuck Butler, Allen Andrus, Deanna Latson, Jeff Combs, Wayne Allyn Root,  and 10-12 additional world class experts on wealth, health and wisdom.

The coming economy is going to have lots of people confused and scared for their financial future, but this does not have to be their reality. We have the unique ability to show people how to live the life of their dreams, and because this is our best line-up ever, our 7th Wealth Conference is going to be the event of a lifetime....likely the single best event ANY company has ever sponsored....on or off Wall Street.

See you in 30 days!

Kip

www.wmitoday.com/kip

www.vraletter.com

 

     

Tuesday
Oct212008

The Next 3 Years

I woke up this morning to CNBC and more negative earnings results, and thought back to my days as a financial advisor and venture capitalist. Its never been more difficult for the average person to invest in the stock market and don't look for that to change anytime soon. People are waking up to the reality of this economic crisis and wondering if they should get out, buy more, or just keep their eyes closed and hope for the best. Trust me on this one folks...this is going to get ugly before its all over. The average mutual fund investor is going to start freaking out when they see the market hit new lows in the coming weeks, because the concensus is that the government has things under control (finally).

Quick Question: have you ever known the government to have things under control?

(This is the point that I have to recommend Ron Pauls best seller "The Revolution". If you think that big government is the answer, then this is a must read for you). 

However, here's what I know to be a given; the "global supercycyle" is still very much intact and there are significant opportunities....right here, right now...that long term investors should be acting on. China is still growing their GDP at 8-10% per year. India, Russia, Brazil, Malaysia, the Philippines, Vietnam, and others in the region are not far behind.

So, what does this mean for us? Massive opportunity! Our favorite global ETF's for one....incredible buys at these levels. Energy is still very much a supply/demand story, and should be bought on this pullback. The same goes for the miners of course. This is the beauty of dollar cost averaging. While it may feel painful to buy more at lower prices, your reward will come in the next 3 years...with vastly superior returns.

Kip Herriage

Editor, VRA

www.vraletter.com 

        

Monday
Oct202008

Just the Third Inning...

As you know from my posts of the last couple of months I believe the stock market is going to be a tough place to be for some time. Bear market rallies can be very powerful, and can even retrace 50% of their losses. However, I very much doubt that this will be the case in this particular bear. The reason: while the stock market may already be down 40% from its highs, the economy is just now heading into a recession…one which I believe will be an incredibly painful one for most people. Historically, the stock market begins to recover from a recession about half way through it, which tells me that we have at least 6 months to a year before that will be possible. In addition, this will not be an ordinary recession. For one, the credit market is dead to most, and it will continue to be very difficult to get loans. Since our economy is now a debt based one, this is bad news indeed, and once layoffs begin to ramp up (just as they did this past month with 159,000 people losing their jobs) the reality of this process will begin to set in. People go through 3 distinct phases when dealing with tough financial times in their life. Phase one is denial, which is the phase we are in currently. Right now most people see this as just a crack in the stock market, but believe that it will soon turn around…it will not. Phase two is when reality begins to set in. Layoffs, foreclosures and bankruptcies…which are only beginning to pick up in their intensity… become a reality. And phase three, “capitulation”. This is when things are so bad that an individual will sell everything left of value just to hold on to some semblance of their prior life. If this all sounds incredibly bleak…well, that’s because it is. 80% of the country is upside down financially, and as you’ve probably noticed, very little of the $3 trillion or so that is being pumped back into the economy by the Federal Reserve will actually help individuals directly. Yes, this newly printed flash cash will ensure that the banking system survives, but none of it will be deposited into any of our bank accounts, which is where its needed most. The following is an article from this weekends Barrons, and one that I concur on just about every point. I believe that this is the single best opportunity to buy gold and silver, and especially precious metals mining stocks. It has been incredibly difficult to watch these stocks get hit with the rest of the stock market, and it would seem to make no sense whatsoever. We bought these stocks for “exactly” the current situation; a stock market meltdown caused by a financial system based on paper money backed by nothing…a fiat currency. Yet, these stocks were hit as hard as anything. I encourage you to use this opportunity to average down on our precious metals recommendations as gold and silver begin what will be a huge move higher. The timing of this move is difficult as many see deflation as the biggest current risk, but in the near future it will become very clear that massive inflation must follow the $3 trillion of newly printed cash. Our debt balloon has a leak…no matter how much fresh air is pumped into it. Kip Herriage Editor, VRA www.vraletter.com

Tuesday
Oct142008

Opportunity...!

The announcements coming from the US, and global governments, clearly indicate that they will do ANYTHING to avoid a global economic meltdown. This includes “forcing” the largest banks and financial institutions in the US to take billions upon billions of dollars via government equity stakes. There is no doubt that this will ensure that the banking system will survive, and this removes the possibility of another Depression.

This is our new socialism, and like it or not, we have implemented many of the same polices that represent the “new China”.

This will no doubt remind lots of people of that infamous quote: “I’m from the government and I am here to help”

We own stocks that will continue to prosper in a “real economy” however if you are an investor in mutual funds or other large cap stocks, you may want to use this opportunity to sell and wait for much lower prices to re-enter those positions. It is very likely that we will make an attempt to “retest the lows” before this bear market is over, and I expect that those lows could even be broken.

GOLD

In the last 24 hours, both Goldman Sachs and Merrill Lynch have said that gold is headed much higher in light of the ENORMOUS amount of dollars that are now flooding the system. Merrill’s target, which was announced this morning, is $1500/ounce. Look…the system had to be reliquified to prevent a meltdown, and had they acted 30 days ago we could have avoided the crash of 2008. However, with this massive monetary inflation, gold and gold stocks (especially our small cap gold stocks) continue to be an excellent buy and I fully expect gold to break $1000/ounce in the not too distant future.

It’s the Economy!

Once the madness of these stock market moves subsides, the reality will still be the same. The economy has cancer, and it is spreading quickly. The US, and the world, is awash in DEBT and a recession is here. With 80% of the population in the US upside down, and with housing prices headed still lower for the next 12 months at least, we will have to see how this washes out. China (and other parts of Asia and South America) will be the BIG winner in all of this, and you should continue to adjust your “portfolio mindset” with this in mind.

Hey….we just had a 2 day bull market of 20%….doesn’t it feel great? Didn’t think so….

Kip Herriage

Editor, VRA

www.vraletter.com