Jim Rogers’ Opinion On Bear Stearns’ Bail-Out

Posted on March 23, 2008 by Nirav

[youtube]http://www.youtube.com/watch?v=wXUU_lyb0Lc[/youtube]

While Jim Rogers has never had a good opinion of Fed Chairman Ben Bernanake, he seems particularly upset with his latest actions. He thinks that he had no right to bail-out Bear Stearns (BSC) to the tune of $230 Billion of the US taxpayers money. He claims that if BSC had filed bankrupcy,the billions of dollars of bonuses paid out in January would have to be returned. So effectively Bernanke facilitated a bail-out so that his pals on Wall Street could continue to drive their Maseratis! Sounds a bit too conspiracy-theory to me, but in principle I agree with him. It’s not fair that the Wall Street guys take huge risks to make huge amounts of money, but when they mis-calculate, instead of being punished by the market (in terms of bankruptcy and financial ruin) the Fed just bails them out.

He also admits that he’s been buying agriculture for a while, since its the cheapest commodity and that he’s also out of the dollar. He also thinks that gold should be over $2,000, adjusting for inflation. The short term dollar rally isn’t fooling him, he’s using it to liquidate the rest of his dollars.

Gold Cracks $1000/Oz: Investing For A Recession

Posted on March 14, 2008 by Nirav

Based on continuing weakness in the dollar, gold briefly breeched the $1000 level yesterday along with oil hitting an all time high of $111 per barrel. I had a really strong suspicion that we’d see $1000 gold by mid-March.

Despite what Bernanke and Paulson said last summer, the housing bubble has spread to other parts of the economy and subprime mess has not been contained. In a last ditch effort to prevent banks from collapsing, the Federal Reserve announced a bailout of Fannie Mae, Freddie Mac and other banks, promising to exchange bogus mortgages for Treasuries during a 28 day window. They named this Term Securities Lending Facility (TSLF) but it’s just a good old bail-out.

Of course, the stock markets loved this move because it means the Fed is going to prevent banks from failing. However, this $200 Billion bail-out doesn’t come without a cost. The Fed is going to have to print an extra $200 Billion to cover this deficit. But it was a clever move, because Bernanke didn’t have to cut interest rates before the 17th of March, when he’s slated to do so anyway. Another move like that might have created a panic in the markets instead!

Bloomberg reported today that OPEC is going to make about $927 Billion dollars from the sale of oil this year. That’s almost $1 Trillion dollars! Worldwide, sovereign wealth funds (SWF) are thought to be worth about $2.8 Trillion. Considering that the combined wealth of global nationalized assets is about $12 Trillion, that’s really impressive. It probably means that SWFs and OPEC will start buying up pieces of America, since they really can’t do much else with all those US Dollars. Of course, they could buy Treasuries, but it seems like everyone’s now realizing that they’re useless as the dollar keeps on devaluing. Meanwhile, the US government is helpless against stopping the sale of US assets. Our own SWF is negative $9 Trillion, so we have some catching up to do before we can actually buy anything. I think the government’s best bet is to make all those Trillion worthless by printing more and more dollars. Bernanke knows this and so far he’s doing a bang up job. Of course, this leads to severe inflation, but don’t say I didn’t warn you.

Considering how wrong our economic advisers have been so far, I think it’s safe to assume the 0.3% GDP growth that’s forecast for the year is a tad optimistic. While everyone’s still denying it, I think we’re already in a recession and along with inflation, that amounts to a 70s style stagflation scenario.

Considering that consumer spending has slowed down and is likely to continue, US companies are going to go through some tough times. How do you protect your stock investments then? You can’t sell them and move to cash, because the US dollar is sliding too. Coupled with inflation, your wealth is going to slowly (or maybe not so slowly) erode over the next several years.

Here are some investment ideas:

1. Diversify into foreign currencies: I like Australian Dollars, Swiss francs, Japanese Yen. Jim Rogers likes Chinese Remnimbi and Warren Buffett like the Brazilian Real. Take your pick.

2. Buy US giants with international exposure: Consumer staples have historically done very well over the past 60 years, regardless of the economic scenario. I like stocks with a decent dividend yield like Pfeizer (PFE), Johnson and Johnson (JNJ), Merck (MRK), Unilever (UNL), Proctor & Gamble (PG), Kraft Foods (KFT) and Anheuser-Busch (BUD).

