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September 4, 2019 | Melville’s Warning

Lobo Tiggre, aka Louis James, is the founder and CEO of Louis James LLC, and the principal analyst and editor of the Independent Speculator. He researched and recommended speculative opportunities in Casey Research publications from 2004 to 2018, writing under the name “Louis James.” While with Casey Research, he learned the ins and outs of resource speculation from the legendary speculator Doug Casey. Although frequently mistaken for one, Mr. Tiggre is not a professional geologist. However, his long tutelage under world-class geologists, writers, and investors resulted in an exceptional track record. The average of the yearly gains published for the flagship Casey publication, the International Speculator, was 18.5% per year during Tiggre’s time with the publication. A fully transparent, documented, and verifiable track record is a central feature of IndependentSpeculator.com services going forward. Another key feature is that Mr. Tiggre will put his own money into the speculations he writes about, so his readers will always know he has “skin in the game” with them

Melville’s 1853 masterpiece, Bartleby, the Scrivener: A Story of Wall Street, has turned out to be too prophetic for comfort. What seemed like an extreme caricature—a negative ideal designed to make a point—is alive and plentiful on Wall Street today.

This situation is a cornucopia of opportunity.

You see, Bartleby was a law clerk gifted with a beautiful hand for transcribing documents. This was a valuable skill in the mid 19th century. At the beginning of the story Wall Street offers him opportunity. But as he’s presented with choices, requirements, and eventually demands, he says, “I would prefer not to,” and does nothing. By the end of the story, Bartleby won’t even feed himself and does nothing but stare at a wall in the asylum where he’s confined. He had greatness in the palm of his hand, but his own psychology prevented him from seeing it or acting to secure it, so he ghosts away, leaving no mark on the world.

I hated this story when I was required to read it in high school. It was depressing and seemed pointless. But the longer I live, the more of Bartleby I see in human behavior around me. This is why you’ll see me quote Melville from time to time in my writing (or more often in my Tweeting: “Ah Bartleby!”). Each time, my respect for Melville’s cutting insight grows.

Sometimes, to be honest, I see a bit of Bartleby in myself—which always jolts me into renewed action.

Constant vigilance against our own inner Bartlebys is an important task for all of us, whether on Wall Street or Main Street.

Leaving self-analysis aside, the important thing for us today is that most people have forgotten Melville’s warning, if they ever heard it in the first place. When faced with the onerous duty of thinking for oneself and taking the best action possible, most people would simply prefer not to.

Widespread Bartlebyism is why contrarian speculation is possible—and so profitable when done right.

The poster child of Bartlebyism today has to be passive investing through ETFs. What? Put effort into finding overlooked opportunities? Due diligence?

“I would prefer not to.”

Far more insidious is the willful blindness of the financial cheerleaders on Wall Street and the investment herd that follows them.

What? Put effort into tracking the actual developments on the trade war instead of meaningless public posturing? Consider the possibility that, while the average lag between a yield curve inversion and a recession can be almost two years, recession sometimes hits within a few months?

“I would prefer not to.”

Alas for today’s Bartlebys. They’re being marched off to the slaughterhouse, and all they have to do to avoid it is open their eyes. We’re not the ones doing the marching, so it’s fair to ask how we can profit from this situation. The general answer, of course, is to be a contrarian.

More specific answers today include:

  • Don’t treat easily reversed presidential tweets as investible facts. Watch for real events, like the new tariffs going into effect yesterday.
  • Rather than join the “all that matters is the trade war,” or the “all that matters is the Fed” parties, recognize that both of these are powerful variables.
  • Don’t buy the “bad news is good news” herd mentality on Wall Street.
  • Face the ugly truth that trillions of dollars in negative-yield government bonds around the world are telling us that the problems that caused the crash of 2008 are not solved.
  • Don’t buy the “bull markets don’t die of old age” argument for the party on Wall Street continuing indefinitely.
  • Remember that throughout history, contests between deflationary pressures and government printing presses are always won by the printing presses.
  • Don’t forget to take profits.
  • Do understand that volatility is here to stay, and it can be our friend if we don’t pull a Bartleby.

Personally, I’m now extremely skeptical that the trade war will end anytime soon. The Chinese are used to economic hardship. Those on top won’t suffer much unless there’s a revolution—and they’re perfectly prepared to crush any moves in that direction. The current violence in Hong Kong makes this plain. It seems likely they’ll just wait Trump out. Whichever anti-Trump gets elected in 2020, he or she is likely to give in, so why hurry?

As important as that is, the importance of the Fed’s interference in the US economy’s vital lifelines can’t be overstated. I doubt they can put off the recession—perhaps depression—for long, but they sure can make things worse with their efforts to fight the inevitable.

Unfortunately, all of this is bad news for industrial metals and energy minerals—with the exception of uranium. At some point, it will be very bad news for most stocks on Wall Street as well.

Fortunately, all of this is good news for precious metals.

Better yet for the specific market reality of today is that silver is showing that it hasn’t become just another industrial metal. It’s not only confirming gold’s breakout, it’s presenting us with the possibility of another one of its legendary manias.

Best of all is that whether silver goes manic or not, it’s rising with gold, and that’s very bullish for all our precious metals plays.

Just don’t forget that discipline is the cornerstone of successful speculation.

Caveat emptor,

Lobo Tiggre Signature

 

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September 4th, 2019

Posted In: Louis James

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