As the month of July 2007 opened, events began unfolding more quickly, which I took as
a signal that this 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, actions and headlines since the first of August show
that something of major significance has occurred. If we are only mindful of major equity
index prices or the Fed’s decision to lower both the Discount and Fed Funds rates, we’ve
overlooked a great deal of information showing that a credit crunch has set in with a
vengeance. Those who deny the enormous systemic risks within our capital markets,
leaning instead on central bankers’ abilities to add “liquidity,” will soon be forced to
reckon with collective fear. When investors begin to realize that unsustainable growth
rates in complex, exotic financial products will eventually be corrected, fear and distrust
will replace greed and apathy. Critical thinking and rigorous due diligence processes will
replace slick marketing based on “past performance.”
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.
They come from various countries around the world. Why…To think outside the box in
what is sure to be the most extraordinary period of change any of us will ever experience,
which will undoubtedly create the most challenging investment environment any of us
will ever see. Every investor, manager, trader, business leader, and politician will be
forced to deal with issues that the credit expansion allowed us to deny or postpone for a
“rainy day.” Well folks, the rain is coming.
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 wide range of subjects that have been covered in
The Investor’s Mind: Anticipating Trends through Lens of History, and Riders on The
Storm: Short Selling in Contrary Winds, you’ll see that we are not the typical investment
newsletter. If you are convinced that something significant is taking place, which will
challenge the resolve and flexibility of us all, I encourage you to subscribe to The
Investor’s Mind. As enormous historical events now impact our global markets, there will
be plenty to think through if we are to keep from being swept away with the crowd in the
months ahead.
In closing, as you consider Nassim Nicholas Taleb’s words in his recent book, The Black
Swan: The Impact of the Highly Improbable, ask yourself if the last few years have forced
you to become a more independent thinker, or if his words are foreign to the way that you
make financial and investment decisions today?
“It is unfortunate that one learns most from people one disagrees with –
something Montaigne [a French philosopher] encouraged half a
millennium ago but is rarely practiced. I discovered that is puts your
arguments through robust seasoning since you know that these people
will identify the slightest crack – and you get information about the limits of
their theories as the well as the weaknesses of your own. Over the years I
have ended up reading more material from those I disagree with than
from those whose opinion I share. It is the duty of every author to
represent the ideas of his adversaries as faithfully as possible.”
Bull markets produce crowd followers. In bear markets easy answers give way
to critical thinking. Which will be needed next?
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