3. Invest in agriculture: Bush’s moronic plan to reduce our reliance on foreign oil by substituting ethanol has only resulted in a surge corn prices. The economic growth in countries like China, India, Russia and Brazil is increasing the size of the world’s middle class. These people will be improving their diet and adding more meat and veggies. They’ll also be drinking more milk. There’s already surge in global prices of all of these soft commodities. There are quite a few ETFs that will help you profit from these trends, like PowerShares Agriculture (DBA) which consists of 30% soy, 28% wheat, 23% corn, 16% sugar, Van Eck Agribusiness (MOO) [8% Monsanto, 8% Mosaic, 8% Komatsu, 8% Potash Corp] and PowerShares Commodity (DBC) [33% crude oil, 20% heating oil, 14% wheat, 11% aluminum, 10% corn, 10% gold].

Along with this, a demand for fertilizer will result in compannies like Potash Corp (POT) doing very well. If you’d like to invest in milk, American Dairy (ADY) and Dairy Crest (DCG) are too suggestions, but I haven’t done much research on them.

4. Buy Gold: I don’t think it’s too late to start investing in gold. You can buy gold coins and bars, the gold ETF (GLD) or mining stocks (GDX).

5. Invest in Metals: The global boom is creating a huge increase in the demand for metals like copper, iron, aluminum, zinc, etc. Mining stocks like BHP and RIO have done very well. Indian company, Sterlite (STL) also looks like it has good long term prospects.

6. Invest in Infrastructure: Not only is America’s infrastructure collapsing, but global growth makes betting on infrastructure a safe bet. I like Brookfield Infrastructure Partners (BIP).

7. Invest in Oil and Gas: Major oil companies like Exxon-Mobile(XOM) have served its investors well for decades. I’ve also invested in direct oil drilling programs, which go out and drill wells with your money and give you a share of the proceeds. I also like Canadian Royalty Trusts that invest in oil fields. There a few new ETFs that buy heating oil and gasoline futures. I’d stay away from these as their performance is as yet unknown and they might be subject to backwardation and contango.

8. Invest in Water: Water pipes all over the US are breaking. Built after WWII, these pipes had a lifespan off about 50 years. As the nation replaces these pipes over the next several years, cast-iron pipe companies are set to make a killing. Check out NorthWest Pipe (NWPX) and the water ETF (PHO).

I don’t know about the rest of US, but Nevada and Southern California are going to face a huge water shortage in the next decade. Most of the water comes from Lake Mead and the tremendous population growth in Las Vegas and Henderson has tapped the limits on the lake’s capacity. Check out this photo:

Dont’ you think a company that owned the water rights in Nevada and California would make a decent amount of cash over the next few years.

Is Gold A Bargain At $950/Oz!

Posted on March 2, 2008 by Nirav

I’m finally back in the US! Last week, I heard Dr. Marc Faber, of GloomBoomDoom
fame, on CNBC India. While gold is currently at a whopping $973/Oz, on that day gold had briefly touched $950/Oz for the first time ever.

Dr. Faber said two things that were very interesting:

1. Gold is a bargain at $950/Oz

2. Fed Chairman, Ben Bernanke doesn’t understand how the economy works

Seems like he agrees with Jim Rogers!

I’ve been advising everyone to invest in gold since it was $500/Oz. Of all the people I know, maybe 3 or 4 actually followed my advice and bought some gold. Most people thought I was stupid and vehemently disagreed with me. Most of their arguments consisted of the following points:

1. Gold has been a terrible investment for most of history and in fact had declined from its peak in the early 80’s for 17 years.

2. Gold doesn’t pay interest and you’re blocking your money.

3. Gold has no real use. It’s just some rich people who are propping up the prices.

While, these are all valid points, they didn’t touch the main point of gold being a store of value. In times of uncertainty and times of hyperinflation, gold always does well. Whenever there is a lack of confidence in the banking system, gold prices tend to shoot up.

John Lee, portfolio manager at Macau Capital Management, has a good explanation:

Banks create dollars out of thin air and loan them to people. Even though money is created out of thin air, once the borrower pays back the loan, the transaction is complete and those borrowed dollars perish in bank’s books. In this scenario, the dollar’s purchasing power is preserved through non-dilution.

