Random Roving: Early Signs of Change - The Premature Evacuation

Friday, April 17, 2009

Early Signs of Change - The Premature Evacuation

As I've mentioned in the past, I exited this market originally in May, 2000.....what I call my "premature evacuation"! I dove back in October-2007 with a commodites focus (oil/natural gas/gold/silver). The gold/silver half has recovered, but the energy piece is still hurting.

This blog really started in that time period via email with my inner circle of friends. As the Dotcom meltdown evolved, things didn't smell right. My friend Mark and I engaged in some great discussions regarding these topics.

-----Original Message-----
From: Kirk Barrell [mailto:kbarrell@geodynamic.com]
Sent: Tuesday, July 23, 2002 8:38 AM
To: Mark R.
Subject: RE: markets

Mark,
Implosion is the only word I think of when I read the news in the morning. At this point, even trailing earnings are in question due to the bogus numbers. So do we even know what the PE's are? I told Michelle this weekend, it's kind of like it used to be in the airport when you arrived early and you sat there and watched all of the "latecomers" running to their flights. My advice is to sit back and watch things unfold. If I had some cash outside of retirement accounts I would be shorting and buying gold (the real stuff).

It's amazing to watch all of the witchhunts going on....CEO's, accountants, priests, American Talibans, baseball players on sterioids, and poor Martha Stewart! Is Oprah next!?!?! My greatest concern is real estate. I think that we bought our house close to the top. I like to think (or hope) that our area has a good foundation, but the first tremor could be the HP cuts this week.

Long term, I really like the oil patch. Supply/demand and the Middle East bode well for this sector. In the short term, OPEC could move into crisis with Venezuela's quoto cheating. Lower oil prices would play into Prechter's deflation argument.

Prechter writes a lot about "change in mood". I'm seeing it on TV at night and in every day conversations. The news about Morocco and Spain fighting over a barren, uninhabited, goat-populated island "took the cake" last week!!

For now, my thoughts are that "cash is king". Our mentality shift now might have to be that 2% is better than -20%.
www.financialsense.com has some great information posted on a daily basis.
Keep me posted on your ideas,
Kirk

.....................................................
From: Kirk Barrell
To: Mark R
Sent: Sunday, August 18, 2002 9:22 AM
Subject: RE: Big banks are next on list of free-falling stocks

I with you...Jim Puplava posted a great article on the banks last year...especially focused on those with large derivative positions. JPM Chase has an incredible position. My two neighbors work for Chase and I saw them at the park last weekend. They said that things were not good.
The wild ride continues!!
Kirk

..................................
From: Kirk Barrell [mailto:kbarrell@geodynamic.com]
Sent: Tuesday, January 14, 2003 8:40 AM
To: Kirk A. Barrell
Subject: Bedtime reading

a interesting new article at financialsense.com.....
http://www.financialsense.com/stormwatch/update.htm
..........a snipit.....................
Given all of these uncertainties, where should one invest this year? I believe the "Next Big Thing" is going to be in "things" such as commodities. The big winners in this decade are going to be gold, silver, and energy. Other commodities from sugar, coffee, cocoa and grains, to other soft goods will also be winners. Commodity prices will rise because of two trends: a declining US dollar and rising populations and industrialization of developing economies.

The time for paper is over and the rise of "things" has just begun. Another trend that is taking place is what Marc Faber calls the reemergence of the emerging economies. Economic power is moving from the West to the East and this trend is irreversible.
Kirk

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Mission Statement

Friend: What's the mission of this blog?
Kirk: To be honest, I’m not really sure! Since March, 2000, I’ve been concerned with the state of the world and have felt compelled to share. I can’t really explain it.

Friend: A lot of these topics are just plain scary.
Kirk: Fear is an emotion. Read the information with a clear, balanced, and unemotional mind. My intent is not to scare anyone, but to motivate action. One of my favorite Buffet quotes: “It’s one thing to think that it is going to rain. It’s another to build an ark”. Go design and build your ark!

