The Last American
Dow Theory Letters
Nov 28, 2011
November 25, 2011
I heard rehab for a broken hip was hard. That's a false statement.
It's harder than hard. You have to build the strength in your
good leg and both of your arms, to a point beyond your wildest
fantasies. In other words, three of your limbs have to make up
for the loss in strength in the leg that you can't use.
On another subject, I just had a lengthy conversation with my
son Ryan. Ryan is building a self-sustaining farm on 40 acres,
two hours north of San Francisco. He and his friends have built
a large house, that is comfortable enough to withstand the toughest
winters. Ryan has a well that provides his own water, and he
also generates his own electricity. I call him the
last American pioneer. He is growing a huge crop of vegetables
and has planted all sorts of fruit trees. His next step will
be chickens and perhaps a few ducks. [Editor's note: and don't forget a cow and a
few little pigs.]
I told him he's in the right business for the future, which is
a survival business. The stock market is just beginning
to hint of the hard times that I see ahead. The almost insane
world of debt is rolling close to the cliff and I see increasingly
hard times ahead. Crumbling debt will act like a cement roller,
crushing everything in its path. The occasional rebound or bounces
on the lows will be sudden and short lived. As of now, both the
Dow and the S&P are down for the year. I call this Stage
One. Stage Two will occur if the Dow sinks into the 10,000 area.
Stage Two Point Five will occur if the Dow starts trading below
10,000. I think if the Dow trades under 10,000, consumer sentiment
will change from hope to fear and anxiety.
The big smart money is choosing diversity. Their problem, diversify
into what? The answer may be to diversify into something that
is life sustaining. My son Ryan may be on the right path. Sustaining
may be a matter of food, water, and shelter. I know much of the
above sounds outrageous, but in 1980 the Dow at 10,000 sounded
outrageous. We're moving into a world that today's generations
will be dealing with matters that they've never had to deal with
Continue to accumulate gold and 10 ounce silver bars. I'm sorry
for young people now, their biggest move has been to move back
into their parents' homes, back into the nest is the fated
move today. As far as the economy is concerned, the phrase is
"Don't be a pest, go back into the nest." This is what
occurred during the 1930s, and it's in full bloom today. My best
advice if your kid moved back in with you, make them pay some
rent. They must realize that there is no free lunch, and there
are no free living quarters. Next week I will go into detail
as to why a giant storm is brewing.
I hope you had a delicious Thanksgiving, and be glad you weren't
born a turkey.
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