This Week’s Solari Report: Traditional Portfolio Strategy

It is difficult for me to express how upset I am with investors being misled by traditional portfolio strategy. Let me state for the record: there is no such thing as a diversified portfolio when most stocks and bonds represent companies or municipalities that are dependent on federal government funds. In addition, there is a difference between a traditional business cycle and a financial coup d’etat.

Finally, if the rule of law is not available to ensure functioning markets, all bets are off. There are some things that even zero percent interest rates and an infinite amount of loans from the Fed and the Treasury can’t solve.

I’ll be discussing this subject in greater detail on this week’s Solari Report: Thursday, Dec. 18 at 9PM EST.

Here are additional resources we’ll be looking at on this week’s call:

Money & Markets:
The Fall Of Bill Miller
Dodge & Cox
Bernard Madoff Arrested Over Alleged $50 Billion Fraud

Ask Catherine:
A subscriber has asked, “How much US debt is really outstanding?” We’ll talk about collateral and securities fraud and how it connects to two of this week’s biggest stories:
Bloomberg v. The Fed
Fed Cuts Interest Rate to Historic Low

Another subscriber was disappointed in President-elect Obama’s financial appointments and wanted to know why I’m not surprised:
Be the Change

Movers & Shakers:
Health problems are one of the most significant causes of financial problems. Given the change and uncertainty in our economy, you need your mind to be alert and clear and body strong in 2009. In this week’s “Movers and Shakers,” we will be talking with investigative reporter Jon Rappoport about the challenges posed by fluoride and chlorine in your water, why you should avoid vaccines, and the importance of keeping your immune system strong.

No More Fake News
Fluoride, Teeth, and the Atomic Bomb

Let’s Go to the Movies:
At last! I will be showing you what one of my favorite movies, Enemy of the State, can teach you about navigating in a world defined by economic warfare and corruption.

More resources discussed on the call:

Former WSJ Reporter: Illegal Naked Short Selling is Responsible for the Financial Crisis

Financial Expert Max Keiser on the Bailout

Dillon Read & Co. Inc. and the Aristocracy of Stock Profits

The Myth of the Rule of Law

The Missing Money

The Red Button Story
In the summer of 2000, I asked a group of 100 people at a conference of spiritually committed people who would push a red button if it would immediately stop all narcotics trafficking in their neighborhood, city, state and country. Out of 100 people, 99 said they would not push such red button. When surveyed, they said they did not want their mutual funds to go down if the U.S. financial system suddenly stopped attracting an estimated $500 billion-$1 trillion a year in global money laundering. They did not want their government checks jeopardized or their taxes raised because of resulting problems financing the federal government deficit. Our financial profiteering and complicity is not limited to aristocrats and the elites who do their bidding. Our financial dependency on unsustainable economics is broad, ingrained and deep.

Note: Solari Report subscribers can now listen to Catherine’s discussion of this topic via MP3 recording. You can subscribe monthly or annually here.

9 Comments

  1. I am so glad you posted this, thank you — I am feeling such angst as I talk to family members and they insist their “experts” (with whom they all seem to have great relationships) insist they are in solid positions (who knows what solid is anymore?) . . . UGH!

  2. Catherine:

    I think the Madoff Ponzi scheme could be used as a teaching tool to illustrate this financial matrix we are all a part of, and also, more importantly, what your work has been teaching us – how to disentangle ourselves from this much larger Ponzi scheme, but first we need to understand what it is, and the steps to get out of it, which is what your blog, the Solari Reports and all your other works provide. I would also recommend Peter Schiff’s latest article, and the clusterstock.alleyinsider.com’s articles on the Madoff Ponzi scheme, in particular, the work of a brilliant fraud investigator who gave the SEC a detailed analysis of Madoff’s Ponzi scheme in 2005, several years after he initially approached them with his concerns — this is an example of a regulatory agency that did not want to see the elephant.
    I am looking forward to this evenings Solari Report.
    Thank you.

    Veritas Lux Mea (The Truth is my Light).

    Ann

  3. Breaking: Major sustainable-food foundation collapses
    The Fair Food Foundation crumbles under weight of the Madoff Ponzi scheme
    Posted by Tom Philpott at 2:52 PM on 16 Dec 2008
    http://gristmill.grist.org/story/2008/12/16/142656/61

    For a couple of years, there has been lots of buzz in the sustainable-food world about the Fair Food Foundation of Ann Arbor, Mich.

    Fair Food was founded recently by Oran Hesterman, under whose leadership the Kellogg Foundation became the key funder in the sustainable-food space. Kellogg has been pulling back from that space; Fair Food, which was gearing up to begin giving $20 million per year, was expected to fill the void.