Friend: When did you become such a pessimist?
Kirk: I’m the most optimistic person I know! Pessimism and optimism are emotions. It’s best to make important decisions with as little emotion as possible. In 2000, I became very concerned with the future of our nation, world, and economy. On 9/11/01, those concerns escalated to another level. I believe that in hindsight, the entry into the new millennium will be noted as an important inflection point. To believe that the stock market is going lower does not make one a pessimistic. They say that there is always a bull market in something. In contrast, in 2001 I began to believe that oil and gold were due for a resurgence. So what does it make one that believes one thing is going up and the other down? History has shown that the world is quite cyclical. Through time we’ve had peaceful times and periods of great conflicts. Peace has never lasted forever. My research has led me to believe that tougher times are ahead. That’s not pessimistic, it’s an educated hypothesis. Don’t let fear paralyze you. Don’t be an ostrich.

Friend: Aren’t you obsessing over this?
Kirk: My concern for the future increases each day as I see events unfolding that others have forecasted for some time. Watching the news is like watching a movie replaying that I’ve already seen. When the market started crashing a few weeks ago, I wasn’t shocked at all. I’ve been waiting since May 2000. I see it as a natural cleansing that is required before the next phase of growth can occur. It’s like the appearance of the first blizzard in winter. You know it’s coming and you also know that spring will follow. There’s no need to be pessimistic or concerned because you know what to expect and you know to dress warm and to store up some firewood. But, don’t be a bear and go hide in a cave!

Friend: You seem to be enjoying this!
Kirk: No, this won’t be an enjoyable process, but the final destination and cleansing will be good for all of us as moral, hopeful, optimistic human beings.

Friend: When did you start thinking that you’re so smart?
Kirk: I don’t. I’m actually regurgitating information from people I believe know what they’re doing. I’m a messenger, a facilitator of information. I’m like Cliff Notes, but I’m free!

Friend: Why are you so negative on stocks? I’ve always heard that you should always own stocks.
Kirk: Yes, 90% of the experts will agree with that. Mr. Buffet just told the world so. I believe that there are times to pull out and observe from the sidelines. There’s a time to go for it on “4th and 1” and there’s a time to punt. I don’t believe that it’s time to be Les Miles. Stocks have been great investments for our entire adult life so we don’t know anything else. We’ve only seen a couple of seasons of the Kondratieff Cycle during our adult life.

Friend: Why are you so obsessed with the stock market?
Kirk: Actually I’m not. In May, 2000 I sold 100% of my stocks. Call it a “premature evacuation”! My real interest is aligned with Prechter’s theory that the markets are barometers of mass social mood. I’m thoroughly intrigued with the cyclical nature of historical events and how their timing aligns with market cycles. The purpose is to better understand potential future trends, events, and outcomes. My major concern the last few years is that we are due for a contraction phase. The expansion phase was so good and so long, so the next phase concerns me greatly. Is our generation, the 40-somethings, prepared for adversity? My greatest concern is that we have a 15 year old boy who, in three years, is a candidate for military service if a draft were to be reinstated. In contraction phases, the peace process ends and countries engage in wars. Resource wars for oil and water are very likely. The imperialistic invasion of Iraq is part of the escalating worldwide oil war. I believe that it’s very likely that the draft will reinstate due to the fact that our military is stretched thin and activity on dual fronts will be taxing. Say your prayers.

Friend: Do you really believe that one can predict the future?
Kirk: No I don’t believe that one can predict the exact future. I do believe that history repeats itself and that humans have short memories. With that said, history books are great places to learn. I also believe that the universe is very cyclical. I do believe that I can predict the weather next August in Houston within ten degrees. Yes I’m predicting the future, but it’s based on a consistent long term historical cycle. The timing is very difficult, but if you have a perspective on the character of the next phase, then you can be on watch for the inflection point.

Friend: So what should I do?
Kirk: I’m not qualified to be your financial planner and probably not qualified to be my own! I highly recommend that you watch Chris Martenson’s Crash Course. http://www.chrismartenson.com/crash-course/