November 28th Editon

Good Morning All,

A recent letter to the New York Times once again reminded me of the simplicities inherent in the business cycle and how little attention most investors pay to its repeating truisms. Sparsely put, the cycle consists of five basic conditions that last varying lengths of time over a peak-to-trough period ranging from five to seven years; prosperity, crisis, liquidation, recession/depression and recovery. What sticks out here are the obvious questions of where are we now and which will we experience....recession or depression? My answer to this trick or tricky argument is that we have at this point witnessed the bulk of part three having seen part one disappear sometime ago, and that due to the fiat money flooding markets, the world will only suffer varying degrees of recession. Recovery in the economy may still be several quarters away but as so often stated here, markets will rise from the liquidation stage long before the GDP reflects a recovery.

Today is known as black Friday in America's retail business and for those of you unfamiliar with the term it means that strong sales take these enterprises from the red to the black for the year. Weak sales....well you can figure that no one expects great numbers in this area.

Worries in Europe and elsewhere have now turned from inflation to deflation making one wonder about the merits of economic or any other kind of forecasting including this writer's. So on the off chance that you remain skeptical of the latter's views, reread paragraph one and judge the state of the world for yourself by paying close attention to the things you know most about and then applying that knowledge to your thoughts on the future.