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MOVING FROM INVESTMENT BANKS TO COMMERCIAL BANKS

By Monty Guild & Tony Danaher, on March 31st, 2008

A PREDICTION THAT WILL CHANGE THE FACE OF INVESTMENT AND FINANCIAL MARKETS

We predict that due to the current major market turmoil, large independent investment banks will cease to exist in the United States of America.

ONE CHARACTERISTIC OF INVESTMENT BANKS IS THAT THEY OPERATE AT ABOUT 30 TO 1 LEVERAGE…COMMERCIAL BANKS OPERATE AT ABOUT 12 TO 1 LEVERAGE

For this reason and others, we predict that there will be no investment banks in a few years.  Pressures from government will force them into the arms of commercial banks.

They may operate in name only within the commercial banks . . .
Continue Reading: MOVING FROM INVESTMENT BANKS TO COMMERCIAL BANKS

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TRUST NEEDS TO BE RESTORED

By Monty Guild & Tony Danaher, on March 24th, 2008

THE WORLD IS DELEVERAGING

Easy money has disappeared worldwide. This event favors certain classes of investments globally, and penalizes others.

FOR THE NEXT SEVERAL YEARS:

AVOID LEVERAGED ASSET CLASSES 1. Financial stocks, including stock brokers, banks, mortgage lenders, insurance companies, and real estate 2. Highly leveraged businesses, and companies who grow by acquisition. 3. Avoid leveraged markets which are tied to leveraged economies that must borrow to grow.  For example, the U.S. and Europe plus other countries with balance of trade deficits and balance of payments deficits.

FAVOR UNLEVERED, SELF FINANCING MARKETS, ECONOMIES AND COMPANIES

Favor countries where they . . .
Continue Reading: TRUST NEEDS TO BE RESTORED

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THE BIG BAIL OUT (PART II)

By Monty Guild & Tony Danaher, on March 17th, 2008

THE BIG TIME GLOBAL BAILOUT BEGAN OFFICIALLY ON FRIDAY, MARCH 14, 2008.

That is the day that the U.S. Federal Reserve announced that it will make capital available to loan J.P. Morgan any amount of money, and accept Bear Stearns’ bonds (including mortgage bonds and other bonds which have no relation to the conservative kinds of securities the Fed used to take in) as collateral.  Then, J.P. Morgan will loan this money to Bear Stearns and be guaranteed against losses by the U.S. Federal Reserve.

THIS WAS A MASSIVE BAILOUT AND IT WILL BE REPEATED IF ANY OTHER BIG . . .
Continue Reading: THE BIG BAIL OUT (PART II)

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THE BIG BAILOUT

By Monty Guild & Tony Danaher, on March 15th, 2008

WE ARE WATCHING THE BIGGEST PANIC IN GLOBAL FINANCIAL MARKETS THAT HAS OCCURRED IN MY 65 YEARS OF LIFE AND 50 YEARS OF STOCK, BOND AND COMMODITIES INVESTING

It’s Saint Patrick’s Day weekend…old Saint Patrick would probably be fascinated to see all the rich and worldly people running around in a panic.

Yesterday, J.P. Morgan and the U.S. Federal Reserve began a credit lifeline to Bear Stearns.  This is a long and complicated story, but we will attempt to summarize.  Bear Stearns had a run, much like the bank runs of the late 19th and early 20th centuries.  It . . .
Continue Reading: THE BIG BAILOUT

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