9 resolutions for '09

Most of us start the New Year with ambitious new goals or resolutions aimed at self improvement. Listed below are my thoughts on the top 9 resolutions for '09.

1. Ditch the advisor

The 25 year bull market in stocks 1982 - 2007 has masked the incompetence of most financial advisors. Anyone can make money in a rising market, especially with the Greenspan put in place for most of that time. The fat happy "fee"lines will not serve you well in the new world. 2008 was simply a taste of the future.

- Ditch your advisor, think and act critically and independently.

2. Change your psychology

The financial, economic and political environment has changed rapidly and significantly, the same old "buy equities on the dips and hold for the long term" philosophy will not work going forward.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies

3. Become trendy

Most people would be surprised to learn that gold rose for the eighth year in succession in 2008. In fact in many major currencies gold hit new all time highs and recorded dramatic percentage increases in 2008.

"The appreciation gold has achieved over the past eight years is remarkable. Without any doubt, gold's 16.3% average annual change against the US dollar has made it one of the world's best performing asset classes this decade, but oddly, gold continues to be ignored by many. I expect this inattention to change in the year ahead."

James Turk, Chairman GoldMoney

This stealth performance of gold has been driven by smart money and in the absence of media fanfare. The strength of the trend and underlying fundamentals point to massive upside potential for gold. Become trendy, get gold.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies
- Become trendy, get gold.

4. Gamble less

The 2008 crisis has been a financial one. It is widely acknowledged that credit constraints (and now demand destruction) will have significant impacts on the real economy in 2009. Remember the bulk of credit default swaps (CDS) derivatives at the core are based on the real companies selling real things. A similar analogy would be at the core of the credit crisis is falling house prices. If Marc Faber, Nouriel Roubini and others are right 2009 will be an economic disaster. In 2008 the Fed & treasury have backstopped the financial institutions who hold the CDS but they are powerless to prevent the underlying corporate bonds from defaulting in a severe economic downturn. With this giant ponzi scheme it will only take a few defaults to unravel the house of cards. The US government being the ringmaster with JP Morgan, Goldman Sachs, HSBC, Deutsche Bank and Citigroup et al as the clowns. This is not a time for speculation and excessive risk. Gamble less. Focus on return of money not return on money.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies
- Become trendy, get gold
- Gamble less. Focus on return of money not return on money

5. Pay off debt and save money

The drop in interest rates around the globe to almost zero is not sustainable. It will magnify and accelerate the problems. The reason we are in this mess is excessive debt. How does more debt solve a debt problem? It doesn’t! Remember the mountain of debt is so great it can never be repaid. We are left with only two options: default ala Russia 1999 or Argentina 2003 or hyperinflation Zimbabwe style. The problem with default is that the US is the reserve currency of the world so all fiat currency (& therefore countries) go with it. In addition banks would lose their power base. Default is not an option. Hyperinflation on the other hand can delay the outcome and ultimately be blamed on other factors, eg Peak oil, commodity prices, war etc. The banks retain control. The reality is that governments and central banks have already declared their hand with zero interest rates and quantitative easing policy. The effect will be massive inflation on a global basis. Market forces will eventually prevail and interest rates will rise dramatically. Pay off your debt and save real money, not currency.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies
- Become trendy, get gold
- Gamble less. Focus on return of money not return on money
- Pay off your debt and save real money, not currency

6. Watch less TV

CNBC and other infotainment channels are simply cheerleaders for the financial industry, Fed and US Government. Turn it off. It’s just a distraction. Watch less TV, avoid the propaganda.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies
- Become trendy, get gold
- Gamble less. Focus on return of money not return on money
- Pay off your debt and save real money, not currency
- Watch less TV, avoid the propaganda

7. Get more physical

Paper assets are simply a promise to pay. You are reliant on the counterparty making good their promise to pay or deliver the asset they hold for you. This can apply to stocks, cash in bank, bullion and almost all other assets. Did you know that many large stocks have 50% more shares under claim by holders than have ever been issued by the company? How could this be possible? If you read the fine print of your margin agreement it allows your broker to use your margined shares for other purposes often resulting in double ownership claims for the same share. In addition illegal naked short selling is well documented in the US and Canada. One US company with 50 million shares outstanding recently had a proxy vote submissions for over 90 million shares. Lax regulatory oversight and digital holding certificates has enabled what constitutes counterfeiting shares by investment banks and brokers. What happens to your stocks if your broker goes under? If it’s just a digital entry in a system somewhere how do you claim possession? What happens if 100 million claims come for 50 million outstanding shares? There is no simple answer to these questions but undoubtedly the lawyers will get rich after the blow up. Protect yourself by taking delivery of actual stock certificates issued by the company. It is the best proof of ownership. Similar logic applies to bullion. Holding it in paper is simply a claim, not real bullion.
The financial industry is a huge house of cards. A small amount of assets with a huge number of derivatives on it and derivatives on those derivatives. When the game of musical chairs stops, who will hold physical assets and who will hold worthless paper? Get more physical, hold what is rightfully yours.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies
- Become trendy, get gold
- Gamble less. Focus on return of money not return on money
- Pay off your debt and save real money, not currency
- Watch less TV, avoid the propaganda
- Get more physical, hold what is rightfully yours.

8. Work harder

The financial crisis will evolve into an economic crisis in 2009. There will be no soft landing. Many people liken it to the great depression, I disagree. It will be much worse. The depression of the 1930's was a deflationary depression. Whilst unemployment was high, the cost of living decreases cushioned the blow to some extent. Unfortunately as a direct result of government and central bank policy we are headed for a hyperinflationary depression. Massive unemployment occurs with significant increases in the cost of living. This will be the Zimbabwe model on a global scale. Work harder, stay employed.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies
- Become trendy, get gold
- Gamble less. Focus on return of money not return on money
- Pay off your debt and save real money, not currency
- Watch less TV, avoid the propaganda
- Get more physical, hold what is rightfully yours
- Work harder, stay employed

9. Invest in family, friends and community

By far the most important resolution is to invest in your family, friends and community. A strong, cohesive, aligned, educated, purposeful, resourceful, committed and loving family unit, social group or community can meet any challenge. Take action now to invest in family, friends and community - the foundation of success.

- Ditch your advisor, think and act critically and independently
- Change your psychology to sell stocks on rallies
- Become trendy, get gold
- Gamble less. Focus on return of money not return on money
- Pay off your debt and save real money, not currency
- Watch less TV, avoid the propaganda
- Get more physical, hold what is rightfully yours
- Work harder, stay employed
- Invest in family, friends and community - the foundation of success