Monday, September 21, 2009

5% Rate of Return?

I've posted similar tables to this in the past, but it's worth a reminder. The Main Stream Media will call the following a 5% avg annual return:

Annual Return
Starting Price = 10
-50% 5
+60% 8
-50% 4
+60% 6
-50% 3
+60% 5
-50% 3
+60% 4
-50% 2
+60% 3
-50% 2
+60% 3
-50% 1
+60% 2
Avg Return = + 5% Loss = 80%

Don't be a sucker.


  1. Speaking of rate of return, do you think the zsl (double short silver) etf is an appropriate way to short the metals market?

  2. Don't try to fool us with your complex math...LOL

  3. You are better off shorting using your own leverage, or none at all. Bear ETF fees are super high and over the medium to long run they all move opposite their stated objective (mostly because of the effect of the table above).

    In the short run, they can be effective provided you only hold them through a period of acute decline. Now is an ok time to own one like ZSL.

  4. What will be the preceding indicators to look out for prior to the deflationary spiral you suspect?

    Also, the indicators for an exact opposite turn?

  5. "What will be the preceding indicators to look out for prior to the deflationary spiral you suspect?"

    It is already underway.

    "Also, the indicators for an exact opposite turn?"

    I wouldn't worry about that until 2012 or so. At that point, you can look for short term treasury yields climbing strongly for a year straight. That should start a several year decent rally with a lot of volatility, ultimately followed by lower lows.

    Given the unprecedented 80 year inflationary boom caused by central bank looting, the final bottom should be in the neighborhood of 2020-2030.

  6. "Don't be a sucker." ???

    Now you tell me. :)

  7. Thanks for all your help FDR.

    I once was blind, but now I see.

    At least I think I can see something, I'm still watching.



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