Tag Archives: history

Jim Sinclair: Margin of Risk

Posted On: Saturday, August 16, 2003
Author: Jim Sinclair

Q: Jim, you used margin when you where building your foundation. I am young and willing to accept risk. So Jim, what’s your problem?

A: Let me answer your question under two subheadings for simplicity’s sake.

Responsibility

Few who write on the Web fully recognize the responsibility they have to their readers. I would also suggest that this statement applies equally to those in the print and electronic media as well. In contributing to the debate on questions of the day – whether they be economic, political, or both – you need to consider your words with attention and care, especially when someone else’s livelihood is at stake.

Training

My father is Bertram J. Seligman. From simple observation and a study of history, I believe he was the greatest trader that ever lived. Yes, greater than Jesse Livermore who befriended Bert because of his talent.

Bert traded like an old master painted. He used to trade 10% of the NYSE’s volume and ended the day with a 500 share position. He taught me to trade from as far back as I can remember. I sat beside him in the car, in the office, and in the house.

We failed miserably as father and son but succeeded beyond anyone’s wildest imagination as partners. He was also a business man. He financed the first movies in aircraft via “In-flight Motion Pictures, Inc.” He put the first refrigeration device in trucks via “Thermo King Inc.”

A partner of Smith Barney who ran its trading department had inadvertently become a controlling shareholder in a small company and called Bert when the company asked him to lower his position. Bert took on the man’s entire position and control of the company and went on to promote Dr. Land’s new camera. The company eventually became Polaroid and Dr. Land visited my home on several occasions.

Bert financed a company that had invented a feminine hygiene product called Pursettes which was sold in the U.S. through the 1960’s and 1980’s. One of the great fortunes he made was in a metals company called Strategic Materials.

He was also a partner in deals and trading operations with Jesse Livermore, Old man Kennedy and Arthur Cowen. He invented what is today called the NASDAQ.

At my request, he left me totally out of any financial or material inheritance, having given me more than that: the knowledge to spot value in businesses and – more importantly – how to trade for a living.

I was in a trading department when I was 12 years old. At 19, I was an over-the-counter market maker maintaining 35 markets. That is the training and qualification you need to handle huge margin positions.

During the entire gold market [of the late 80s presumably], I never got a margin call – not because I never made a mistake but rather because I margined myself and if a call was pending I liquidated my holdings before the close of that trading day.

I am trained to be a survivor in a battle that takes no prisoners. You may not be. I live markets day and night. I come from the lineage of Jesse Seligman and a famous banking family.

Now you will love this. The Cartel of Common interest [The (Gold) Cartel of Common interest is apparently a term that Jim Sinclair used in the 200-2003 timeframe.] is comprised largely of Seligman firms. Yes, my ancestors founded them all except Merrill. Goldman and Lehman are my family’s. Many of you made fun of me when I first told you those cartel members had met their match. Well, they have. They face the bloodline of their founder and did not know it until know.

Read the book, “Our Crowd,” by Stephen Birmingham and it’s all there. Markets, metals and entrepreneurialism course through my entire body not just my blood. The market is my mistress but compared to the real life equivalent I thrive on the volatility associated with this one.

I am committed totally to markets. I love risk and feel alive only when all is committed. Absolutely nothing else in the material sense interests me. Now that I have played the material game, even that no longer interests me. Money does not interest me. I have given away much more than I have. The game interests me. The game is called building companies and trading markets.

Now I am passing my love of this business on to whoever recognizes the gift and is willing to run with it. My two youngest children have chosen to go their own routes outside the financial sphere and my eldest daughter is in my service in Africa. She is an adventurer in her own right but remains uncomfortable with the intensity I show when the bell rings which is her feminine prerogative.

For the curious, my name has been James E. Sinclair since the day I was born. My mother was Abbey’s Irish Rose.

Martin Armstrong: Staring Into the Abyss

Martin Armstrong’s history has shown his mastery at truly understanding the laws of economics. He has predicted many of the pivotal economic events over the past few decades and has developed a highly sophisticated PI-cycle forecasting system, capable of cutting through the bullshit; becoming more aware of what is really going on in the world of economics.

On July 31, 2010 Armstrong published a newsletter issue titled Staring Into the Abyss in which he detailed his latest predictions for our future.  I have transcribed this newsletter, from its type-written form, so it will be searchable and more useful to the community.

Staring into the Abyss

Original PDF Version

Dow Jones Industrials Monthly Chart

by Martin A. Armstrong

When all is said and done, no matter how we spin the story, we are in the final stages of the collapse of Western Society as we know it. By that I do not mean the sky will fall and people will be running through the streets naked fighting over 2 week old bread. That did not even happen with the fall of Rome, nor with Communism in China and Russia. It is possible that our political ruling class become so desperate that they take the tyranny path to extort every dime from the people hoping to hold on to fleeting moments of past glories. When it is all said and done, we will ask how was this citadel of the earthly powers of man fallen, and laying motionless and prostrate on the ground before all the great empires that have expired before it. The answer will be the same. Debt and fiscal mismanagement. Our greatest problem has been our arrogance and presumption that we have conquered history and the laws of practical economics do not apply.

