On reader feedback and gurus

One of the nicest and most unexpected bonuses that running this blog has given me are the e-mails I've found myself swapping with several readers. You know who you are out there, so I'll just leave it at that. One of these dudes sent me a mail yesterday mentioning a financial commentator named Doug Noland (who writes at the site prudentbear.com). I answered him by saying I'd never heard of Noland. The reply came:

"I've been following Noland for almost 10 years. He pegged Fannie and Freddie as problem children as far back as 2003......... I'm actually surprised you hadn't heard of him."

The thing is that I really don't do gurus, newsletters and things similar, with the notable exceptions of Don Coxe, the Coffin Brothers and biiwii for TA, and that's a conscious decision with reasons behind it. However I do consult non-guru field experts who can help me understand difficult concepts that affect my area of the world. A recent example is Brad Setser's world class coverage of China's GDP growth story. You gotta know what the country buying LatAm metals is doing. Another example is listening to local economics experts such as Jurgen Schuldt in Peru and los tres chiflados in Argentina.

Regarding those gurus, there are plenty who claim to have "nailed fannie and freddie" etc etc, and some of those claims are even genuine. However, without exception all these people have said and say the same thing. Go to financialsense.com, jsmineset, 321gold, 99% of the writers that appear on kitco.com and it's "buy gold", "buy gold" and "buy gold", with their underlying reasons ranging from fairly strategic reasoning to tinfoilhat conspiracy theory (and all points in between). It's fine...saying "buy gold" good advice imho. In fact pm bullion is the major component in my portfolio and I took the position when gold was at 451. But I don't need anyone else to tell me this! It was and still is pretty obvious.

Another thing that most (if not all) fannie/freddie/subprime deathwatch callers did was to call bear market and dow collapses way way before it was valid or relevant. This is the archetype classic error of bear thought (this cannot be stressed enough), which is basically, "I know this can't go on, I've identified the problem, I'm ahead of the curve. Now I can't believe how stupid the rest of you mere mortals are, because you can't see what I can see and you continue to perpetuate this ridiculous and unsustainable situation and I simply don't understand how this hasn't fallen apart already and it's coming, I promise, and you'd better get ready now and etc etc etc......."

Then 3 years later the issue unravels and there are all the "Toldya so!" calls from people who would have made you miss Dow 9k to Dow 14k. The Dow is now at 11k/12k and they were "right". At best these people would have given you a zero sum game in stocks and a double in the 20% of your portfolio that they'd reco you kept in gold. Even people at the cutting edge of calling this bear market correctly like Nouriel Roubini at RGE Monitor are guilty of calling the bear way to early. The difference is that Roubini is not afraid to admit it. Is that cynical enough for you?

I have my work cut out following LatAm, and cutting out noise is a necessary discipline. Noland may well be good. No worries with me, but I'm not going to sign up to any of his newsletters, be they free or paid. Not cos I don't agree with him, but because I simply won't read them. However your e-mails and thoughts are fabulously and amazingly welcome, cos you guys make me think.

otto.rock1 (AT) gmail (DOT) com
Keep 'em coming!