As July 2007 opened, events began unfolding more quickly, which I took as a signal that

this historic, worldwide credit bubble was coming to an end. In light of the mounting

signs of a credit contraction, on July 19th I sent an issue of The Investor’s Mind titled,

“What Is & What Should Never Be,” with the following note to both our free and paid

subscribers:

“Evidence is mounting that we are in the final throes of this worldwide,

credit-fueled bubble. The wobbling dominoes certainly merit the attention

of all investors and advisors.”

While we have seen, and will no doubt continue to see, enormous efforts to try to change

the course of where we are headed, actions and headlines since the first of August show

that something of major significance has occurred. If we are only mindful of major equity

index prices or the Fed’s decision to lower both the Discount and Fed Funds rates, we’ve

overlooked a great deal of information showing that a credit crunch has set in with a

vengeance. Those who deny the enormous systemic risks within our capital markets,

leaning instead on central bankers’ abilities to add “liquidity,” will soon be forced to

reckon with collective fear. When investors begin to realize that unsustainable growth

rates in complex, exotic financial products will eventually be corrected, fear and distrust

will replace greed and apathy. Critical thinking and rigorous due diligence processes will

replace slick marketing based on “past performance.”

In light of this, I encourage you to consider joining the group of subscribers, who are not

only readers, but are part of The Investor’s Mind. Our subscribers include hedge fund

and institutional managers, retired industry insiders, business owners, and professors.

They come from various countries around the world. Why…To think outside the box in

what is sure to be the most extraordinary period of change any of us will ever experience,

which will undoubtedly create the most challenging investment environment any of us

will ever see. Every investor, manager, trader, business leader, and politician will be

forced to deal with issues that the credit expansion allowed us to deny or postpone for a

“rainy day.” Well folks, the rain is coming.

If you would like to get a taste of The Investor’s Mind before you sign up for a six-month

subscription, scroll down this page to Recent Updates and click on the links under our

latest public article. If you examine the wide range of subjects that have been covered in

The Investor’s Mind: Anticipating Trends through Lens of History, and Riders on The

Storm: Short Selling in Contrary Winds, you’ll see that we are not the typical investment

newsletter. If you are convinced that something significant is taking place, which will

challenge the resolve and flexibility of us all, I encourage you to subscribe to The

Investor’s Mind. As enormous historical events now impact our global markets, there will

be plenty to think through if we are to keep from being swept away with the crowd in the

months ahead.

In closing, as you consider Nassim Nicholas Taleb’s words in his recent book, The Black

Swan: The Impact of the Highly Improbable, ask yourself if the last few years have forced

you to become a more independent thinker, or if his words are foreign to the way that you

make financial and investment decisions today?

“It is unfortunate that one learns most from people one disagrees with –

something Montaigne [a French philosopher] encouraged half a

millennium ago but is rarely practiced. I discovered that is puts your

arguments through robust seasoning since you know that these people

will identify the slightest crack – and you get information about the limits of

their theories as the well as the weaknesses of your own. Over the years I

have ended up reading more material from those I disagree with than

from those whose opinion I share. It is the duty of every author to

represent the ideas of his adversaries as faithfully as possible.”

Bull markets produce crowd followers. In bear markets easy answers give way

to critical thinking. Which will be needed next? 

Read More...

We have recently changed our communication strategy to include Short Reports. If

you would like further information on this, click here.

Protecting Giants from Slingshots, July 18,2008, Doug Wakefield and Ben Hill

What should be obvious to anyone at this stage is that while the SEC has always had an

obligation to clean up naked short selling – and I support orderly markets which must

punish illegal activity – a more pertinent issue remains. We are all watching a credit

crisis, and that crisis was fueled, at the root level, by the very players who today demand

special privileges from our market regulators and government leaders.

The Day Free Markets Died, May 20, 2008, Doug Wakefield with Ben Hill

Though our government has increasingly influenced our markets since the creation of

the Federal Reserve in 1913, we have recently reached the point where it would be a

glaringly obvious misnomer to call the markets “free.” And while some aspects of a free

market remain, those who’ve studied the day-to-day operations of our nation’s banking

system and the stock markets’ performances at certain times, would likely come to the

conclusion that, on occasion, the state, through the Fed and certain banks, intervenes to

engineer market bottoms.

Staying Alive, April 18, 2008, Doug Wakefield with Ben Hill

With the NASDAQ up nearly 5 percent and the Dow and S&P 500 up nearly 4 percent for

the week, many investors are ready for reflation, thinking the markets have signaled, "All

clear," even as billions in losses continue. Yet, it is only a matter of time before the real

world fundamentals devastate those investors who have lulled back into complacency by

two soothing words: "bail out."

Four Critical Questions, March 6, 2008, Doug Wakefield with Ben Hill

"We are wired in such a way that the only warnings we are inclined to act upon are those

that will help us avoid things we have personally experienced. One could even say, 'The

only things that are real to us are those that we have experienced.' And that’s the point:

the only thing most New Orleans’ residents had experienced were dire warnings and

minimal consequences. All because it had never happened to them before."

The Investor's Mind - The Long & the Short of It, Doug Wakefield with Ben Hill

If you are not aware of the 90% collapse in trading in the Home Equity Backed Securities

market that has occurred since November, or the fact that in January the $13 trillion

Credit Default Derivatives market saw trading slow to less than a tenth of the pace it was

at a year ago, then you owe it to the safety of anyone depending on your insights to view

the Weekly page of our site.

In this month’s newsletter, The Long and Short of It, readers will learn why the seismic

tremors in our financial system of late are no surprise to those who have studied historic

junctures. For example, consider the fact that the Financial Stability Forum was

“randomly” established by the world’s central banks in October of 1998, which coincided

with the final throes of Long Term Capital Management’s demise. Or, if you prefer:

• What global developments today parallel Keynes discussion, regarding the bancor (the first attempt for a world currency), with world leaders at Bretton Woods, New Hampshire in 1945?

• What took place between the Saudi’s and the US Treasury in 1974 [addressed in Islam versus Israel] that explains why oil has gone $1.39 a barrel in January of 1971 to topping $100 a barrel for the second time this year in February of 2008?

• Why don’t most investors in the US equity markets realize that they’ve lost more than $2.5 trillion since the middle of October?

• Which collection of small, illiquid markets appear to be supporting the hyperinflation view, while two substantially larger markets show tops in November and January?

To subscribe to The Investor's Mind, and gain access to our industry research paper,

Riders on the Storm, click here.

To view a summary of the wide variety of subjects The Investor's Mind has covered since

2006, click here. To view a detailed table of contents for Riders on the Storm, click here.