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January 16, 2018 | Sex, Lies, and Alfalfa

Is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and author of the daily financial column, Diary of a Rogue Economist.

BALTIMORE – Our main man in Argentina, Pancho, came to Baltimore last week.

Dapper and charming, Pancho has become more than just an administrator for the ranch. He has become a trusted advisor to the family.


We began the conversation by explaining why we needed his advice:

“Pancho, you come from one of the biggest, richest families in South America. You’ve seen all the things that can go wrong. We’re counting on you to help make sure we don’t make the same mistakes.”

“Yes… we lost all our money over four generations. We finally sold the family business in the 1980s and got $200 million for it. You know how much of that money the family kept?”

“How much?”

“Zero. By then, everyone was in debt. They had summer houses… winter houses… and spring houses. Ranches… apartments… you name it. Polo fields. Yachts. Servants upstairs and down. Sound familiar?”

“Uh… sort of… except for the polo fields and yachts. And the servants. But how did you lose so much money?”

“Well, only one person in the family, my great-grandfather, had a talent for making money. The rest of us had a talent for spending it. There were plenty of bad investments… and bad marriages, too.

“But Bill, I’m not sure I can help you. I’m one of the ones who knows how to spend.”

Pancho continued with an update from our ranch…



Originario Update

“I tried to make peace with the originarios (locals claiming native rights to our land).

“I just asked for two things. They had to sign our contracts. I wasn’t asking for any rent. We’d forgive it all. But they have to understand and recognize that they’re on our land.

“And I asked them to take down the fence they put up in our pasture. They refused. I don’t think they ever wanted to settle things.

“I went to court and asked a judge for a ruling. I’m not trying to expel them. That’s impossible. But I want the judge to declare that they are not really originarios. None of them were born there. And everybody knows that Rodrigo, the leader, came from Chile. Or somewhere else.

“But the good news is that they’re respecting our water rights. We had a very dry winter. We needed every drop of water we could get. And they let us have it.

(The little river comes down from the high mountains. Each farm along its course has the right to use the water, but only on specific days. In the past, the originarios upriver have been caught using the water when it was our turn.)

“We’ve gotten about two and a half inches of rain so far this year. If that’s all we get, we’ll be in another tough drought situation. But we’re all praying for more rain. Typically, the rains stop in February, so we have a little more time.

“And this year, we’ll also have San Martín [our farm lower down with more irrigable land]. We’ll have that planted by April and make our first cut in October.

“And here’s some more good news. The grapes look exceptionally good. It looks like we might get 60,000 lbs… if they’re not attacked by ants… or bees… or parrots… or hail. Keep your fingers crossed.

“But there is also bad news on the home front. We asked Juan to come down to the lower farm to clean it up and get it ready for planting more alfalfa.

“He’s down there during the week and goes back up to his house on the weekend. Apparently, his wife started cheating on him with Pedro. So he retaliated by cheating with Lucretia [we are substituting names here… to protect the privacy of our workers]. And as near as I can tell, now everybody is cheating with everybody else.

“When the priest comes, the confessions take a long time…”



Lopsided Sentiment

Meanwhile, back in the USA…

Has it ever been this easy to make money?

You just buy stocks and wait – a few weeks at most.

The Dow is flying; this month, it is setting records. And the only cloud on the horizon is falling bond prices, which we’ll have more about tomorrow…

Our research department tells us that the last time investors were so bullish was 30 years ago – just before the 1987 crash.

Today, sentiment is so lopsided, if all the bullish commuters all crowded onto the same side of the Staten Island Ferry, it would never leave the pier.

The old-timers say a bull market ends when the last bear capitulates and joins them. He hastens to the optimistic side of the boat.

Then, it tips over and sinks.

The end must be getting close. The stock market is listing badly to starboard… and there’s almost no one left on the port side. When will the end come? We don’t know. (Our market-timing advice may be a bit like Pancho’s wealth-building advice.)

For us, a crash is overdue. Not trusting our own instincts, however, we turn to trusty researcher Joe Withrow for an update on our Doom Index. (Coming soon…)

We take it for granted that a big, nasty bear market in stocks is on its way. One always shows up sooner or later. More interesting is what happens next.

Stay tuned!




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January 16th, 2018

Posted In: Bill Bonner's Diary

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