EWI Reads FDRAOA

What's a little plagiarism among friends?

In their pricey Financial Forecast November issue, Elliottwave International finally picked up what I've been showing readers for nearly a year (and here and here and here):

EWI's Pricey November 2009 Issue's FDRAOA Duplication:

Portfolio Watch

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Prospering During Deflation

"My favorite time to hold a stock is forever"

-Warren Buffett

With prices across America in the first phase of historic collapse, it's essential to reject the conventional "wisdom" that brought us this mess.

First, embrace lower prices. Lower prices are good for everybody. Capital gains speculation is irresponsible (I borrowed that word from modern socialist taking points just to annoy them) and should never form a large percentage of a comprehensive investment portfolio. Note, I'm using the word "investment" correctly, to describe the purchase of cash flow. When rip off artists driving our financial media use the term "investment" or "investor" they really mean someone who tries to attack and destroy companies through capital gains speculation. Let's be clear, ripping off a company is not an investment in that company.

Capital gains speculators are not investors. Speculators are people who want to buy low then sell high. They want to steal a piece of an organization and run. Virtually every educational institution teaches this stupidity as if it is viable method of creating wealth, using a flat broke staff of academic professors. Let's be clear about another thing, if you learned anything about money it in the halls of academia, it is completely wrong.

Capital gains speculation is about as close to throwing cash in the can as you can get, without actually dumping it. In fact, if you dump your cash somewhere you can often deduct it from your taxes, making in far more profitable than placing it with a speculator like a banker or broker, or speculating with it yourself.

The reason is obvious, ultimately, capital gains speculation is nothing more than a pyramid scheme, and you have to be pretty gullible to think any scheme is going to pay out over the long haul. Yet, almost everyone in the modern world is guzzling the pyramid-scheming socialist central bank's Kool-aid. That's exactly why the great majority are buried in incurable debt--the socialist's pyramid is in the process of collapse.

Note: I use the word "socialist" properly too--someone who wants the many to bear an equal burden supporting the privileged few.

You don't need to depend on corrupt government socialists exponentially expanding spending to thrive from their inflation of prices (or suffer as it deflates prices). You can actually make money instead of trying to snatch it via speculative pricing schemes. This is called, "investing."

Happily for investors the seemingly endless era of criminal inflation is over, at least for a few decades. The crime kingpins have once again destroyed their own phony credit for cash pyramid, and that makes investing extremely attractive.

Beat the rush.

Investors buy cash flow, they don't speculate on wild schemes to push prices higher. Investors pass cash flow positive assets on to their children. They intend to hold forever, because they aren't trying to leave some sucker with a wad of worthless paper. Investors want prices to fall, they want paper and real estate assets to become more affordable so they can buy more, at the same time bestowing greater buying power upon existing cash streams.

The key to prosperity for the rest of our lives is understanding the difference between "speculation" and "investment." Build an investment portfolio.

Lucky for people wanting to switch to investing, there has never been a better time to see the light. During Federal Reserve inflationeering (like a Disney Imagineer who can only draw Dumbo), investors are driven away by rising prices. During Federal Reserve implosioneering (kabooms are more interesting than floppy-eared elephants) and eventual bankruptcy, investment is grandly rewarded by falling prices. We live in the world of deflation, a return to the era of investment.

The first thing an investor notices, is that tax policy is sometimes on your side instead of working against you. That's because investors approximate or are businesses and should strongly consider incorporation. As such, capital outlays, or investments, are generally deductible. Cash flow beyond living expenses (salary) can also be taxed at a lower rate. There are a few things our tax policy actually gets right (for the time being), and rewarding investors more than speculators is one of them. Most people don't understand it.

Let's look at one of the most attractive investments during deflation: buying cash. Unlike what most were taught in the womb, cash is an asset during deflation. Plus, it is nearly risk free. It is hard to beat the risk/reward profile of cash. Buying cash as as simple as trading work to obtain it, or trading other assets for it. Once you hold it, cash starts producing cash flow. Yes, you can get a little interest on cash buy allowing the Treasury to protect it (don't risk it in banks, they will speculate it away), but I'm not talking about interest, I am talking about falling prices. As prices fall, idle cash in hand generates a steady stream of positive, spendable, cash flow.

If you have a lot of cash, you might need to protect your cash using Treasuries. Using the Treasury's relatively new C of I is a great way to stay completely liquid while protecting an unlimited number of cash flow notes.

If you work, another way is to decrease your W-4 exemptions to 0, so the government withholds the maximum amount of cash from your paycheck. This pool of government-protected cash isn't liquid after 30 days like a C of I account, but it is effortless and most people's time is worth more than a few pennies of interest. If you bank get's locked in private FDIC legal arbitration, or you are over the insurance limit, they'll mail a tax refund right to you.

