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From an adoring reader
Thursday, April 10, 2008
Dear Sir:
Greenspan is among the smartest economists in history, including Adam Smith, Milton Friedman, and Thomas Sowell. Dr. Sowell frankly states that any criticism of Chairman Greenspan comes from a position of sour grapes! I concur.
What the hell do you know about economics, especially commodities investing? I have been on the street for over 20 years and I know to stay away from commodities, a zero-sum game that is virtually unregulated. To wit: all the moron commercials to the general public pitching investing in gold. Gold is high for only one reason: speculation. As you know doubt do not know, Gold and Oil are POSITIVELY correlated. In yesterday’s WSJ, the price of oil was openly stated as having $50 to $60 of speculation built into the price.
I concur with Greenspan, that the coming correction in commodities is going to make the sub-prime mortgage market look tame! How long can a centrally planned ecomony like China continue to grow and how much are they hiding from investors/economists. With the Oympic games coming to Beijing at the end of the summer, a very bright light will be shinning on China’s overinflated success. When American companies like GE and Caterpillar begin scaling back their China operations, the house of cards is likely to be exposed.
You are the worst type of client any REAL investment professional stays away from! Why, because you think you are so much smarter then us bean-counter/Economist/finance types. Guess what, you are wrong! I suggest you pick up a copy of Dr. Sowell’s Basic Economics before you attempt to criticize the master. Have you read the Chairman’s book? He provides a very accurate and honest assessment of his life’s work and applies a hefty amount of self-examination.
Yours truly,
Thomas J. Zaleski, EA RIA
President
Thomas Capital Management, LLC
www.thomascapitalmgt.net
(Try purchasing a real internet address. Anyone who uses Yahoo cannot afford one; therefore,…………..)
29 comments:
I actually read Sowell's book some time ago. It doesn't really address "bubble economies" like we have in the U.S., but it is a great reference for the pre-Greenspan era.
Ha! Mr Zaleski must be new to attacking people on the internet. Here are a few pointers and observations:
1) If you make extreme claims (China's imminent collapse, commodities are a bigger bubble than sub-prime, oil should really be half its current price, etc) DO NOT be dumb enough to attach your real name to such a forecast
2) Whatever happened to these "hyper patriot" types simply laughing at their critics and dismissing them out of hand? The fact that they've launched more of an offensive smacks of desperation, a la Greenspan's recent attack mode. You can almost see the wheels turning: "the blogosphere doesn't share my opinions... if only they were sychophants like the talking heads on the financial networks!"
3) How can annual portfolio growth rates of 20%+ (such as Tim's) possibly constitute sour grapes? It's the people who listened to Mr Greenspan who would be rueing their past decisions at this point. How's your portfolio performed lately, Mr Zaleski?
FWIW, Thomas Sowell ran out of things to say many years ago. He did muster the energy to attack the Fed's bailout of Bear Stearns last week, but it was so wishy washy that the article was devoid of any real value. Sowell has become a GOP hack, and like anyone else who works as a shill for one of our two awful political parties, he should be criticized for it. Check out his archive at townhall.com if you want to read a bunch of fluff.
Can someone explain to me the difference between "investing" and "speculating"? If I put money in gold because I think the price will appreciate (which is why you would put money in it isn't it?) is that speculating? But if I put money into Microsoft because I think it will appreciate, that's somehow investing?
Interestingly Mr. Zaleski's site has no information (that I could find) on his performance as an, investor? or speculator? But I doubt he's done better than the Timster. Isn't that the bottom line Mr. Zaleski? How are you doing this year?
Personally, I don't care if Tim is my gardner. If you can make money, you can make money.
Too bad you can't afford an email address, Tim. I don't envy your position at all... hehe.
It is pearls of wisdom like this from people like Mr. Zaleski that remind me how early we really are in this commodity bull market:
"I have been on the street for over 20 years and I know to stay away from commodities"
Brilliant! This is delusional stock permabull zealotry at its very best.
Greenspan one of the smartest economists in history? No unbiased observer could possibly make that case given Greenspan's mediocre (at very best) analytical track record. That this guy make that claim just shows that he has created his own worldview in a desperate attempt to avoid admitting that he confused his participation in a huge secular stock bull (which is now over) with actually having a clue about what was going on.
And now that the illusion is coming unglued and all his clients are calling to ask why he had bought so much BSC for their accounts, he's angrily lashing out at his analytical betters who actually predicted what is now underway.
