The Future

As many of us prepare our New Year’s Eve celebrations, we often also reflect on the passing year whilst sharing hopes and visions for what the future might bring. Some express the former by compiling a list of New Year’s resolutions which are mostly forgotten or abandoned just a few weeks later. But the passing of yet another digit on the annual calendar reminds us that the future continues to approach mercilessly – whether you are prepared to embrace that what lies ahead or not.

But it is not just common folks who are concerned about the future – in the global chess game of global power and influence government agencies are equally keen on being prepared for potentially shifting dynamics. After all – it’s the ultimate high stakes game and there is very little margin for error. Tom Fingar, deputy of the National Intelligence for Analysis is in the business of compiling intelligence reports for the U.S. government and he warns us about a “diminished gap between the United States and everybody else. . . . The unipolar moment is over.”

His agency’s 115 page report, titled “Global Trends 2025: A Transformed World,” represents the U.S. intelligence community’s most comprehensive examination to date of long-term security issues. It sees a possible increase in terrorist violence even as support for extremism starts to wane.

If you are interested in what your future might look like by the time you’re ready to retire go here:

http://www.dni.gov/

The report is publically available and can be downloaded as a PDF document.

You might also point your browser to Chris Martensen’s ‘Crash Course’ – which is a series of slide show style video presentations that represents a clear and concise but most sobering report of what awaits us. It is some of the best work on the subject I have seen:

http://www.chrismartenson.com/crashcourse

How you deal with all this information and act upon the challenges that loom ahead is your personal choice. But know that the actions you take today will have an impact on the future you and your family will experience years and decades from now.

So, why am I bringing this up today – in a trading blog?

Darwinism. Which means – survival of the fittest. All joking aside, my dear steel rats, the future will most likely not be glorious and it will bestow much hardship on people around us, perhaps even many of our friends or relatives. It has already begun and what you have witnessed thus far is only the tip of the iceberg. There is little margin for error going forward. However, I expect there also to be opportunities abound in 2009 – but ultimately your success will depend on the following:

• Anticipation
• Preparation
• Action
• Timing

Anticipation (i.e. knowing) of what’s ahead will be key being prepared, so that when the time is right you are ready to take action. For instance – what if we make boatloads of money in the coming year but then suddenly face an explosive bout of hyperinflation rendering your assets practically worthless? Impossible you say?

Exhibit A: For you non-currency traders – this is the DXY – the U.S. Dollar Index Futures spot price. It just so happens that it dropped nine points in just two weeks – a move that usually takes months to unfold. What we are facing right now are unprecedented moves in currency, bond, and equity markets, the likes of which we have not witnessed for almost 80 years. I want you to forget everything you think ‘you know’ and mentally prepare yourself for what you may think is the ‘impossible’. Whether or not a particular scenario will unfold is beside the point and should not be argued – if 2008 has taught you anything is that very few people are able to predict the future accurately. With the exception of Robert Prechter maybe – who almost down to the detail described the events of this year in his 2003 book ‘Conquer The Crash’.

What separates us steel rats from those who we fondly refer to as mouth breathers is that we are nimble. Adapt or perish should be our motto for 2009. Diversify, and collaborate so that we all prosper while others snooze through the opportunities of a lifetime. As you know I’m medium term bearish on Gold and will continue to remain so unless we breach 920 in the futures. But my long term outlook for the precious metal is equally bullish and there is going to be the time when I will start accumulating physical Gold to ward off possible hyperinflation. But as in all things in life – timing is everything. I know that many expect deflation instead and maybe that’s what will happen. But since none of us have a crystal ball (only the Zero, which is close – hehe) we need to think ahead in our minds of exactly what action we will take when a particular challenge presents itself.

This is why Berk and I don’t just talk about Elliott Wave patterns all day – we often take a step back and look at how inter market correlations or significant political events impact evil speculators like us. We are obviously not fundamentalists but as technicians we attempt to translate technical analysis into near term reality and that cannot be done in a vacuum.

My message for 2009 is to stay nimble, sharp, prepared, and most of all ready for action. All your intelligence, knowledge or preparations are in vain if you are incapable of taking action when the opportunity presents itself. Which is why academics make respectable analysts but lousy traders – it takes the mentality of a stainless steel rat to crawl through some rusty air duct just to extract that extra piece of cheese.

Obviously, Berk and I have a plan and we haven’t been shy about sharing it with you leeches. What you do with your life and your money is your perogative. But if nothing else, 2009 will be one for the history books and we both hope you’ll be along for the ride and come out victorious. Let’s never forget – business is war – and that will be the very manner of how we’ll approach the coming year. We are not politically correct over here in lair of doom, and neither do we want to be.

Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying that  “The time to buy is when there’s blood in the streets.”

He should know. Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. But that’s not the whole story. The original quote is believed to be “Buy when there’s blood in the streets, even if the blood is your own.“

Another good book you might want to look at: Sun Tzu – The Art of War – it’s over 2000 years old and remains one of my favorites. That one should put you in the right mind set 😉

Cheers,

Mole