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Somehow, when I tried to post this the first time, it got lost in cyberspace. So I'm going to try again.


There is, in fact, a Buddhist proverb that goes like this: “A way of seeing is also a way of not seeing.” Obviously, if you say I have blinders, so must you. So pursuing that line of thinking will get us nowhere.

Who is my “nemesis” in this forum? Who has been his through nearly 1,900 posts? (About 700 as “imdajunkman” and nearly 1,200 as “junkman02”?) What have been his claims about how to manage risks and what have been mine? On each side of the debate there have also been partisans in a manner not unlike the struggles described by Thomas Kuhn in his, The Structure of Scientific Revolutions. That’s a book worth adding to your reading list, because it predicts and explains the dynamics of the debate. He is “old-guard, and I am “new-guard” and, though both can co-exist, they don’t do so comfortably.

How each person wants to manage his/her invests is for each to choose. I have never claimed there is only one way to do any of this stuff or that my way was fixed in stone. I post, because I choose to explore, and in exploring I cover more ground than most investors, both in terms of engaging the fundamental texts, as well as doing original work. I was a “shark” in the classroom. I can be a “shark” in a discussion forum, which isn’t to say I don’t make a ton of mistakes. What’s the catch rate for an eagle versus an osprey, in terms of fish snatched from the water? If the naturist whose canoe trip I joined is right, the eagle’s ratio is 40% to the osprey’s 60%. But I’d claim totem kinship with neither. I’m just spermophilus lateralis, the golden-mantled ground squirrel of our northern forests, the humblest of food gathers, trying to defend myself from the hawks, owls, jays, weasels, foxes, bobcats and coyotes who would eat me. So managing risk ranks high on my concerns, and I pursue a path few choose, 100% bonds, because when all risks are considered, it is an easy, safe.

Throughout the ‘80’s and, especially, the ‘90s, markets were easy. Buy something, anything, and it was sure to make money. Are you willing to bet your retirement that will continue? It would not surprise me to see the US descend into the chaos of the Weimar Republic. That is is a possibility my nemeis dismisses for its being inconvenient to his methods on managing money. But inconvenient or not, the possibility of total financial collapse is very real, and those who choose to do the bulk of their gambling --if not all of it, as does my nemesis-- with principal-protected instrument will get steam-rolled in an environment that is moderately deflationary –-the more likely scenario— or moderately inflationary (which the Fed is trying to engineer).

How long can a dedicated “saver” tolerate interest-rates that don’t even offer a real-rate of return? I don’t know the answer to that, just as you don’t, just as he doesn’t. But it sure looks like we all might find out real soon, given that the Fed re-affirmed today their intention to keep rates low.

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