I basically agree with you that the deflation/debt/depression scenario is coming. I even think its coming very soon. What I do not expect is it to happen this month simply because the “pattern” is not established yet. Most analysts and pundits have a habit of projecting their emotional take on the situation. It should be approached on a more sound basis. You yourself were pretty darn skeptical 5 months ago when I suggested we will have a big rally before any more damage gets done.

I have used history as a guide during such dramatic times simply because emotional swings are what drive the markets during those times. Sentiment is just not there yet. As a fibonacci follower the retracement lines have not hit. Seasonallity is against any big down moves going into the Holidays.

As for Buffett he has been out of the market, holding over 60 percent of B.Hathaways money in cash assets for a very long time. Thats why his loses were half the averages. He was ridiculed last year for doing so. He also blasted the Bush administrations policy of dumping the dollar to prop up corporate profits; he and Soros made a major issue of this over 2 years ago. As a result of the dollar policy Buffett bought GOLD. Smart man.

His recent big purchases indicate to me that he thinks the worse is behind us. I hope so but my gut tells me it’s just not likely.

I hope I didn’t ruffle any feathers with my remarks. I try very hard not to make it personal.

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I assumed Buffett had avoided gold like the plague, Gary — or that he certainly had not scooped it up, as his his custom, when it was cheap and out of style. What is your source for saying that he bought gold? RA

In “normal” cyclical times it has always been profitable to buy at these exact situations. Now we come to the term “normal”. Unfortunately this is anything but normal. While the street follows the formula for success by investing in this downfall, they will eventually be hit with the reality that a normalized recovery is not going to take place. I don’t think we are there yet. In fact I believe another big leg up is about to start. We could/should hit the lows by the end of this week. A 2,000 DOW point rally after that isn’t out of the question. November/December historically have done well.

Finally I must add that for the very first time I am going against Warren Buffett’s assumptions that its time to buy American again.

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We’re descending into the Second Great Depression, Gary, so I wouldn’t expect this bear rally to continue indefinitely.

Concerning Buffett, he has lost a mountain of money in the meltdown and would seem to have nothing special to tell us. He doesn’t appear to understand deflation any better than the next guy, but the thing to understand it that deflation will provide zero money-making opportunities. Joe Paulson was the only guy who made a billion betting on deflation, but that was the first and last opportunity, and it was not an easy trade to set up. If you are are financial genius, when deflation bottoms around 2016, you may come out of it with 25%-50% of your peak net worth intact. The financial gauntlet may include a brief but ruinous hyperinflation just for good measure. RA

http://members.cox.net/theprof/UrbanSurvival/Thoughts%20On%20Urban%20Survival.htm

A second longer, more academic but just as valuable one, is a Murray Rothbard piece titled The Secret Truth About Karl Marx and His Disciples. If you’re struggling to understand what motivates many of the hare-brained plans of the modern authoritarian centralizers, this is another one you shouldn’t miss. It is fascinating to follow Rothbard’s outing of these types as the spiritual heirs apparent to the myriad bloody Utopian idealists we find throughout Western history. It will better help you understand their fanatic determination to ’stick to principals’ no matter how many evil peasants are ground up in the process. Evil peasants are all those who resist their plans, by the way. You may access that posting at http://www.marketoracle.co.uk/Article14535.html

Rick, I hope this post isn’t too far afield to warrant posting. As you well know, getting wealth is one thing, keeping it in times like these is something entirely different. These articles may further that outcome.