My investments and I have not faired well. Every day I see my meager savings growing progressively more meager. In desperation I made an urgent appointment to discuss my concerns with my investment councilor. Three weeks later he finally found time to see me. He was not sympathetic. In fact he was angry with me. What right had to complain, he exclaimed, when others have lost everything? Rather than complaining, I should be grateful to him. It was only through his diligence, skills and brilliance that he was able to avoid losing all my money. He concluded by stating in no uncertain terms that if was not satisfied, I could take my paltry business elsewhere. He would not waste his time, helping an ingrate like me, when he was making super-human efforts to save his other clients from total penury.
As with most of us, I saved my pithiest comments for the trip home alone. In fact I was most upset with myself. Why had I allowed myself to be intimidated? What right had he to be angry with me. He was the one who lost my money? It because of him that my account had fallen from modest to paltry?
It was only later when I had calmed down, that it occurred to me that the fault may indeed lie with me. I had acted like a total idiot. The person I selected to look after my savings actually believed that he deserved credit for not losing all of my money, just most of it. Based on his performance, my best strategy would have been convert everything to cash and stuff my savings in my mattress — My savings would now be in tact and I would have saved those horrendous fees I paid him to lost my money. In fact, the second best strategy would have been to stuff half my savings in my mattress, and set fire to the other half. Employing this monkey was a distant third.
This gave rise to a serious question. Had I hired the financial community greatest monkey, or was my monkey no better or worse than the other monkeys? Looking over the events of the past three years, it seems that I like the rest of us had been mislead. The politicians, bankers and financial experts are not rational professionals they are simply a band of blithering monkeys.
Remember the conundrum where if you take an infinite number of monkeys and put them in a room with an infinite number of typewrites, at least one monkey will type out a perfect copy of Shakespeare’s Hamlet. It seems to me that the probability of our politicians, bankers financial experts overcoming the problems we face are on a par with a monkey producing a perfect copy of Shakespeare’s Hamlet — about 0.
We can be certain that whatever the problem, whatever the challenge, whatever the difficulty we will face going forward, we can be certain that our political, banking and financial monkeys will get it wrong.
Which leads me to the perfect strategy for the coming recession. Assume that the world’s finances have been taken over by a bunch of moneys; therefore always bet against the experts.
For example, unemployment is now acknowledged to be the most serious economic problem facing the United States. To a large degree, the future of the U.S. economy depends on solving this problem. As investors we have two choices:
a Have faith that U.S. government leaders and financial professionals are rational human beings and assume that they will create a bipartisan policy to raise employment and avoid the impending recession.
b Have faith that these same political leaders and financial professionals are a bunch of idiot monkeys and assume they will to act like idiot monkeys —they will do nothing more than scream at one another and throw feces in all directions.
If you accept alternative b, then you must assume that they will flush the U.S. economy down the toilet will and the best you can do is take your savings out of U.S. dollars and go elsewhere.
What is true of the United States is equally true of Europe. The EU is faced with a slightly different but even more serious problem. Sovereign debt — the bonds issued by national governments: There is a growing fear that the weaker EURO countries such as Greece, Ireland, Portugal, Spain and Italy will default and in doing so threaten the European financial system. Again you have two choices
a Have faith that these European politicians and financial specialists are rational human beings and assume the EU countries will work together to overcome the current problem.
b Have faith that these European politicians and financial specialists are a bunch of idiot monkeys and assume they will act like idiot monkeys — they will run around in circles doing nothing
If you accept alternative b, then you must assume that the EURO collapse and the best you can do is take your savings out of the EURO and go elsewhere
Finally we have China which faces a very different but most serious problem. The country faces rising inflation and an ongoing currency revaluation. The problem is that in an effort to subsidize foreign trade the PRC government has forced the value of their currency ever further downward which has led to ever greater inflationary pressure.. Once again you have two choices
a Have faith that these PRC politicians and financial specialists are rational human beings in which case the will allow moderate currency revaluation thus reducing inflationary pressure.
b Have faith that these same PRC politicians and financial specialists are a bunch of idiot monkeys and assume they will act like idiot monkeys — they will sit there grooming one another ignoring the problem.
If you accept the alternative b, then you must assume that Chinese inflation will rise and more importantly the Chinese RMB will increase in value — perhaps 15% in the next two years and you should rush to put your money in Chinese RMB.
Of course I would never suggest that you should hire a financial advisor. I think we have all learned that lesson. The prudent move would be to convert your savings into Chinese RMB cash and stuff the notes in your mattress.
If only I had done that three years ago.