Like I said, brilliant.
rich
Hey Tommy (you don't mind if I call you Tommy, do you?),
We're all speculating, chief. Placing money in an attempt to forecast the direction of an asset is speculating, no matter what your timeframe. Doesn't matter whether you're doing it on stocks, bonds, futures, forex, the horse races or whether Crazy Jim can, in fact, drink an entire bottle of whiskey in 15 seconds.
I'd agree that there are a lot of moronic commercials out there, but I'd hardly use that as evidence of the danger of one particular market. All markets are dangerous if the participant does not have a method for trading it and doesn't have the confidence and mental objectivity to follow that method.
Greenspan's record is pretty abysmal. I find it slightly ironic that he would rail on a central economy like China, when the Fed is essentially a central planning office which attempts to set interest rates (as opposed to letting the market do it). It's true; centrally planned economies are, in a word, bad. Which is why I'd argue that the Fed has screwed things up so royally. Instead of letting the market function freely, they have selectively intervened. The market's a big engine, but even a small wrench can stall a big engine.
Economists have a pretty bad record of forecasting. Although there are many smart economists out there, using macro trends to forecast the market has, for whatever reason, not been their strong suit.
We all love being right and many of us will defend ourselves to the hilt. But in this game, if you make money, you're right; if you don't, you're wrong. That's not to say every trader won't be wrong sometimes - we all are. But the truly zero sum game is the one played in your bank account.
Greenspan's tenure at the Fed coincided with unprecedented market bailouts and unprecedented systemic crisis. These are pretty much the facts. We can argue all day about the causes, but given that Greenspan's on-record statements and forecasts - going back to his early days of being nominated as the chief of the Presidents Council of Economic Advisors - have consistently been very inaccurate (his interest rate targets during his nomination process were, in fact, the worst on record), it makes it very difficult to take anything he currently says seriously.
Criticize all you want; it's certainly you're right. I personally believe that Greenspan did an extremely poor job and is trying to rewrite history by placing new context on his on-record statements. Because of this, I don't get angry when I read something he said; I simply ignore it and follow my own council.
If you don't like what Tim's saying, don't read the blog. It's a big country with a big Internet. Don't waste your energy ripping on Tim. Use it to make more money in your investments.
Re investing vs speculating:
Per Buffet et all, investing is buying something from which you reasonably expect to be paid a regular return through the process of its continued operation generating income. Examples are real estate (rental income), dividend-paying stocks (business income), CD's (loan income), etc. Speculating is buying something with no inherent ability to produce wealth, but of which you expect the value to increase, and be able to sell later for more money. Examples are buying commodities, growth stocks, currency trading, etc.
Notes:
- Both a valid, proven strategies to make money, and both can work
- There's often overlap (eg: real estate, which can be an investment and a speculation)
- Not sure if this is the "standard" distinction, but it's the one which makes sense to me
Thanks for that clarification Nick - I was going to go look it up in Graham's book but you saved me the effort.
Let's recap: putting money in commodities is "speculating", but putting money in stocks that pay little or no dividends is "investing".
Hehe, yup... although Graham would argue that you're a pretty poor investor if you're buying investments with little or no expected return. In fact, I'd speculate (no pun intended) that Graham would stay away from stocks in our current market in general, unless he could make substantial investments in companies and create value by doing so (a la Berkshire).
There's nothing wrong with putting your money into speculative "investments", as long as you realize what you're doing (I certainly am doing so currently, for example). You can often realize much better returns by speculating accurately on the zeitgeist, rather than looking for the elusive and increasingly unpopular investments with wealth creation from operations ("value" investments).
I wish I could just "invest" and get 6 or 7 percent risk free. Instead I have to "speculate" and hope that I have enough 10 or 20 percent years to make up for all the bad years.
I stopped reading at "Thomas Sowell".
Wanker.
Mr. Zaleski,
Have YOU read Bill Fleckenstein's book Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve?
I just Googled Zaleski's name and checked out his Amazon profile, which states that his birthday is coming up on the 20th. Even though it's not on his wish list, I'm thinking of getting him Peter Schiff's book.
Speaking of his wish list, it's a source of high comedy. Long on Joel Osteen, short on substance, with a little Michelle Malkin thrown in for good measure. His reviews are boring, other than his freak out over the Da Vinci Code.
People like Mr Zaleski are going to be very upset in a few years, possibly sooner. If Dan Brown can send him into a tizzy, imagine what the results of prolonged Fed mismanagement will do.
Ah, I just found a gem!
