Editor’s note: The market’s closed in observance of Martin Luther King Jr. Day. So, instead of our usual timely market insights, we wanted to share this classic essay on the fast-approaching World Economic Forum.
This sharp breakdown of the event – originally published in 2009 – is good to keep at hand over the next couple weeks…
What happens in Davos stays in Davos. Thank goodness.
Every year during the waning days of January and the early days of February, 2,500 business, political, religious, and community leaders gather in Davos, Switzerland, and try to solve the world’s problems.
The event is the World Economic Forum (WEF). It’s filled with conferences, breakout sessions, and plenty of opportunities for powerful people to put forth their ideas.
And in previous years, they got to hang out with the likes of Brad Pitt, Angelina Jolie, Bono, and a host of other celebrity do-gooders. But Brad and Angie didn’t make it this year. Bono is missing as well. And according to press reports, the mood in Davos is downright depressing.
A global recession will do that.
Nonetheless, there’s work to be done. According to Vladimir Putin, Russia’s prime minister and a keynote speaker at Davos yesterday, part of that work is getting rid of the U.S. dollar as the world’s reserve currency.
Wen Jiabao, China’s premier and another keynote speaker, complained the reasons behind the current economic downturn were “inappropriate macroeconomic policies in some economies, characterized by a low savings rate and high consumption.”
The leaders of both Russia and China were basically pointing west and saying, “It’s their fault.” They argued it was time for a change. And the change they were thinking of would be bad for the United States.
So, it’s probably a good thing not much ever really comes out of Davos. Oh, sure, lots of important people get together and talk about lots of important things. But in the 28-year history of the WEF, you’d be hard pressed to find any concrete accomplishments.
The WEF promotional material crows about how in 1994, Shimon Peres and Yasser Arafat talked for hours during a private meeting in Davos and managed to restart the Israeli-Palestinian peace process.
That’s the Davos claim to fame… and we can see how well that all worked out.
This year, it looks like there will be a lot of U.S. bashing and a lot of talk about reducing America’s economic influence. Right now, it’s just talk. And if history is any sort of a guide, it will remain just talk.
The really ironic thing about Davos this year, though, is many of the people who are coming together and trying to solve the world’s financial problems are those who helped cause them in the first place.
Best regards and good trading,
Jeff Clark
Reader Mailbag
Today, readers respond to Jeff’s latest mailbag issue – “Like Asking a Cat to Bark.”
Even though I don’t subscribe to your service, I read your Market Minute every day. I was impressed by your candor in talking about your reversion strategy. Admitting that is seen very little in the stock advisory service industry. I thank you for that.
Regarding “Dave,” the guy asking you to change your strategy – he’s just someone who won’t learn how to evaluate stocks himself, so needs someone to blame. He probably is only buying your “losers” because of his mindset. He is attracted to losing.
If he wants to follow a momentum trader, he could subscribe to that kind of service, but, no, he’d rather complain, and blame you for his losses. I know, I have been there, and sometimes still do the same thing. He could follow you…and that other service…and when the market corrects, he could be buying.
– Vince S.
Just some thoughts… I can only agree with your customer’s letter on ABX, GG, and COF. I would not touch GE… It did well… just not a stock I would touch.
I do wish you would offer other trades then metals? In all fairness to you… only been trading your thoughts since October. I will give it time; because a crash is coming at some point.
– Jeffrey R.
Jeff, why waste time on these downbeats? (Of course I know why…)
Of course you will have losers. And they hurt. But besides the obvious fact that you have more winners, you have an extraordinary ability because of your unmatched knowledge and experience to roll over a lot of these losers into new winning positions by employing a different option strategy or rolling forward to a further timeframe if you still believe in the trade. I wish I could convince you to manage my portfolio!
– Charlie H.
Keep doing what you’re doing. Love it.
P.S. And Trees Don’t Grow to the Sky.
– Martin C.
As always, feel free to send in your trading stories, questions, and suggestions right here.