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As July 2007 opened, banks and brokerage houses came under increasing pressure,

which I took as a signal that the historic worldwide credit bubble was coming to an end.

In light of the mounting signs of a credit contraction, on July 19th I sent an issue of The

Investor’s Mind titled, “What Is & What Should Never Be,” with the following note to both

our free and paid subscribers:

“Evidence is mounting that we are in the final throes of this worldwide,

credit-fueled bubble. The wobbling dominoes certainly merit the attention

of all investors and advisors.”

While we have seen, and will no doubt continue to see, enormous efforts to try to change

the course of where we are headed, the depletion of half of the Federal Reserve's book

of Treasuries and the severe contractions in the Asset Backed and Structured Invest-

ment Vehicle markets, indicate a change of major significance is at hand.Those who are

only mindful of the major equity index prices or the Fed's decision to lower rates, overlook

the credit crunch occuring within the institutions that fund many of our market operations

and a large part of our economy. Those who deny the systemic risks within our capital

markets and lean instead on central banker's ability to add "liquidity" will soon be forced

to acknowledge what happens when collectively, individuals move away from embracing

debt, to attitudes and actions that seek to REDUCE their exposure to debt, especially

higher risk debt instruments. As investors begin to realize that many complex, exoctic

financial products do not merit the rating they have been given, and that the growth rates

of the same are unsustainable, fear and distrust will replace greed and apathy and, in the

process,will correct such excesses. An obsession with past performance, devoid of

concern for the underlying drivers, is inherent to human nature during secular bull

markets. But if we want to be well-prepared, we must ask, "How have my investements

performed since the credit contraction began, in July 2007, and how should my overall

investment strategy perform in a long-term credit contraction?"

In light of this, I encourage you to consider joining the group of subscribers, who are not

only readers, but are part of The Investor’s Mind. Our subscribers include hedge fund

and institutional managers, retired industry insiders, business owners, and professors,

as well as retail investors from various countries around the world. Why do they sub-

scribe? In short, to gain a better understanding in this period of extraordinary change and

to better navigate the most challenging investment environment any of us have ever seen.

Every investor, manager, trader, business leader, and politician will be forced to deal with

issues that the credit expansion allowed us to deny or at least put off for a “rainy day.”

If you would like to get a taste of The Investor’s Mind before you sign up for a six-month

subscription, scroll down this page to Recent Updates and click on the links under our

latest public article. If you examine the range of subjects covered in

The Investor’s Mind: Anticipating Trends through Lens of History, and Riders on The

Storm: Short Selling in Contrary Winds, you will see that this is not the typical investment

newsletter. If you are convinced that something significant is taking place, I would

encourage you subscribe to The Investoor's Mind. As the aforementioned issues take

their tool on global markets in the months ahead, there will be plenty to think through

if we are to keep ourselves from being swept away along with the crowd.

As each of us assesses our ability to successfully navigate today's markets, consider

Edward Chancellor's words from his book, Devil Take the Hindmost: A History of

Financial Speculation, published in 1999.

       "According to the financial journalist Alexander Dana Noyes, the American stock

        market boom at the beginning of the twentieth century was 'as much a social and

        psychological phenomenon as a financial episode.' "

Since the credit contraction began, in the summer of 2007, our national leaders have

only presented one solution to the public: more government, more spending, and more

debt. At the same time, the general public has shifted towards spending less and

lowering their debts. As any child can see, thesee themes are simply not compatible.

Understanding what is unfolding, is not the challenge. With a little bit of study, it is easy

to assemble how we arrived at this destination in history. The challenge is to have

enough courage to look at difficult scenarios, act accordingly, and deal with the distor-

tions thrown at our thinking and markets as the contraction gains strength.

Read More...

Recent Updates...

The Gallery of Crowd Behavior: Goodbye All Time Highs, Oct 24 '14

Doug Wakefield

[html]

 

As world markets come into the Federal Reserve’s next scheduled press release on

Wednesday, Oct 29th, we are all waiting for two issues to be resolved; will they continue

their path since December 18, 2013 and announce that effective November 1st, QE III

funds go to zero, and will the Dow be able to break above 17,000 or will this line prove to

be the final wall of resistance before starting the next phase of selling?

 

A History of Unlimited Money: Learn From It or Repeat Its Mistakes, Aug 28 '14

Doug Wakefield

[html]

In order that we are all clear that history is a great resource to avoid mistakes we

continue to ignore today, we will start with two events in the 1700s that demonstrate

why the "Icarus can print money to reach the stability sun" theory has already failed

miserably. Remember, these stories are centuries old.

