Tuesday After Lunch Money Memo - Can't Anybody Here Play This Game? Ten Top Forecasters Who Apparently Caneeeefr

Not everybody gets it right. On Wall Street, the banks, the brokers, the government and most media shills have lathered themselves in incorrectness and embarassment the past couple of years.  A safe rule of thumb would have been Nassim Taleb's quip that anybody wearing a coat and tie, predicting economic stuff was lying.  The guardian picked 25 scallywags who helped crash the world economy, with a slight nod to a few who got it right. http://tinyurl.com/bwrl8l
But, seekers, a few did - about the same percentage of forecasters that nailed the crash of 1987.  My objective today is to ask who these far-seeing seers are, and talk about them.  Because, those that have been accurate in the past two years might certainly be worth a listen in the days of 2009.  Here's my arbitrary, alphabetical list of famous, findable folks to follow:

1.  Bonner, Bill:  Editor of www.dailyreckoning.com

Bonner's tongue-in-cheek writing style, written amidst family growing pains, and a medium-sized deteriorating castle in the South of France, cheerfully chronicled the growing disasters of the new century.  He wrote for years that Wall Street wasn't worth the pay, and that real estate would end in tears.

He's still pouring money into his castle, and buying gold.

2.  Buffett, Warren, The Oracle of Omaha

Buffett, and his partner, Charlie Munger, have long warned about the dangers of dodgy derivatives that no one understood and said often that Wall Street's finest were grossly overpaid.  In his annual letter to shareholders in 2003, he compared complex derivative contracts to hell - "Easy to enter and almost impossible to exit."  He should know.  Buffett's Berkshire Hathaway bought Gen Re and spent the next 4 years trying to unload 22,000 derivatives contracts that came with the deal.  Munger referred to the assorted derivatives pile as "… assets until you reached for them, and then they were gone."

In October of 2008, Berkshire put some money into GE and Goldman Sachs indicating that some companies are worth buying into… especially if they pay a good dividend while you wait, and you're an insurance company that can take advantage of that particular tax break.

3.  Dines, Jim:  Editor of The Dines Letter

Dines got interested in gold back in the 1960s when as a kidder Peabody junior analyst, he noticed that gold prices were rising, yet the "file" on gold at his firm was empty.  He got fired for recommending gold to Kidder's clients in the face of management opposition.  In 1995, when he was around and Kidder wasn't, Dines became the first "internet bug," as well as a uranium bug in early 2000 when uranium was selling for under $8 a pound.  In 2004, he began predicting a recession to arrive in 2007.  He says his nickname in the mainstream press is "nobody" as in, "Nobody predicted the current economic disaster."

He is still recommending gold, silver and uranium because, as he says, "You can lead a central banker to water, but you can't make 'em think."

4.  Eismann, Stephan:  hedge fund manager

An analyst and fund manager who tracked the sub-prime market from the early 1990s.  "You have to understand," he says, "I did sub-prime first. I lived with the worst first.  These guys lied to infinity.  What I learned from that experience was that Wall Street didn't give a shit what it sold." (sic)  Eisman sold Lehman Brothers shares short and yelled at the top of his lungs to everybody who'd listen about it.  Dick Fuld, CEO of Lehman, plugged his ears, and complained to Congress about Eismann.

Eisman won, and is now buying gold.  He says his grandfather recommended it.

5.  Marc Faber:  Editor of the Gloom Doom and Boom Report

Faber, although tall for a Swiss gnome, lives in Thailand and has been bearish on U.S. fundamentals for years.  His record of global and gold predictions in the Barron's Round Table have certainly blown Abby Joseph Cohen's picks away, but then maybe that wasn't too hard.

His hard asset picks for 2009 are up on Youtube: http://tinyurl.com/anvafr

6.  John Paulson, hedge fund manager

The February, 2009 issue of Bloomberg magazine, noted that Paulson himself earned over $3.7 billion in 2007 by "shorting" the US mortgage market, specifically the subprime piece.  Paulson is a Harvard MBA, and has years of experience at Oppenheimer's Odyssey Partners, and at Bear Stearns.  It looks like he earned his payday, but to defend against schadenfreude criticism, he donated $15 million to the Center for Responsible Lending, a charity that aids homeowners facing foreclosure.

Bloomberg magazine said Mr. Paulson is not a publicity hound, but can currently be found at presentation meetings raising money for his Paulson Recovery Fund to buy distressed debt, which he calls "a $10 trillion opportunity.

7.  Rogers, Jim: Singapore resident, and former Investment Biker
Rogers has long been an independent investor and writer, and has predicted this mess since the late 1990s.  He has liked commodities for years and started an index for them in 1998.  His current views are to short big Dow stocks.  His views are watchable at www.jsmineset.com, or http://tinyurl.com/dgywew

Described by the New York Times as "Dr. Doom," a name periodically pinned on anybody near Wall Street environs who is currently negative on the always fantabulous American economy.  Roubini warned IMF economists in 2006 that a financial crisis was on the way.  He said the same things in harsher terms to assembled toffs at the Davos World Economic Forum in early 2008.  None of the brainy caviar eaters even looked up from their trough.

He remains a pessimist, and on February 10 at his website, http://www.rgemonitor.com/blog/roubini he said that losses in the US financial system could hit $3.6 trillion before the credit crunch ends - which, he said, means the entire US banking system is in effect bankrupt.  No specific current predictions on the free part of his site, other than to duck.

9.  Schiff, Peter:  Euro Pacific Capital brokerage house CEO

Schiff has been on CNBC and most of the media outlets, and despite being gloomy and correct, has been invited back.  In May, 2007, at http://tinyurl.com/c2zsyf, he described Treasury Secretary Paulson's work to dress up our financially distressed economy as "putting lipstick on a pig."  He added to the analogy by saying that Ben Bernanke had come to Paulson's aid with "a can of hairspray and some mascara."

His current view from February 16, 2009 is entitled "Obama's Opening Salvo," and indicates he doesn't think TARP II will work any better than TARP I.  Continue ducking.
http://tinyurl.com/cavupx

10.  Meredith Whitney, Oppenheimer Securities

On 31 October 2007 the analyst forecast that Citigroup had to slash its dividend or face bankruptcy. A day later $370bn had been wiped off financial stocks on Wall Street.  Within days the boss of Citigroup was out and the dividend had been slashed.  Wow, a total reversal from the days when analysts just spit out what the investment banking department head  wanted.  She's one of the few women on Wall Street that's made a name for herself.  It's good to see the boys hide when she writes.

I'd infer from her recent posts that shorting bank stocks wouldn't be a bad play here.

I could also mention Felix Zulauf of the annual Barron's Round Table and Bob Chapman and his delightfully paranoid newsletter,  http://www.theinternationalforecaster.com/ But then I'd have gone over my self imposed "ten" limit.

The consensus, if any, is to be very careful, buy gold and other hard assets, look for high dividends, and perhaps prepare for an opportunity to buy debt securities of distressed [but good] companies.