However, as we have witnessed through the recent subprime fiasco, many parties are getting away without fulfilling their obligation to repay a loan. Institutions were bailed out as the Fed bought their mortgage positions at face value with new money. Consumers were bailed out as lenders were elbowed to freeze foreclosures, freeze rate resets, forgive loans, and make lower payments.

Such compromises erode confidence in the system. If one person can get dollars through borrowing without paying back, and yet another had to work to obtain and save dollars, it is surely not an incentive to earn and keep dollars. Rather, it is a no brainer to borrow dollars and spend unabashedly. Savers are the most risk averse bunch of people, and when the monetary rules are muddied, they will opt out. This is how a run on the dollar starts.

Interestingly, unlike Faber or Rogers, Lee maintains that Bernanke does know what he’s doing and that its the correct course of action for the Federal Reserve.

Today, the USA is the world’s largest debtor nation. Regardless of how high oil is, there is no room to raise rates with tens of trillions of dollars in debts to be serviced.

Don’t blame Bernanke for our problems; even if Volcker were to be the chairman today, he would have acted in exact same way as Bernanke did.

The ideal dream for debtors is inflation, which is precisely what the Fed is advocating – expanding money supply through lowering interest rates and direct handouts. The Fed’s action is entirely logical acting on behalf of the average American, which is heavily in debt.

While I would contend that debasing a currency just because you can’t afford the interest payments is a wrong thing to do, Lee does at least agree that fiat money always results in hyperinflation.

The deflation camp has been on the wrong side throughout EVERY fiat money experiment thus far. The bear camp contends that the debt burden will eventually become so large that eventually the debt bubble will blow and the prices of everything stocks to real estate to copper and zinc will collapse.

Fiat money systems have always resorted to hyperinflation and destruction of the currency without fail. If hyperinflation could be avoided in a fiat system by the creation of the Fed, the Argentines in 2002 surely would have figured it out and avoided their hyperinflationary disaster.

He also thinks that the Federal bailout will lead to a further weakening in confidence which will cause the dollar to drop further.

The idea that the Fed and the government will allow debt cleansing lasses faire style is patently absurd in my opinion. Central bank action has spoken louder than words in the past six months as record $1 trillion+ has being printed to rescue banks. For instance, England’s largest mortgage lender, Northern Rock, has been nationalized. And as for the consumers, loan amounts are reduced without penalty or conditions, mortgage rate resets are postponed, federal guarantee limits are set to increase.

Here we go back to psychology. It is not so much about the amount of bail out money being printed, but rather that the smart money took issue with the way the handouts were given unconditionally across the spectrum. Confidence in the dollar was further eroded.

Ok, so what’s his point? Lee thinks that gold is heading much higher.

Gold is money and a refuge of capital when a defective fiat money system shows its ugly head. Gold is universally recognized, portable, divisible, liquid, and limited in supply which makes it the only real viable option as store of wealth. Today’s gold price has not fully priced in dollar’s deep and terminal issues and there is nothing that can be done to stop the further rise in gold. The Fed can talk tame CPI to try stabilizing commodity prices but the effect will be limited. Mind you, gold’s rising popularity should be seen as positive; the fall of the dollar system levels the playing fields for global consumers and producers.

The markets can easily handle $3,000 – $5,000 oz. gold in the near term horizon with minimal disturbance. It is when gold rises too much over $5,000 too fast that we might start to worry about global inflation panic.

Wow, gold at $5,000/Oz! That’s a bold prediction. I’m not sure if I agree with him, but I’m still sticking to my belief that gold will reach somewhere between $2,500 and $3,000 in this cycle. Look for gold to break $1000/Oz around the middle of March when Bernanke drops the federal funds rate another 50 basis points.

And whether or not Bernanke knows anything about the economy is still up for discussion. The popular consensus seems to be that he doesn’t!

Jim Rogers Gives His Take On The Economy.

Posted on February 15, 2008 by Nirav

I always like it when he rips into Ben Bernanke! Mr Rogers says that job of Federal Reserve is NOT to bail out a few financial institutions and the stock market, but to maintain a strong currency and job market. He says the Bernanke’s lowering of the interest rates is debasing the currency which will lead to higher inflation.

He also explains why we’re going to see the worst recession in a long time and also mentions some of his current investments.

Its a great informational video. Definitely check it out!

[youtube]http://youtube.com/watch?v=LjLMAQiIRyU[/youtube]

After Sub-prime, Is Commercial Property Next?