    Today brings a stunning announcement: Fair Food is closing down. In an email message I obtained from the Comfood listserv, Hesterman wrote that the funds of the foundation’s main donors had been managed by Bernard Madoff, the financial operator who has been accused of defrauding his clients of billions of dollars.

    The wealth of Fair Food’s donors, Jeanne and Kenneth Levy-Church, has evaporated in Madoff’s Ponzi scheme. As a result, “We will be spending the next few weeks closing down our operation,” Hesterman says.

    The New York-based JHET Foundation, which funds social justice and participatory-democracy projects to the tune of $30 million per year, also relies on donations from the Levy-Churches. It, too, has collapsed, Crain’s Detroit reports.

    Now is a good time to reflect that the federal government has between $5 billion and $25 billion to invest every year in industrial agriculture through subsidies for corn, soy, cotton, and a few other commodities — and billions more in the form of subsidies for biofuel. Alternative-ag projects receive a pittance in comparison, with foundations like Fair Food partially filling the void.

    Thus the industrial food system can rely on public support, while alternatives to it vie for crumbs from a piecemeal and clearly vulnerable set of foundations. Perhaps it’s time to reverse that situation?

    For story: Breaking: Major sustainable-food foundation collapses
    2 Comments | Post a Comment

  4. That is sad news indeed,and a great reminder ultimate responsibility for galvinizing change rests with the individual. What can we do on an individual level to promote grassroots engagement? Whether it is talking to your pre school, writing to your congressman, posting a YouTube on permaculture, buying from a co-op, or planting some organic seed — how can we build momentum for any sweeping movement without widespread individual engagement? It is scary and heart breaking to see how our best organizations are tapped into (unwittingly dependent) on tapeworm economics.

  5. Catherine, I have to thank you for the time, energy, and content you put into last night’s call. Having no deep understanding of the financial world, it was exciting to hear you(in fairly short order) deconstruct the puzzle, build a frame, then put all the puzzle pieces back together: I kept saying aha! aha. You took me from just seeing the forest to also seeing the trees I now feel empowered to deepen my conversations in a meaningfulway. Thanks, you’re the best 🙂

  6. People!

    Do not believe anything that this woman advises; I see that she has links to gold websites and she trades in gold/silver.

    All “goldbugs” will tell that the world is going to hell in a handcart, but, fail to tell you that gold has no value except as a decorative metal.

    Be very careful of Catherine’s recommendations.

  7. As Mr. Farmer points out above. Catherine is a member of GATA and probably, just as I am, happy to be called a gold bug. As far as the “for decorative purposes only” comment. I would remind Mr Farmer that Gold and Silver have been a global currency for thousands of years. And the “goldbugs” have been right about the economy going to “hell in a handbasket”, it’s just become mainstream news now. Thank you for all of your work Catherine. Merry Christmas.

  8. James Farmer obviously has not the slightest understanding of economics or gold. His post was irresponsible and needs to be rebutted. Every central bank in the world holds gold, and for good reason. Fort Knox? There’s a reason why we have that, (if any of it is still there, lol).

    Bernanke and Greenspan have both talked about the importance of Gold in their speeches at various times in their careers, and gold has triumphed after every collapse of fiat currency the world has ever seen, no exceptions so far.

    Oh, and James: You forgot to tell people that since the year 1999, gold has tripled in price. What has your nasdaq stocks done since then? Government bonds?

  9. Memo to Jacl Blaylock and C Sreiling:

    Thou doth protest too much.

    I always find that “gold bugs” must manipulate data to try to justify their poor investment decisions. Mr. Blaylock, gold was $ 850 US an ounce, in 1980. So, in 28 years, the price has gone no where. In that time, if one had bought a basket of the Dow 30 stocks and continually reinvested only the dividends (disregarding the capital appreciation), one would be up at least 50%, over the investment horizon. If you had bought the Dow 30 on October 20, 1987, and held it to today, you would be up over 400%. On October 19, 1987, gold was $400 an ounce! Thus the Dow has handily beaten your beloved gold. Mr.Blaylock, why was my post “irresponsible”; are you afraid of the truth? Also, why did you isolate your discussion to NASDAQ stocks; once again, you manipulate data to enhance your perception of your poorly performing decorative metal. Also, Mr. Blaylock, be careful when you invoke Alan Greenspan as an expert because he recently (December, 2008) stated that he EXPECTS a recovery in the financial markets in the next six to twelve months.

    To C Streiling, I would advise you to look into the future, when investing. Using your justification that “gold and silver has been a global currency for thousands of years” would lead me to invest in the horse and buggy industry.

    To all Happy Investing and more enlightened opinions!

Leave a Reply