When empires die, the clash between private and public assets swings into hyperactive mode. Those who see the Dow crumble and fall to 1400 because that is what happened in 1929, fail to ever understand that such an event took place because of deflation that was created by the fact that the dollar rose to extreme levels when everyone else was defaulting in 1931. This is why Roosevelt confiscated gold and devalued the dollar by raising gold from $20 to $35. Money was still something tangible. Today, we are looking at a massive sovereign debt default on a worldwide level.

Under a situation from the European view in 1931, the only thing to survive was tangible assets. That is not only gold, but shares in corporations with tangible value. velocity is always the key for as it declines due to people hoarding money you get deflation. When people are afraid the money will become worthless (paper or debased coinage) they spend it faster before it depreciates and that creates hyperinflation at the other extreme. It all depends on where the confidence resides – with government or within the private sector. We are headed into the later.

I have been working at full speed to get this book complete. I have passed the 300 page mark and I am deeply in debt to those assisting me from outside to get me the reference material I need to ensure this is more than just an opinion, but also authoritative.

Adam Smith in his Wealth of Nations wrote in his final volume about Public Debt and what he asked was why people had ever considered lending money to government was safe or that their debt was somehow quality. I have been working on this issue in great detail. Smith stated that never had any government ever paid off its debt and that was in 1776. He was correct. I am assembling all the defaults that are a subject that no one seems to want to talk about.

Yet, there are stark and monumental conclusions that emerge from such a long list of defaults. Society does not end as the doomsday crowd portray. This seems to be just their desire or opinion. Many seem to wish disaster upon the world for they feel cheated and did not become rich with the crowd. But those sorts of claims are truly the exception. The fall of Rome ended in disaster as people fled cities and the population of Rome itself fell from 1 million to just 30,000. That was what the Romans called suburbium and why we still today call moving out of the city to the suburbs. The flight took place because of the collapse of the Rule of Law and unprecedented taxation that set in motion a migration that eventually lead to feudalism. Continue reading Martin Armstrong: Staring Into the Abyss

The Wormhole at the “Process Event Horizon”

Ever since the beginnings of fiat money, economies have pulsated between polar opposites: paper and tangibles. The Romans started out with pure gold and silver coins; but with the decline of their economy, they diluted the precious metal content until there was virtually no precious metals in the coins.

There comes a point where it becomes painfully obvious that a society cannot function without economic discipline; meaning there must be controls on the issuance of money. The most reliable method known of today is to make all paper money backed by precious metals, or to use precious metal coins themselves for commerce.

We are in the final phases of the paper-promise-based economy; the point at which perceptions can no-longer be papered over to continue this fiat game. Confidence is lost, without which you cannot operate a system of paper-promises. This is where natural law re-asserts itself and real value overtakes fantasy value in the minds of people everywhere.

It happens quickly, when the game is finally up; there are many examples of hyper-inflation throughout history to give you an idea of how it turns out. The velocity of money increases dramatically when hyperinflation hits, meaning people quickly spend the money they have while it still has value; this causes prices to further escalate in a vicious cycle. In Weimar Germany, when all of the chickens came home to roost, their Papiermark was 1 Trillion to a single US Dollar.

Just imagine what would happen if a significant number of the trillions upon trillions of US Dollars in the system today were mobilized to purchase tangible assets. When you factor in the tremendous amount of money creation taking place throughout the world, the prices of these tangible assets will necessarily go up tremendously when the money hits the real economy.

Reliable sources indicate that the MOPE (Management of Perception Economics) cannot last much longer. The game is likely up in late 2009, going into 2010. We are likely to see a year of perilous decline in the value of the US Dollar. It will be an incredibly bad year for the ill-prepared.

The Final Definition of Inflation According To the Law of Relativity

Jim Sinclair | Jim Sinclair’s Mine Set

Inflation equals money squared.

Eventually no speed of creation of money can maintain the economic stabilizing graviton and according to the law of physics we all fall into the Weimar black hyperinflation hole.

The wormhole at the “process event horizon” (the fall of Lehman Brother and the pending fall of CIT) is from commodity money to commodity money.

The wormhole travels through economic pain and suffering.

YOUR SAFE SHIP IS GOLD BULLION for the transitional trip from commodity money through Weimar hyperinflation and back to commodity money.

As sure as E=MC squared rules in physics, hyperinflation, the black hole of the Bernanke electric money printing press, is here and now accelerating to the speed of light that even at that speed must fall into the black hole in the distorted (by Bernanke) of the financial space – time continuum.

There is no escape from the hyperinflationary result of the infinite quantity of money being created to fill the void of value in the now more than one quadrillion dollars worth of value-less OTC derivatives created from 1991 to 2009.