Politics, Investing and the Future

Q: Although FDR introduced some socialist elements to the US government in the 30's, it seems that the US is now on the fast track to becoming a socialist country. Do you think that communist countries moving towards socialism and capitalist countries moving towards socialism is a good thing?

A: I see socialism as a bad thing in and of itself [it is man's attempt to bring utopia without God], but under God's control, in the best interest for mankind. 
 

Q: What do you think will come out of the April 2nd G20 economic summit in London?

A: Pure guess: more socialism. I agree with Rogers. The best thing they could do is go to the bar and leave the world alone.
 

Q: Do you think that economic forces or political forces are more powerful in today's financial markets?

A: Political, but God controls everything.
 

Q: It seems like even your experts like Maybury and Rogers do not know what policies are being formulated behind the scenes today. They are just waiting, ready for moves in various directions. Thus, to what extent do you think that it is possible to apply economic theory of any kind to investing in today's markets?

A: It makes sense to me to apply the economic principles taught in the Bible.  [See Biblical Economics] 
 

Q: What % do you think is planned or controlled by powerful forces behind the scenes?

A: I have no idea. In my mind, the critical issue is: Has God answered my prayer for one or more experts whose strategies I should follow, or has He not? In all honesty, unless I am giving up to the point of sacrifice the things I would like to spend the money on, and surrendering it into His kingdom, then I can see no reason why He should answer my prayer. (See Romans 12:1-2). Those who are following me in investing their portfolios should bear that in mind. In Chapter 15 of Biblical Economics, Storing God's Property, I deal with this issue, and especially in the Appendix by Randy Alcorn, Forty Questions to Ask God About Your Giving, which has helped me reach convictions on this issue. I commend these to our readers for their own meditations.
 

Q: Do you think that the world is moving towards a one-world government, as the Bible prophesied 2600 years ago (Daniel 2)?

A: It appears to me that it is, but I am unqualified to present the Biblical case.
 

Q: Do you think man can improve the world to the extent of creating world peace and elimination of poverty and injustice on its own?

A: This one I will give an unequivocal and unambiguous answer: Positively not!! Depravity can never bring peace or eliminate poverty and injustice, rather the opposite.
 

Q: Do you think the world will see peace and an end of wars before or after Jesus Christ returns visibly, flying in the clouds and landing in Jerusalem?

A: Only God knows. I would guess after Jesus returns.
 

Q: When you did an in-depth study of your experts in March, 2008, although there is no way to know exact numbers, you came away with the strong impression that their average allocation to cash was in excess of 50%. Rogers, Maybury, Russell and Hickey have said so in so many words, although we can't be certain. None have indicated that a major part was in other than US dollars. How would you explain this? Do you think that based on your experts' comments on the US dollar it will (a) remain strong for years, (b) slowly start to decline in 2009 or 2010, or (c) be allowed to crash by political forces and then replaced by something that appears to produce more stability as a world reserve currency?

A: I think anything is possible. I don't think our experts know how this will play out. The best (opinion) idea I've heard is from Maybury (agreed to by several others): Some sort of crisis will force them to either reinstitute a ratio between gold and the dollar, or defend the dollar with high interest rates. They would still have to make these moves if they switched to a different world currency. Paper is still just paper.
 

Q: Do you think that the world is moving towards a one-world currency, as God said would happen 1900 years ago (Rev. 13)?

A: It appears to me that it is, but I am unqualified to present the Biblical case.
 

Q: I found it interesting that Permanent Portfolio put out a new allocation as of December 31,2008 (20% gold, 5% silver, 10% Swiss Francs, 15% natural resource stocks, 15% aggressive growth stocks, US dollars (cash, bonds, T-bills, etc.) This is similar to your portfolio, but it consists of more stocks and fewer commodities. Can you comment on this?

A: They reduced the stocks from 33% to 30% and increased the Swiss Francs from 5% to 10%. If you add cash, T-bills, Bonds and Swiss Francs you have 45% cash, very close to the 50%. I found that interesting.
 

Q: One final question. The major stock and commodity indexes made their lows around November 20, 2008. They have not made new lows since (79 days). Do you think new lows will be made in 2009? Has the market seen full capitulation, or is it still coming?

A: I think this is a key question, and the answer, at least in part is found in these high cash positions of these experts. Either through experience, or the study of history, or both, they believe the probability is high that we are nowhere near the end of the stock bear market, and that capitulation lies ahead. We could easily have a powerful rally (40% or 50%)over the next few months, which would suck many back into the market before the next crash. Remember a 40% to 50% rally is nothing like a 40% to 50% drop. The great majority of the public is still heavily in stock mutual funds. The next scare will panic a whloe new group into liquidation. We possibly could have two more major declines ahead of us. This would reactivate the dollar short squeeze. I would guess Dow 5,000 to be a reasonable target, and another 5-10 years of recession-depression.  Could this be wrong? Of course. If it is, a 50% cash position and another 30% gold and silver would likely not result in much loss, if any. But if it is right, and you are invested as the average person, you would lose most of your market value.

In the day of prosperity be joyful, but in the day of adversity, consider:
surely God has appointed the one as well as the other,
so that man can find out nothing that will come after him.
(Ecclesiastes 7:14)
  

The contents above were taken from an e-mail exchange between Ted Spaeth (Q's) and Jay O'Keefe (A's).