Comment by Thomas J. Zaleski - May 4, 2007 at 8:14 pm (on wsj.com)
"I would not want to hold long oil contracts. TCM predicts below $50 per barrel by end of 2007. There is such a glut of crude in proven reserves and storage around the globe that a decline in crude oil may come all at once! Beware, oil buyers and sellers are smart people, one of them is wrong, always!"
I hope Tom didn't have much money on that one, or pretty soon he won't be able to afford an email address either!
Okay, I'm done cyber stalking now.
Geez Larry, I'm starting to feel sorry for the guy now...
I forced myself to read through to the end of that rant but Zaleski really lost my interest after not knowing when to use 'no' and 'know'. And I'm a bean counter too (or is that 'to' or 'two'?).
Maybe China will find a ginormous hidden rice paddy and start flooding the world with rice to make the agricultural commodity bubble burst. I'm not counting on it though.
It's amazing that someone in the financial services field could be so ignorant of macroeconomics. And of the wisdom of putting your name and business on an attack email!
Gold and oil are high because the dollar is losing value. it takes more of them to buy oil. That's something a 19 y/o college student would be taught. At least I was.
Sadly, Mr Sowell is getting old, at some point in life people quit following events in reality and rely on doctrinaire thinking and rules of thumb from the past. He's a smart man, but he's got a script and is sticking to it.
Is it possible to short Mr Zaleski's business? I get the feeling it's headed for a big fall. Especially if his clients find out his level of professionalism when dealing with concepts he disagrees with.
"...$50 to $60 of speculation built into the price."
That's why the refineries are buying actual physical barrels of oil for $40 or $50, right? Because there's no "speculation" in the price of the actual delivered commodity.
Same thing with gold- on wall street it's $950, but once the speculation is stripped out I can buy Krugerrands at the coin store for what, $700?
Whew. Nice to know that.
"In yesterday's WSJ, the price of oil was openly stated as having $50 to $60 of speculation built into the price."
Well, whew, if the WSJ said it, esp. on the opinion page, then it's just gotta be true!
But, here's the thing: the price per barrel in the spot market is the same, more or less, as the futures market. People buying at the spot market either (a) consume the stuff (in which case they are clearly not speculators, at least not smart ones), or (b) store the stuff. But where, may I ask, is all this oil being stored? The reports also say that stored reserves are down.
So that leaves only (a) - all of the oil is actually being *consumed* at that price. But maybe my neighbor is really just speculating when he drives his huge SUV 30 miles to work each day . . . speculating, that is, that there will be plenty of oil for him to waste for years into the future . . . .
Hey, you needa give a guy special credit when he doesn't just agree, he concurs. And here I thought common sense was the basis of reason -- turns out it's really elitism.
I’m sure Mr. Zaleski is just lashing out because bonds have beaten stocks over the last 10 years, however, he should really consult an attorney before making written attack like the above. Nothing positive could ever come from him doing this. Any lawyer, even one with a yahoo email address, would be able to explain this to him.
Anyway, what’s over/under on how long before he retracts this statement ala one of the “the smartest economists in history.”
This guy is a tool. Like a lot of so called "finacial services" professionals he does not know what he is speaking about. What a shock.
Greenspan is great? This man was one of the direct causes of 2 asset inflation bubbles get a grip. What Greenspan is good at is being a shill for the rich and big corporations. We would not be in the predicament we are now except for his constant campaigning for "deregulation" of all the financial markets. Its been proven over and over again deregulation just gets you into lots of trouble because people dont play fair.
As a sidenote Greenspan can take pride in the fact that he presided over the devaluation of the dollar over the last 20 years due to his easy money policies.
I'm with Bruno. There must be a way to short someone this stupid.
weinerdog43
All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.
Arthur Schopenhauer
He's right.....the gold commercials on the radio etc. are moronic; it's when when they have the level of sophistication of a Citibank or Morgan Stanley commercial that we will have reached the top of the precious metals' market and and a U.S. Dollar bottom. Take care Mr. Zaleski, you will need it! jg
I'm not sure what is more entertaining, the fact hat he named his "business" after his first name, or the homoerotic handshake featured halfway down the main page (bonus: his own email is @cox.net - lrn2useyourowndomainnoob).
I'll guess this fool manages money for his family and friends. And he's located in economic-collapse-central Arizona.
Well, at least they aren't making any more desert. Oh wait, we are.
"....sour grapes" ???
hmm by the tone of Mr. Zaleski's vitriolic comments, it appears that he is the one with sour grapes.
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