Posted on February 9, 2008 by Nirav

Based on my own experiences of being allowed to borrow 40 times my annual income to purchase investment property, I knew the real estate party was going to end badly for many borrowers, banks and eventually tax-payers. I had tried shorting Countrywide, which was the largest lender of mortgages, last year when the stock was trading at around $36. Unfortunately, I was a little early and closing my position at $39 incurring a substantial loss. If I had held on to my position, with Countrywide currently trading in $6-$7 range, I would’ve have been handsomely rewarded.

Hopefully, I’ll have the fortitude to hold onto my positions next time. Right now I think the Commercial real estate is the next bubble to burst.

Easy liquidity and the willingness of investors to settle for low rates of return have squeezed the margins on commercial properties over the past few years. Commercial construction has been on tear and new malls have sprung up all over the place. There’s also been a contraction in commercial liquidity owing to the sub-prime fiasco. Added to that is the slow-down in consumer spending which will affect the bottom line of retailers and the amount their willing to spend on employees and rent.

I’m currently short Simon Properties (SPG), which gets 25% of its income from retail malls in California and Florida and the Dow Jones Real Estate Index (IYR). Lets see if I can hold on to these positions during the coming few months which will probably be quite volatile.

Residential Housing To Drop Another 25%

Posted on February 7, 2008 by Nirav

Since 2005, I’ve been saying that San Diego home prices are way overpriced and are due for a 40-45% correction. The homes are so far out-of-whack thats it’s 30-50% cheaper to rent than it is to buy. Of course, the National Association of Realtors (the cheerleaders of the real estate world) will always tell you its always a good time to buy, but anyone who can use a calculator might think otherwise.

Already in most parts of San Diego, home prices are down 20-30%, unsold inventory has sky-rocketed, and real estate is no longer the main topic of cocktail parties.

Someone recently asked me if I though it was a good time to buy in San Diego. Houses in a Cardiff/Solan Beach/Encinitas/Pt. Loma that were $800-900k during the peak were now in the $600-700K range. When would we see the bottom?

I obviously thought it made sense to wait until the prices overshoot fair-value and become undervalued. Real estate has a tendency to keep moving in a trend for a very long period of time. Once its started to go down, it’ll just keep on heading in that direction. The Federal Reserve may try to give the bust a ‘soft landing’ but that won’t have much of an effect. It’ll probably just increase the duration of the downturn, similar to what happened in Japan after their real estate market crashed and was depressed for 15 years.

BusinessWeek finally has an interesting article about the Housing Meltdown: Why home prices could drop 25% more on average before the market finally hits bottom..

Even Mike “Mish” Shedlock thinks that home prices will reach more reasonable levels in 2009. Nice to finally see some corroborative data from an economists point of view.

How many of you think the bottom is in 2008?

Why The Government Wants A Weaker Dollar

Posted on February 4, 2008 by Nirav

As I stated in my last post, the government is bankrupting our economy. I asked Chuck Butler of Everbank.com “why is the government trying to weaken the dollar and if there was any advantage to having a weak dollar?”

He was gracious enough to answer my question:

It’s a political thing… If the Gov’t can show that they are doing what they can for Manufacturing, that equals votes. The main thing though is the dollar is used to attract foreign investment. I’ll explain.

The Gov’t is running a huge deficit, and as long as they are running a huge deficit, they are in need of foreign investment to finance that deficit. The amount of financing needed each day is over $2 Billion.

When a Gov’t needs to attract investment, they can do 1 of 2 things.
1. They can raise interest rates aggressively to attract investment, or…
2. they can allow a debasement of the currency, which acts as a clearing mechanism for investments. When a foreign entity buys a U.S. asset, they need to convert their currency for dollars… If dollars are cheap vis-a-vi the foreigner’s currency, they are in essence buying that asset at a discount.

Given these two choices, a Gov’t will always choose #2… raising interest rates would bring an economy to its knees… so #2 is the always the choice… and that’s where we are today.

There you have it folks! Debasing the currency is always the better choice! I’m so glad I bought some gold. There also seems to be some evidence that foreign countries are finding the US dollar cheap enough to bring manufacturing jobs back to the US!

An added bonus to debasing the currency is that the 30 year bond, which pays less than the current rate of inflation, will be worthless in 30 years. In other words, the government will be repaying its debt with worthless currency. Suddenly the $57 Trillion of future debt obligations (Social Security and Medicaid) doesn’t seem so bad!