 

The Three Stocketeers: One for All and ...., Aug 1,14, Doug Wakefield

[html]

Since crowds always chase a rising trend, thousand level markets always prove to be

a good way to seduce investors to chase a market higher. Yet once the level is

attained that we seem so determined to reach, we have to ask the question, "Now what?"

 

The Yuan Stops Here, July 15, '14, Doug Wakefield

[html]

 

My fellow Americans. Did you notice in the last few months that China has been

establishing agreement after agreement with various major financial centres around

the world, so that payments could be settled using the Chinese yuan? That's right. It

would appear that world leaders have been in a race to make certain the yuan stopped

at their country next.

 

Two Worlds Collide: The Financial/Political Elephant, May 19 '14, Doug Wakefield

[html]

Anyone looking solely at the patterns of US and European stock indices in the last three

months since Ukraine became the center of escalating tensions inside the nation and

outside between Russia and Europe & the US, would come to the conclusion none

of this had anything to do with the lives of billions depending on our global financial

markets. When we consider the cracking of the largest real estate bubble in history in

China, as they strengthen their relationship with Russia and Europe simultaneously, it

seems surreal to watch western markets give off the impression that none of these

events could impact their stock "nirvana" state.

 

Two Worlds Collide: Financial & Political Manipulation Accepted, May 8 '14,

Doug Wakefield

[html]

"Federal Reserve policy is at a crossroads facing unpleasant paths in all directions.

Monetary policy around the world has reached the point where the contradictions

embedded in years of market manipulation have left no choices that do not involve

either contraction or catastrophic risk." The Death of Money: The Coming Collapse

of the International Monetary System (2014) James Rickards

 

Always Bet on Black, Mar 19, 2014, Doug Wakefield

[html]

So what do these "pessimistic" headlines have in common? US stocks bottomed at

or shortly after these headlines. That's right. None of them lead to a crisis or hard sell

off. All were "signals" to buy stocks.

What in the old days could have been explained as negative news that sent traders

and investors to the sidelines, in the brave new world, for 2 1/2 years, has been seen

as a "positive" for buying stocks.

 

Sochi Begins: 1929 Crash Warnings Accelerate, Feb 7 '14, Doug Wakefield

[html]

"When the market made its high on September 3 [1929], there were 23 subsequent

trading days where the Dow Jones Industrial Average had a short-term bottom.

23 days aligns with the low on Monday [Feb 3, '14]. And subsequent to that, we had a

four-day rally, and then the market unraveled - went down 48%. We are currently at that

inflexion point. Like I said, so far, everything is aligned. We think the next two to three

days are extremely critical....

What we're seeing right now, if the market does unravel, I think we'll have a correction

of 40% off the high,which would put us at about 1100 [on the S&P Index]." Tom DeMark,

founder and CEO of DeMark Analytics, Feb 5, 2014

 

Who Needs God, We Have Bankers, Oct 30 '13, Doug Wakefield

[html]

It is my belief, that the greatest challenge to the period of time in front of us are our

deeply ingrained beliefs that can easily be proven are false. We don't want to change,

and we especially don't want to think that we are depending on ideas that cannot possibly

be true, such as borrowing our way to success.

 

The Easy Money Addiction Exit Plan, Oct 2 '13, Doug Wakefield

[html]

If we look at the price of US stocks since that time, we can see why investors were so

optimistic about the PAST 5 years of “Quick and Easy” money that they poured their

own money into equity mutual funds at record levels right before the latest Sept 18th

announcement from “the addiction dealers”.

Recognizing Bubbles After Creating Them, Aug 23 '13, Doug Wakefield

[html]

Are these two individuals, holding the most powerful political and financial offices

in the United States, completely ignorant of the history they have helped create as

well as the history that came before them?

 

The Nirvana Trade, July 24 '13, Doug Wakefield

[html format]

As we head into August, I would like to present you with data I believe supports the reality

that millions of investors are soon to be stunned once again like they were in 2008. Like

the Tsunamis we have watched in the last 10 years, we must remind ourselves and

others that the bursting of global stock bubbles don’t care about our long term plans,

they change the landscape for everyone, including central bankers. 

Not So Sweet Sixteen, May 28 '13, Doug Wakefield

[htmal format]

Will 16,000 on the Nikkei and Dow be reached?

Only time, and less and less of it seems to be required, will tell.

But one thing is for certain. If we don’t understand that when the short term loans for

speculation are called once again that the borrower will once again be slave to the

demands of the lender, we have refused to learn lessons that span three millennium,

not just three hundred years.

The Lost Art of Being Early, Mar 22 '13, Doug Wakefield

[html format]

As I write this article, on Friday, March 22, 2013, the EXPERIENCE of prices in US

equities only builds more confidence in taking on MORE risk, not LESS. I mean, with the

banks loaning money like crazy to speculate on higher and higher prices, what could

possibly go wrong, right?

