Last week, on the subject of markets, I discussed about how supply, demand, and related things affect markets. But there is another very important fact which influences markets, prices, supplies, and yes, demands too. That is “opinions.” Opinions, make the world go ’round, and grandly influence markets. As an example, in the South Seas, women have no embarrassment at being naked from the waist up. Female breasts are no big thing to those men, because they see them all the time, and probably, as far as they are concerned, are only good for nursing babies. In the rest of the world however, such is not the case. Custom and opinion make things what they are.
So let’s examine how opinions and habit influence everything, and everyone, and not just with female mammary glands. Auto manufacturers depend on opinions. If designers have taste only in their mouth, they might design a hideous looking car, which in the opinion of the public is so ugly that they won’t buy it. Remember the 1960’s Dodge Darts? Ugly is too kind, and they didn’t sell. Those who bought, must have thought they were pretty. Human looks are classic. Negroes, Orientals, and Caucasians all have their opinions as to beauty in the opposite sex. Taste in the mouth influences markets too. Restaurants which have good food, in the opinion of the public, do well if their prices are reasonable. Restaurants are the best way to go broke. Most fail miserably in the first year. Everyone seems to think they should run a restaurant or write a book. They shouldn’t!
Style in clothing is a matter of opinion. Long dresses? Short shorts? Long hair, short hair, or bleached hair? Fortunes are made and lost by clothing designers when they bring out a new line. If the opinion of the buying women like it, they will do fine. If the designs hit a sour note with women, all is lost. Opinions on clothing design, fabric and color, affect markets greatly. Music can be a hit or miss, as can architectural design, light fixture style, landscape, and brand names. Brand names can be cultivated through advertising, and often are. The Dell Computer seems to have it made, and others fade into obscurity, possibly because of advertising, or mass marketing of other types. The point is that even if supplies and prices are good, but the opinions, habits, and custom of the buying class are not with it, sales will not take off, and investors in that line will lose their investment, no matter what the product.
Let’s then, examine the financial things we all deal with, and see how opinion and habit affect these markets. There are two or three basic items in the financial world which the masses know and think they understand, but don’t. I mean they really don’t have the slightest comprehension of these things they deal with constantly. If they knew about them, they would abandon them quickly, if they could, but usually can’t.
Dollars and paper money are main ones, which are adhered to around the world, even though there is no logical reason to do so, other than transacting immediate business. World opinion and habit, gives paper money its status, which is undeserved. We all have to use paper money to buy and sell, just like we do in Monopoly, even though neither has no actual value. Think of it. The entire world uses paper money, as they have to, but the entire world saves in it too, which is a disaster. No paper money in the entire world is holding its purchasing power. All paper money is self debasing, self degrading, losing purchasing power, or how else can I say it? Not a single paper money is even stable. The world’s opinion of respective paper monies is so great that they save their surplus assets in it.. Paper money, is just like Monopoly money. None are backed by anything, and none promise anything. All are pretty, just like a pretty car, dress, or home. But a pretty car, dress, or home, has uses beyond immediacy. Dresses, cars, and homes can be lived in for decades, driven for a hundred thousand miles, or worn for years. Paper money, aside from buying things and paying bills, is absolutely worthless, in spite of being pretty. Were it not for legal tender laws, we probably wouldn’t even use it for immediate transactions.
Paper money would OK, if the issuing governments would stay within budgets, and spend only what revenues come in from whatever source. Were paper money backed by tangible gold and silver, these would be a self-limiting device. As it always is, when not enough comes in, governments print their own, and then gleefully spend, spend, and spend. Politicians, who get re-elected by bringing home the bacon with paper money to pay for it, are 100% responsible for inflating the currency supply, and thereby degrading it. Hey, if I could print my own, I’d probably spend it endlessly too which they do at our expense.
Stocks are another addiction, opinion, and habit, which most cling to, and with the Dow at virtually the same place it was when it crashed a few years ago, I feel that opinions will change soon. Think about stocks for a minute, and see how the masses and media manipulate things with their opinions. CNBC has opinionated people every day, giving their opinions about this or that stock, and their opinions cause people to buy or sell those stocks. Major brokerages say a stock is a ’buy,’ ’hold’ or ’sell,’ all day long, which influences people to act. Opinions of one interviewee, can change the opinions and actions of millions. A share of stock, gives one a millionth or hundred millionth ownership of a corporation. That corporation is in business, using your money, and hopefully it will be a success and give you a dividend on your investment. The corporation’s success or failure depends on its management, product, price, and opinions of the buying public. The chain in a corporation is huge, and lengthy.
One share, or a hundred millionth ownership in a corporation, means that all must go extremely well in the lengthy chain of command, manufacture, and sales of an item for you to get a single cent back as a dividend. A share owner must place his trust in management, design, marketing, efficiency of sale, brand name acceptance, reputation, and a whole host of “others,” involved in corporate profits and dividends. The well known “P/E Ratio” is profits-earnings, not ’profits-dividends,’ and few stockholders ever get a return even close to the inflation rate in dividends, from paper money invested in a share of stock. Corporate CEO’s, often make tens of millions a year in salaries, and generally are no smarter than the barber down the street. Executives and management of corporations are wildly paid with huge perks, as are stock-brokers and the firms that employ them. Stock brokerages, and especially the large ones, have been fined over and over again for cheating their customers by pushing off on them stocks the brokerage was making a huge profit on, regardless of quality.
Outfits which loan paper money to borrowers, such as mortgage companies and even banks, usually create their loans to you out of thin air, copying of course the Federal Reserve, which is unconstitutional, and a total rip-off to everyone except its owners, and no one seems to know exactly who they are. It is a privately owned banking monopoly, which has nothing to do with ’federal,’ but whose chief is appointed by the President. Make sense? Not to me. The film I mentioned has a new web site and you can see a couple of trailers from the film. See them at freedomtofascism.com. Those who have seen it, as have I, say it is something which could change America’s OPINIONS about a lot of things, and it is opinions which make the world go ’round.
My opinion is that by year’s end we will see $25 silver and $1,000 gold. My opinion may not be correct, as I have no crystal ball. My opinion that we would see $500 gold by Jan 1st was way off. I think it was November, wasn’t it? Maybe I’ll off that way this time. It is possible I could be off, because we are truly at the beginning of a tremendous bull market in metals, and straight up seems to be the rule rather than the exception. In the mean time, protect yourself.