The idea here is not return on capital, it is return of capital.

Lastly, there is the perennial favorite fire and water proof personal vault. Don't forget that boobie traps and overwhelming firepower can also function like investments. B e the bank. This one can pay off big when there is no cash accessible, ATMs are emptied by the first 10 in line, the world is in a panic to pay negative yields while migrating vulnerable bank account balances into the Treasury. You'll be growing your own cash at home.

How Unemployment Has Ravaged America

October 15, 2009:
Update: Subtract Atlanta.

October 11, 2009:
When you hear "10% unemployment" that's just ongoing government claims.

The majority of the unemployed do not, or can no longer make a claim. Shadowstats.com reports our total unemployed at 23% (chart does not include the latest BLS release):



During the Great Depression, they counted total unemployed. That number peaked at 24% in 1932.

I get the feeling most people don't understand the un-fixable devastation that has already wrecked the United States' economy, particularly our metropolitan areas. The following table shows the population of America's 100 largest cities:

• 23% unemployment is the same as the cumulative population of the dark red cities. That is, people on the unemployment dole, or who have given up looking for a job.

• The bright red city of Milwaukee (#23) is the number of unemployed that we added last month (new goverment paychecks)

• The population of Indianapolis (#14) is how many jobs we lost the month prior.

• San Fransisco (#12) is equal to the worst month in 2009.

• Last month, the BLS said they understated all of those numbers by 875,000, about the population of Detroit (#11).

• The blue cities represent the current total number of unemployed workers, counting from the top down.

Rank	City	Population
1	New York	8,363,710
2	Los Angeles	3,833,995
3	Chicago	2,853,114
4	Houston	2,242,193
5	Phoenix	1,567,924
6	Philadelphia	1,447,395
7	San Antonio	1,351,305
8	Dallas	1,279,910
9	San Diego	1,279,329
10	San Jose	948,279
11	Detroit	912,062
12	San Francisco	808,976
13	Jacksonville	807,815
14	Indianapolis	798,382
15	Austin	757,688
16	Columbus	754,885
17	Fort Worth	703,073
18	Charlotte	687,456
19	Memphis	669,651
20	Baltimore	636,919
21	El Paso	613,190
22	Boston	609,023
23	Milwaukee	604,477
24	Denver	598,707
25	Seattle	598,541
26	Nashville	596,462
27	Washington	591,833
28	Las Vegas	558,383
29	Portland	557,706
30	Louisville	557,224
31	Oklahoma City	551,789
32	Tucson	541,811
33	Atlanta	537,958
34	Albuquerque	521,999
35	Fresno	476,050
36	Sacramento	463,794
37	Long Beach	463,789
38	Mesa	463,552
39	Kansas City	451,572
40	Omaha	438,646
41	Cleveland	433,748
42	Virginia Beach	433,746
43	Miami	413,201
44	Oakland	404,155
45	Raleigh	392,552
46	Tulsa	385,635
47	Minneapolis	382,605
48	Colorado Springs	380,307
49	Honolulu	374,676
50	Arlington	374,417
51	Wichita	366,046
52	St. Louis	354,361
53	Tampa	340,882
54	Santa Ana	339,130
55	Anaheim	335,288
56	Cincinnati	333,336
57	Bakersfield	321,078
58	Aurora	319,057
59	New Orleans	311,853
60	Pittsburgh	310,037
61	Riverside	295,357
62	Toledo	293,201
63	Stockton	287,037
64	Corpus Christi	286,462
65	Lexington	282,114
66	St. Paul	279,590
67	Anchorage	279,243
68	Newark	278,980
69	Buffalo	270,919
70	Plano	267,480
71	Henderson	252,064
72	Lincoln	251,624
73	Fort Wayne	251,591
74	Glendale	251,522
75	Greensboro	250,642
76	Chandler	247,140
77	St. Petersburg	245,314
78	Jersey City	241,114
79	Scottsdale	235,371
80	Norfolk f[›]	234,220
81	Madison	231,916
82	Orlando	230,519
83	Birmingham	228,798
84	Baton Rouge	223,689
85	Durham	223,284
86	Laredo	221,659
87	Lubbock	220,483
88	Chesapeake	220,111
89	Chula Vista	219,318
90	Garland	218,577
91	Winston-Salem	217,600
92	North Las Vegas	217,253
93	Reno	217,016
94	Gilbert	216,449
95	Hialeah	210,542
96	Arlington	209,969
97	Akron	207,510
98	Irvine	207,500
99	Rochester	206,886
100	Boise	205,314