 

When Everyone Sees, Jan 23 '13, Doug Wakefield

[html format]

It would appear that the age of image is coming to an end and the age of character

through pain is rising. The rally periods are getting shorter, and the problems from

supporting MORE speculation by central bankers continue to mount. Soon, the can will

refuse to be kicked any further down the road.

 

Unlimited Means Limited, Dec 15 '12, Doug Wakefield

[html format]

Are these men liars or fools or both? What is it that keeps the public in denial that as

John Mauldin comments from his own book, “There are no good endings once you start

down a deleveraging path”? Do they or we really believe in the “unlimited Santa”?

Selling the Announcement, Nov 7 '12, Doug Wakefield

[html format]

Over the last year, we have read very dire headlines, while watching markets RISE

right into "the announcement". The result appears to have given the public the idea that

without constant intervention from central bankers, our lives would not continue as

"normal". What can be learned from the political side of this market noise?

Powder Kegs and Photo Ops, Sept 19 '12, Doug Wakefield

[in html format]

"When people are not thinking about how something is provided for their benefit – just

expecting it to continue – they come to the conclusion that somebody else is going to take

care of them." Dr. Janice Dorn, from her interview for the Dec '06 issue of The Investor's

Mind. Her comments are even more pertinent today, after the recent central banker's

"all in" debt scheme announcements.

East Meets West: State Monopolists Unite, July 31'12, Doug Wakefield

[in html format]

Did the socialist central planning bankers in the West teach the Chinese about

“too big to fail” policies, or the other way around? Either way, the problem with always

rescuing the businesses most closely aligned with “the Party”, is that too big to fail

eventually becomes too big to possibly save, both leading to extremely negative

consequences.

 

Too Calm: Strength or Seduction, June 15 '12 , Doug Wakefield

[in html format]

The Dow closed today 4.2% lower than its 38 month high on May 1st. To avoid so many

negative world events taking place, does this continued bullishness show the Dow's

great strength, or seductive nature to delude.

 

Forgetting the Past, Mar 16 '12, Doug Wakefield

[in html format]

Life is good. Today, Apple’s new Ipad went on sale, and yesterday, March 15th, its stock

topped $600 a share. The company’s market size is larger than the entire US retail

sector. There is even talk of the company reaching $1 trillion in market size, after reaching

the half a trillion mark on February 29th.

Yet, something appears wrong with this story of “unlimited wealth”. Something seems

familiar about this story from our past. The headlines today, read like ones I have read

before.

Making Our Lives Stable, Mar 2 '12, Doug Wakefield

[in html format]

It is obvious from examining the charts above (in the article), that increasing debt and

lot's of it, has been the long-term objective of central bankers the world over. To state

"central bankers seeking stability" is an oxymoron.

Coming Off A High, Jan 20 '12, Doug Wakefield

[in html format]

After living through two bubbles, fueled by cheap credit, we are afraid to admit that our

entire society is once again caught up in a third credit bubble, and this too, like all before

it, will end very, very badly. Our markets have become the place for “financial flippers”

(remember the condo flippers) who are addicted to central planning schemes, never

considering what it will be like when we come off “the high”. Like a drug addict, we all

know there will very painful side effects.

 

Darwin's Dangerous and Deceptive Devices, Oct 28 '11, Doug Wakefield

[ in html format ]

When we read news headlines that state that investors bought or sold certain markets

for some specific reason explained in a news article, and yet the majority of the trades

on the largest exchanges in the world are electronic and can react to changes almost

instantaneously, are we really watching a crowd of investors reacting to the latest news,

or computers reacting to changing math patterns? To understand, one must understand

the evolution of capital markets in the last decade and the role of high frequency trading.

 

Peeling Onions, Sept 21 '11, Doug Wakefield

[ in html format ]

Like peeling onions, we are watching events today that have, and will, set up millions

for that “burning sensation” with their financial capital, and why there is a desire to avoid

peeling back any more layers of the onion.

“The influence of these business leaders was so great that the Morgan and Rockefeller

groups acting together, or even Morgan acting alone could have wrecked the economic

system of the country merely by throwing securities on the stock market for sale, and

having precipitated a stock market panic, could then have bought back the securities they

had sold at a lower price. Naturally, they were not so foolish as to do this, although

Morgan came very close to it in precipitating the ‘panic of 1907’, but they did not hesitate

to wreck individual corporations, at the expense of the holders of common stocks, by

driving them to bankruptcy.” Dr. Carrol Quigley, Tragedy and Hope: A History of the

World In Our Time (1966)

 

The Gallery of Crowd Behavior Returns, May 2 '11, Doug Wakefield

[in html format]

"In a market that is in a stage of old age; it is particularly important to be attuned to

symptoms of a potential end to the current trend. To use the life insurance analogy,

most people who become involved in the stock market don’t know the difference

between a twenty-year old and an eighty-year-old." Trader Victor Sperandeo.

