A program on Channel 4 last night suggested that we face the longest economic downturn since the great depression, and that national debt will run much higher than government forecasts.
It was hosted by hedge fund manager Hugh Hendry and was targeted at the banks as the cause of the problems we are in:
"Banks spent the last decade throwing caution to the wind by dabbling in schemes that nobody understood...
"To save the banks, the government made available a virtually bottomless pit of taxpayers money in loans and guarantees. In the process, taking stakes in three of Britain’s largest banks."
Though an interesting documentary, there are two problems with this type of thing.
- It is easy in the current climate — Each and every economist is coming out of the wood work to give their two pence on the crisis. Where were they before it all kicked off? They were making bullish predictions and telling The Bank of England to raise interest rates.
- There was, predictably, no action point — Analysts have a penchant for talking about how bad things are and how long things might go on without offering any solutions.
On 14 July 2007 — exactly one week before the credit bubble burst sending the FTSE reeling we issued a wake-up call for investors that financial institutions were ‘dicing with risks which none of us understand with any precision...
We warned of a dramatic fall in the FTSE before it came... we warned of a recession before it came. And now we are warning of the dramatic fall in the currency that has just started.
The most important thing about this is that we are actually offering a real course of action rather than simply pointing out the next downturns.
We are a traditional newsletter that has been focussed on stocks for a long time. This has changed recently, we have been reducing our exposure to stocks — which has saved our readers money — and been introducing new investments...
We have made two new non-stock recommendations, both of which are in profit and are outperforming the FTSE 100 by double digit amounts.
What we are recommending you do now
I am recommending my readers to buy an investment that grows as the economy shrinks and, more specifically, as the pound falls.
This investment has risen since our original recommendation and outperformed the stock market by 35%. However, this trade still has a long way to go.
The massive government debt almost guarantees it.
There are a number of factors that combine to help a currency to grow against its peers:
- Low debt
- Low inflation
- Rising growth
- Rising interest rates
Bottom line: The selling is relentless and our currency is in freefall. As what we face worsens, pressure on the pound will increase.
Government borrowing is going to have to go up by huge amounts. Selling will intensify further, and it is going to be a bloodbath on the currency market.
This gives you a chance to position your portfolio to not just avoid the recession in stock market earnings, but profit from the fall in our currency.
So what we have an opportunity is to profit from the currency’s downfall, and you can do that with our recommendation.
It’s only available to our subscribers in the latest issue of The Fleet Street Letter.
If you’d like to get this latest recommendation, you can do so right now, by joining up for a no-obligation three-month trial. Click here to find out more about The Fleet Street Letter and we’ll send you our latest issue in an email by return.
Until tomorrow,
Theo Casey
For Fleet Street Daily P.S. About the report we sent you on Saturday from Tom Bulford — "Tomorrow’s giants selling for pennies..?" was the subject of the email.
Just a little reminder...
Tom told his readers yesterday: "Time is running out if you want in on this one. I really believe that 31 October is when this incredible company could reveal some major news that could send its share price soaring. That gives you just over four days to get in to take maximum advantage.
"Forget about the wider markets. Yes they are going down. But some shares are defying that — and I reckon this could be a MAJOR winner. You should at least have a look at the idea.
"If I’m right about this company, it could help you make 400% over the next year — and I reckon the big part could come early from the news that could break in four days’ time.
"Quick - have a read of my idea here. It will take you a few minutes and you’ll soon see the scale of this opportunity — and why I believe this could be the ultimate credit crunch bargain share."
That was yesterday. You now have three days!
(Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek independent financial advice if necessary. Fleet Street Publications Ltd. 0207 633 3600.)
Today’s selected articles:
Fleet Street Letter Investment Director, Theo Casey, explains why the pound must fall — and how you can profit, even as stock markets crash.
Tom Bulford: Returning to the Bahamas.
The Daily Reckoning — The Great Masked Ball of the Markets
The masks are coming off. It’s the end of the party, now we get to see what people really look like.
And it’s not a pretty sight.
You’ll recall that one of the fairest of the Bubble Era’s revelers was the idea that, over the long run, you would make money in stocks. All you had to do was ‘buy and hold.’ Who didn’t like her? She seemed so easy... so willing... so fetching and attractive.
Yesterday, the Dow lost another 203 points. Investors are down 44% so far this year. Worldwide, they’ve lost $10 trillion this month — far worse than the crash of ’29.
The most successful economy of the 20th century was the United States of America. The second was probably Japan. It rose from the bombed-out ruins of WWII to become a worldwide export powerhouse, dominating the auto and electronic equipment industries.
But yesterday, stock prices in Japan fell to more than a quarter-century low. Investors in Japanese stocks — including your editor (who is better at giving advice than taking it) — have made nothing in 26 years.
Here’s the press report:
"Nikkei index in Japan closed at its lowest in 26 years as the financial crisis raised recession fears and drove up the yen, piling the pressure on the country's exporters.
"Tokyo’s Nikkei 225 index closed down 6.4 percent to 7,162.90 — the lowest since October 1982 — with exporters like Toyota Motor Corp. and Sony Corp hit hard. The losses came despite a report that the government was considering massive capital injection into struggling banks in a bid to calm jittery financial markets."
"Decades of pain and still no relief," adds the Financial Times, noting that investors in Japan have been waiting for a recovery for the last 18 years.
With the mask off, stocks in Japan are giving investors a Halloween fright. But what other masks are coming off?
You can read the Daily Reckoning in full here.
P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.
