investing beyond the stock market

Beyond the stock markets

finding new opportunities to invest in

Tuesday, August 16, 2011

Markets in chaos


The fundamental problems in the global economy have not been addressed -- they’ve just been papered over with trillions of dollars in printed or borrowed money.

Charles Hugh SmithAn Unconventional Guide to Investing in Troubled Times


Centralized Institutional Failure


Us vs. Them

• Mortgage banks’ predatory lending

• investment bankers pushing subprime

• rating agencies asleep at the wheel

• Large trade deficits

• degradation of manufacturing jobs, capabilities

• Real hourly wages haven’t increased in 35 years


2 tiers of investors


“I realized from a very early stage that the market is a whole rigged

job. There’s no chance that investors have in this market.”

-- Bernie Madoff


“The Grand Failure of Conventional Economics”

“This dynamic intersection of

disruptive decentralizing technologies,

resource depletion and the grand failu

re of

conventional economics is unprecedented on

human history”

“The is no such thing as low risk; there is

only transparent risk, and masked or

misrepresented risk.”

“We want a simple, inspirational plan so badly that

we ignore the fact that simple, inspirational plans

fail in the real world.”

“end of work era”Source

An Unconventional Guide to Investing in Troubled TimesTuesday, August 16, 2011

Charles Hugh Smith’s 7 Reasons Why The Status Quo Can’t Work

1. extreme concentrations of wealth

2. unprecedented demand for finite resources

3. increasing dependence on traditional funding macro funding methods

4. dependence on State intervention

5. phony reforms

6. discredited leadership

7. decentralizing technologies (Internet) eroding centralized institutions


What to do?


New Sources of Investments


Decentralization of

existing markets

[Trend]


New options for investors1. local stock exchanges

2. return to local banking

3. peer to peer lending

4. private company investment

5. real assets (gold, real estate)

6. social capital (engaged, multiple revenue streams)


Local Stock Exchanges

• More effective way of allocating capital to local businesses

• Renewed interest in DPOs (Direct Public Offerings)

• Example: Lancaster Stock Exchange (LanX)


Key Resources

• DPO case studies: dfdpo.com

• Cutting Edge Capital blog: cuttingedgecapital.com


Return to local banking

• Community banks (<$1B in assets) are typically locally owned and focused on lending to local businesses

• Example: Deposits with local institutions

• Credit Unions are non-profit financial institutions operated on behalf of members

• excess revenue betters rates, reduces fees


• Move your Money’s risk analytics for local institutions: www.moveyourmoney.info

• Credit Union National Association (CUNA)’s credit union locator: www.creditunion.coop

• Independent Community Bankers of America (ICBA)’s bank locator: www.icba.org/consumer/banklocator.cfm

Key Resources

Source: Locavesting


http://www.moveyourmoney.info

http://www.moveyourmoney.info

http://www.creditunion.coop

http://www.creditunion.coop

http://www.icba.org/consumer/banklocator.cfm

http://www.icba.org/consumer/banklocator.cfm

P2P Lending

• enabling individuals to lend to one another

• skirting traditional banking structures, SEC cracking down

• Example: Prosper.com


Investing in private companies

• Requires creative solutions to securities laws to allow “non-accredited” investors to invest

• Example: ProFounder, FundingCircle (England)

• value of social networks not even begun to be tapped


Real assets

• gold (bars), not mutual funds, ETFs

• real estate (single family, multi-family units)

• farmland (11% historical appreciation rate)

• not making any more of it

• water

• unusual assets (wine, art, taxi medallions, domain names, etc.)


Source: http://slowmoney.org/invest

Agricultural loan funds


http://slowmoney.org/invest

http://slowmoney.org/invest

Revenue Streams• need to expand earnings capabilities beyond full-time

“jobs”

• internet based businesses

• monetizable hobbies

• return to guild-like systems, learning skills from masters

• ROI for higher education?

• Take on a project and move on to the next

• expand projects to include social capital (contributing to others in your community/local enterprise)


“Money is a tool; don’t invest your money in Wall Street’s promises, invest it with an unblinking eye on systemic risk; invest in your own life and in the lives of others.

This book explores how to do just that.”

Key Resource


“Investing locally makes sense as long as you do it with your eyes wide open. And this book is a realistic, up-to-the-minute exploration of the field. After all, it was the local community that invested in Ben & Jerry’s--and it worked out pretty well for them.”

-- Ben Cohen, cofounder of Ben & Jerry’s

"Once in a while, a book comes along that has the potential to change things. This is one such book. It is going to unleash a major movement in this country."

– Steve Costa, Point Reyes Books

Key Resources


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