Friday’s Rant: Its the Government, Stupid!

Posted on February 1, 2008 by Nirav

In the past week or so, the Federal Reserve has lowered the interest rates 1.25%. Today they’ve announced that they’re going to lend out $60 Billion to cash-strapped banks to prevent a credit crunch and to maintain liquidity in the economy.

By lending out money below the real rate of inflation, the bank is essentially handing out free money. Basically, Ben Bernanke is giving away a truckload of money to anyone who asks for it!

My guess is he’s going to keep lowering the interest rates for the remainder of 2008 until we’re at a 1% Federal Funds rate.

Since the US consumer can no longer refinance his house to fulfill his appetitive for consumption, Bernanke’s hoping that low interest rate consumer loans will continue to fuel consumption. After all, we’re a consumption based economy (as opposed to other countries, who actually make goods). Evidence of this is provided by the Economic Stimulus package worth $150 Billion. Since our economy is $15 Trillion, I guess $150 Billion will make 1-2 months look good, long enough for President Bush to claim that the economy has turned around as he gracefully exits office.

By lowering the interest rates after the dot-com bust in order to prevent a major recession, Greenspan caused the housing bubble. And now, Bernanke in trying to prevent the recession that should’ve occurred in a few years ago, is probably going to create a credit card/personal loan bubble.

I’m sure Wall Street will come up with a novel way to bundle $100 million portfolios of unsecured personal loans and palm them off to some unsuspecting foreign country. Of course, they’ll make a quick buck without assuming any risk, but more importantly, they’ll provide a risk-adjusted yield for their clients and provide necessary liquidity for the banks. Standard & Poors will issue AAA credit ratings to products they can barely understand. As usual, Goldman Sachs will start shorting the very products its selling to its clients and make even more money!

Meanwhile, the government has dis-incentivized savings, which it doesn’t believe in anyway. Why else would we have a budget that’s only $400 Billion in deficit (excluding the cost of the Iraqi War and future debt obligations)?

The government is funding its growth (yes, the government never has a recession – its always growing) through the sale of US Treasury bills and has no intention of ever becoming debt-free. As the world’s largest debtor nation, we don’t even have a plan towards economic recovery or paying off our debts.

I think the government and Federal Reserve are leading the US down the path of bankruptcy. Of course by the time we all realize it, it’ll be too late.

Manufacturing Jobs Coming Back To The US

Posted on January 30, 2008 by Nirav

I read a lot of financial news and newsletters on a regular basis. One of the paid newsletters I subscribe to is Capital & Crises by Chris Mayer which discusses safe, non-speculative stock market investments. Today I got an email quoting Mr. Mayer which was pretty interesting. It was about the return of manufacturing jobs to the US.

“The weak U.S. dollar makes U.S. assets look cheap to foreign buyers,” comments our managing editor Chris Mayer. “And they are buying.”

In 2007, foreign purchases of U.S. assets topped $400 billion. That was a 93% increase over the year before. The top foreign purchasers were Canadian, British and German, with their loonies, pounds and euros. But the Middle East and Asia — most especially China — are quickly catching up.

“It’s interesting what they are buying, too,” Mayer writes. “Hardwood trees in Pennsylvania, for example. In fact, there are six Chinese companies in the process of closing deals in that state. The Chinese are also looking to set up manufacturing facilities here. The weak U.S. economy means that some pockets of the country have high unemployment — lots of skilled workers without their old manufacturing jobs. Enter the Chinese.“In South Carolina, the unemployment rate is 6.6% statewide. In some areas, it’s more like 10-15%. Chinese investment has come in to soak up some of that excess. Haier, a Chinese appliance maker, has a refrigerator plant in South Carolina. There is also a Chinese-owned chemical plant, a printing company and a general contractor.

“Not only can Chinese manufacturers find good workers, but land is cheap. Also, electricity is about a quarter of the cost in China. Plus, in South Carolina, the Chinese are closer to their customers — mostly Americans.

“It’s an odd mix of realities, isn’t it? First, America’s manufacturing jobs go to China. Now the Chinese are bringing them back. It’s not that simple, of course. But down on the ground, in small ways, there is this interesting shuffle going on. Even 10 years ago, I think such investments by Chinese businesses would have been very unusual. Over the next 10 years, I think such investments will become quite common.”

