Glabal Economic Collapse by Jim Marrs

I just stumbled across the thread "The Global Economic Collapse". I was quite shocked that I was unable to reply in that thread. Maybe someone can post this for me. I know ATS has rules, but these rules do not lead any credence to the motto "deny ignorance", if only certian people are allowed to post to Jim Marrs threads. Is Jim too good for the common ATS'er or something. No wonder when he posts crap like this.

As to the thread, Jim surmises that the end of the economic world as we know it, is about to hit. He advises young people to invest in properties and precious stones. This is the worst advice I have ever seen. People need to know the truth, thus this response. Young people need to invest in the world's greatest companies. Anyone who has ever invested regularly in stocks from a young age has become extremely wealthy relative to the amount of their investment and also relative to any other asset class. Through ALL time periods.

Jim argues that inflation destroys the value of money. That is true. It also makes the value of assets, including the greatest companies in the world go up in value as well(especially assets not in dollars). Jim uses the example of a $3,000 house in 1940 now costing $140,000. Well if you had invested $3,000 in a portfolio diversified between large, small and foriegn stocks, you would now have somewhere in the neighborhood of $500,000($575,000 with an exact breakdown). Stocks are the greatest hedge against inflation that has ever been.

It does not matter when you started investing. Stcocks have always been successful. Even the person that bought the day of the 1929 crash started , retired that day and drew 5% of his starting portfolio each year, adjusted for inflation, never ran out of money, and if they lived long enough, the portfolio ended up being multiples of what they started with.

Putting 1929 another way, the markets fell 90%. Dividends though, only fell 50%. The dollar actually DEFLATED by 25%. Thus a person in the markets did not suffer that much of living standard decline unless they were forced to sell for some reason. Owning diamonds or property meant they fared much worse over the short and long term. One thing is for sure, when the economy crashes no one is intrested in spending their money on diamonds and in this particular case real estate for the most part was in forced liquidation. Thius is not where I would want to be.

Another factor for that crash was brokerages allowing 90% margin. So you could buy a $10 stock with only $1 in your account. Once the markets fell that first 10%, accounts began to have negative worth and the slide magnified. Today margin requirements are 50% and sometimes even lower. Much money is in retirement accounts, etc. which are not allowed to have any margin whatsoever. Mortgage loans are also much more secure with the banks have much less ability to just "call in"your loan.

The biggest risk anyone faces in investing is not owning stocks. There have always been great fears in the economy. Bubbles, gov. debt, inflation, deflation, world wars, assinations. You name it we have had it, and there has never been a period in time where the diversified portfolio I described has had a negative return over any 10 year period.

Don't like the central banks? Can't destroy them? Then you might as well join them and embrace the capitalists. If it all blows up it won't matter where your money is. If they continue to win then the major companies will own the world and investors in them will flourish as well.

How much money has your fear of the markets cost you in your lifetime? That is a question everyone needs to ask themselves. Alll major investable assets have a lower return after taxes than inflation since 1940 except for stocks. Economic optimism has been the only true reality the last few hundred years.



[edit on 10-10-2007 by disgustedbyhumanity]

[edit on 10-10-2007 by disgustedbyhumanity]

You need 250 posts to post in that forum. Maybe some mod can move yours over there, it looks like you have some good followup questions.

reply to post by djohnsto77


I would appreciate if they would. It is simply fear mongering to leave that thread as it currently exist. Best way to beat them is to join them.