Tim Iacono, is a man who lives without stocks. He does this from a remote mountain top in rural Bend, Oregon, where he has the luxury of spending his days researching long term trends in the financial markets. Maybe it is the incessant rain that keeps him working indoors so long, sifting through the grains of data he pulls off the Internet.
Whatever Tim is doing, it is working. It was his spot on calls on precious metals and commodities during the ‘naughties’ that has enabled him to live this sought after lifestyle. When his research led him to conclude that real estate was careening off a cliff, he sold his California properties and made the move north. His successes led him to launch a blog in 2005 and an investment website in 2006. Today, The Mess Greenspan Made boasts 26,000 followers at the aggregator site www.seekingalpha.com.
With the exception of the odd commodity producer or gold mining shares, Tim has completely avoided investing in paper securities for the past decade. He believes that stocks are still in a secular bear market that has at least a few more years to play out. When government stimulus runs its course later in the year we could be in for another downdraft as severe as the debacle that ensued in 2008-2009. Your mom & pop investors, battered by two collapsed stock bubbles in ten years, have gone missing in action in the latest rally, preferring to hide their money in bonds instead. This will only end in tears.
Instead, Tim thinks that you should haul your Bee Gees records and leisure suit out of storage and start practicing the hustle. There will be a return of an investment environment last seen in the 1970’s, when inflation was high, paper assets were shunned, and cash poured into precious metals and commodities. He especially likes gold, the beneficiary of a coming wave of inflation and an emerging market central bank bidding war. He has a near term target of $1,400/ounce and a decade end goal of the old inflation adjusted high of $2,000. A favorite ETF of Tim’s has been the (GDXJ), which focuses on junior gold miners, unlike the (GDX), which only directs money into the big companies.
Tim prefers gold over other precious metals because it will hold up better in the coming collapse, as it did last time. He thinks every asset class except gold will get hammered. As gold still has to digest its recent meteoric gains, and is currently lacking a weak dollar tailwind, he is advising readers to sell calls against current long positions to bring in marginal income.
Furthermore, Mr. Iacano thinks the outlook for bonds is poor at best, but the coming downdraft in financial markets may take the ten year yield from the current 4% down to 3% before we enter a prolonged rise. Bernanke is attempting to cure the current economic collapse with new printing press financed bubbles, inviting inflation to return with a vengeance. The early signs of this can already be seen in the white hot ascent of Chinese real estate prices.
The outlook for US real estate is terrible. He sees at least another 12 million foreclosures hitting the market before the fever breaks. Personally, I think there could be more. If we get another 20% drop in prices, the spill over into the banks carrying properties at ‘aspirational’ values could trigger a second financial crisis. His message to investors is ‘rent, don’t own.’
To learn more about Tim Iacono’s research, please visit his website at http://timiacono.com. To listen to my interview with Tim Iacono on Hedge Fund Radio at length, please click the ‘PLAY‘ arrow below.
Hedge Fund Radio is a weekly program featuring one-on-one interviews with the titans of the hedge fund industry. The show is hosted by legendary hedge fund manager John Thomas, one of the most seasoned players in the industry. It is broadcast live on station KGOL 1180 AM in Houston, Texas as part of the BizRadio network to 100,000 local listeners, and will be streamed online to a further 100,000 national and international listeners.
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