A few years ago, I realized that if the Federal Reserve weakened the dollar enough manufacturing jobs would start coming back. Accordingly, I bought a couple of rentals in the mid-west while they were still cheap. I paid $90k for a 5 year old, 1600 sq ft house, which looked pretty cheap to me since I was living in a $350K, 920 sq ft condo in San Diego. This is the first sign of manufacturing jobs coming back to the US. Hopefully the trend will continue. Maybe this is the only silver lining of the devaluation of the US Dollar.

You might want to also check out Mr. Mayer’s new book, Invest Like A DealMaker. It’s definitely something I’ll pick up when I get back to the US.

US Inflation Much Higher Than Reported: Get Ready For 10% Inflation

Posted on January 24, 2008 by Nirav

Today’s post is an excerpt from a letter by Martin Hutchinson. He’s done a great job of explaining why interest are so low and why inflation will probably run 10% pretty soon.

Back in the early 1990s, the Fed and its chairman – Alan Greenspan – had a problem. And it was a big one. The central bank tried to maintain a low rate of money supply growth, as Fed predecessor Paul Volcker had pioneered, but this was causing problems. Even though inflation appeared under control, economic growth remained stuck in low gear – even long after the nadir of the 1990 recession. President George H.W. Bush was seriously annoyed, as he had right to be: After all, that slow economic growth probably cost him the 1992 election.

Accordingly, Greenspan in 1993 abandoned monetary targeting, asserting that for some unspecified reason [but one that was doubtless highly technological] money supply aggregates had become inaccurate, so it was better to target inflation directly. However, inflation showed signs of turning up, so in 1994, the Fed was forced to tighten again, slowing growth once more. No fun at all.

The solution was to move the goalposts. The Bureau of Labor Statistics, which measures inflation, suddenly found a great interest in “hedonic pricing” – essentially an assessment of the pleasure people gain from the goods and services they consume.

The idea behind this is quite simple – essentially that the satisfaction derived from a particular good does not remain the same if the quality increases through better technology. Shouldn’t that quality increase be counted as the equivalent of a price decrease?

The most exciting application of this premise was a concept called “Moore’s Law” in the high-tech sector, where microprocessor power was doubling every two years or so. If you pretended that this doubling in chip speeds also doubled “hedonic” output, you could also pretend that the price had been halved. If you then rebased all weightings on the 1st of January of each New Year, you could then take the effect of these repeated “halvings” in tech-sector hedonic prices. If each halving took the tech sector from 5% to 2.5% of the economy, then after 10 years you would have halved prices over fully 50% of the economy.

Doing this is completely spurious – for one thing, it ignores the negative hedonic effects to consumers of such nuisances as customer call centers and automated telephone systems – but it has allowed the BLS to report inflation at about 0.8% to 1% less than it otherwise would have been in every year since 1995.

Conversely, since inflation is lower, using that artificially lower number to get a “real” economic growth figure will produce a growth figure that is artificially higher. And that’s why we had the so-called “boom” of the late 1990s, and the apparent boom since 2000 – even though neither really seemed to make consumers any richer.

Needless to say, politicians love this stuff! It enables them to trumpet the new, higher growth rates and the new, lower inflation rates every time they run for re-election. It also makes improvements in the U.S. economy look much better than its European Union and Asia counterparts, which haven’t adopted “hedonic” pricing.

But the game may finally be up. Even hedonic consumer price inflation is running at 4.1% in the last 12 months, so with interest rates at 3.5% for the benchmark Federal Funds Rate and about 3.6% for 10-year Treasuries, interest rates are now significantly below the inflation rate.

That means savers are getting an even worse deal than they usually get.

It also means inflation is almost bound to accelerate. By definition, if borrowing costs are less than zero, people will find ways to borrow and will waste the money they have borrowed. Unless the BLS finds some new trick to avoid reporting inflation, it is likely to rise rapidly towards 10% or so in the months ahead.

Whats the best way to hedge against this?

Hutchinson suggests the following:

1. Avoid TIPS (Treasury Inflation Proofed Securities).
2. Consider investing in Rydex Inverse Government Long Bond Strategy C Fund (RYJCX) is a fund designed to move inversely to Treasury bonds.
3. Buy gold.
4. Jump on Japan by buying the ETF JSC, which consists of smaller companies with little or no exposure to the global markets.

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