If we compare the final 31 trading days before the Dow topped in 2000 and 2007,

to the 31 days after March 16 '11, we find some extremely important parallels. When

added to the current juncture of the largest currency pair trade in the world, the

stakes become even higher for every investor, advisor, and trader.

Remember the Past, Remember the Wolf, Apr 8 '11, Doug Wakefield

[in html format]

"The so-called 'surprises' of history have emerged not because other countries did

not have information, but because they refused to believe it." (pg 919)

Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (1966)

A further examination of crowds and credit in history with charts of market collapses

from the last 11 years.

Crowds and Credit, Feb 4 '11, Doug Wakefield [in html format]

As I continue to watch markets ignore world events like rioting in Egypt, Jordan,

Yeman, and Tunisia, or the deterioration in sovereign debts across major European

nations as bankers propose more debt to cover yesterday's debt, I contemplate

"the reason" the public will be given at the start of the next decline in prices that far

so long have been elevated from reality.

Riders on the Storm: Short Selling in Contrarian Winds, originally released

Jan '06, Doug Wakefield w/ Ben Hill - posted on Feb 4 '11

Due to extreme market conditions like that of the fall of 2007, I decided to release

the entire research paper to the public for free. For more information about our latest

insights into this incredible period of market history, and applicable trading ideas,

click here to subscriber to The Investor's Mind: Anticipating Trends through the Lens

of History.

John's Economic Worldview, Sept 16 '10, Doug Wakefield [in html format]

Today, we are faced with a period of unprecedented change. The scope of these

changes requires each of us to ask the question, "What is my own wordview?", and

to learn about other worldviews. This requires a level of reflection we are seldom

asked to explore in today's fast paced financial world. It is my hope that each individual

reading this article will glean new ideas, and grasp the critical importance of learning

from other periods in history similar to our own.

The Efficient Wealth Transfer, August 11, 2010, Doug Wakefield

One of the most widely taught theories in the financial world over the last few decades,

has been the Efficient Markets Hypothesis. This theory, is totally incompatible with the

financial history, which reveals that our markets have been moving at an ever faster pace,

where the big get even bigger and gain even more influence over the lives of the millions

who depend on them worldwide.

A Simple, but Painful Lesson, April 30, 2010, Doug Wakefield

Our lives, like our market commentary, are being lived out on a week by week basis.

What could previous generations tell us about their credit bubbles, and the price changes

they watched unfold in just two generations? What could these lessons, as well as

a long history of our national debt before and after the "stability" of our money was

placed in the hands of the Federal Reserve? If you are ready to move away from

the short term perspective, as well as learn from another time in American history, your

thinking will be challenged by this piece.

Too Costly To Bear, February 5, 2010, Doug Wakefield with Ben Hill

"I have often stopped to ponder our human condition – specifically, our uncanny ability to

dismiss the seriousness of an event beforehand and to lament our lack of preparation

after it has happened. In some form or fashion, how many New Orleans residents stated

that they never expected the storm to break the levees? It’s easy to look back, after an

event, and wonder why people didn’t heed the warnings. But don’t we act similarly every

day? Still, history is replete with examples of ignored warnings before cataclysmically

destructive events. Be it the passengers on the Titanic or the investors in 1929,

unheeded warnings combined with ignorance to produce tragedy."

Financial Lessons of the Ages, January 8, 2010, Doug Wakefield with Ben Hill

"And as long as the public believes that up markets mean the elixir of capitalism is

working and we are getting better and that down markets are only temporary, trite sayings

will suffice. Human nature being what it is, I suppose we would rather seek “advice” that

allows us see things the way we want them to be, rather than address how corporate and

political corruption and unsustainable debt could impact our collective future.

Powershift, October 28, '09, Doug Wakefield with Ben Hill

According to Jim Rickards, director of market intelligence for scientific consulting firm

Omnis, the unannounced purpose of the G20 Summit in Pittsburgh on September 24

was that “the IMF is being anointed as the global central bank.” Rickards said in a CNBC

interview on September 25 that the plan is for the IMF to issue a global reserve currency

that can replace the dollar.

Jerusalem: City at the Crossroads of History, October 2 '09,

Doug Wakefield with Ben Hil

Regardless of your religious beliefs, the lessons from this historical account of

Jerusalem - which does not even scratch the surface of all that is written on this city -

should prove pertinent to the events surrounding the Israeli - Palestinian peace talks

which involve many of today's leaders. In the end, I hope this presentation will

increase your understanding of our world - today, and in the years to come.

 

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