Crisis Investing: For The Rest of 90s

460 Pages·1995·25.141 MB·English

by  Douglas Casey

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bestselling author of Crisis Investing and Strategic Investing_
Digitized by the Internet Archive
in 2021 with funding from
Kahle/Austin Foundation
https://archive.org/details/crisisinvestingfO000case
More Critical Acclaim For
Crisis Investing for the Rest of the *90s
‘*This is the rare investment book from which we can all learn. Get extra
copies for your friends. It’s that good.”’
—Adrian Day, editor
The Investment Analyst
‘‘T agree with 95 percent of everything in Crisis Investing for the Rest
of the ’90s.”’
—Robert Prechter Jr., president
Elliot Wave {nternational
‘Every investor needs to explore the unconventional. Doug Casey will
make you think; this is not the conventional wisdom.’”’
—Jim Rogers, author of Investment
Biker and cofounder of the
Quantum Fund with George Soros
‘‘What makes it the best of Doug’s four books is its combination of an
unswerving dedication to individual responsibility, the wisdom of a
hardened veteran of the financial markets, and the best of Casey’s
irreverent and iconoclastic wit. But the most radical (and therefore
enjoyable) chapters are in Part III; these are not to be missed.”’
—John Pugsley’s Journal
‘Financial guru Casey begins on an incendiary note, describing taxa-
tion as robbery, and ends on another—maintaining that government has
outlived its usefulness. Outstanding are a capsule demonstration of how
an economy works and a chapter on commodities.”’
—Publisher’s Weekly
Also by Douglas Casey
The International Man
Crisis Investing
Strategic Investing
Douc as Casey, author of bestsellers Crisis Investing and Stra-
tegic Investing, has lived in seven countries and has visited over
one hundred more. He has appeared on scores of major radio and.
TV shows and has been the subject of numerous articles. He writes
a monthly investment letter and is an active speculator in the stock,
bond, commodity, and real estate markets around the world. In his
spare time, he engages in competitive shooting and plays polo.
Crisis Investing
for the Rest of the '90s
Douglas Casey
A Citadel Press Book
Published by Carol Publishing Group
Copyright © 1993, 1995 by Douglas Casey
All rights reserved. No part of this book may be reproduced in any form, except by a newspaper
or magazine reviewer who wishes to quote brief passages in connection with a review.
A Citadel Press Book
Published by Carol Publishing Group
Citadel Press is a registered trademark of Carol Communications, Inc.
Editorial Offices: 600 Madison Avenue, New York, N.Y. 10022
Sales and Distribution Offices: 120 Enterprise Avenue, Secaucus, N.J. 07094
In Canada: Canadian Manda Group, P.O. Box 920, Station U, Toronto, Ontario M8Z 5P9
Queries regarding rights and permissions should be addressed to Carol Publishing Group,
600 Madison Avenue, New York, N.Y. 10022
Carol Publishing Group books are available at special discounts for bulk purchases, for sales
promotion, fund raising, or educational purposes. Special editions can be created to specifications.
For details, contact: Special Sales Department, Carol Publishing Group, 120 Enterprise Avenue,
Secaucus, N.J. 07094
Manufactured in the United States of America
W@W O&O 8S 7 6 Sa 8 oD I
Library of Congress Cataloging-in-Publication Data
Casey, Douglas R.
Crisis investing for the rest of the ’90s / by Douglas Casey.
fo Co
“‘A Citadel Press book.”’
ISBN 0-8065-1612-7 (pbk.)
1. Investments—United States—Handbooks, manuals, etc.
I. Title.
HG4921.C33 1995
332.6'78—dc20 94—44951
CIP
Contents
Introduction to Paperback Edition Vil
Introduction
Acknowledgments Xll
Part I: What’s Going On and Why?
The Great Transition and the Greater Depression
Economists and the Greater Depression 15
Cycles of Boom and Bust 19
The Destruction of the Dollar 31
Is Debt a Big Deal? 37
Taxes and the Greater Depression 53
NWNM P
Part II: What Can You Do About It?
A Low-Risk Portfolio With 1,000 Percent Potential 67
Hedging for More Profit and Less Risk 1
When to Buy Stocks 83
What Stocks to Buy—and Not to Buy Dy)
Venture Capital and Low-Priced Stocks 105
vi Contents
12 Reverse Venture Capitalism 117
13 Mutual Funds: An Accident Waiting to Happen 127
Money Market Funds as Hot Potatoes 141
15 Income—Bonds as a Triple Threat to Capital 149
16 Wall Street Ethics 163
17 Envy and Wall Street Ethics 169
18 Back to the Future With Gold We)
19 1,000 Percent Returns on Gold Stocks 197
20 South Africa and Its Gold Stocks PANY)
21 Silver and Company Papd i|
22 The Raw Materials of Civilization 239
23 Energy and Its Producers 257
24 The Problem With Real Estate ZS
25 Property That’s Going Up 291
26 Commercial Property 299
27 Finding a Place in the Sun With International Real Estate 307
28 The Bubble Bursts in Japan 321
Part III: What’s Going to Happen Next?
29 The Ex-Soviet Union, the Next Yugoslavia 539
30 Third World Wars 347
31 The New Class in the No-Fun Nineties 361
32 Saving the Rain Forest From Ecohysteria 315
a8 Where Have All the Nazis Gone? 389
34 The Real Problem 401
35 An Unlimited Future 417
36 The Bag Can Be Full Enough 425
Further Helps
431
Index
437
Introduction to the Paperback Edition
The purpose of this second introduction, to this new edition, is to alert you to any
changes. that may have occurred in my thinking in the eighteen months since the
hardback edition came out. The short answer is: No.
The major investment recommendations of this book have, so far, been spot
on. This is both good news and bad. The bad news is that stocks and bonds have
clearly passed their peaks and are headed down; precious metals and commodities
have clearly bottomed, and are headed up. Some stock recommendations, for
instance, have already doubled or quadrupled from levels listed here. That’s bad
news for you now, because action you may take won’t be quite as profitable as it
would have been had you heeded the advice in the 1993 edition when it first
appeared.
On the other hand, the good news is that you can see the trend is in motion—
and it’s still got a long way to run.
POLITICS AS A SOLUTION?
One question that arises is: what will the Republican victories in November 1994
mean for the economy and investments? Part I of this book spells out the profound
effects politics has on any economy. If the Republicans actually roll back the
income tax to a flat 17 percent (as has been discussed), embark upon the wholesale
abolition of most federal bureaucracies, and attack entitlements with a chainsaw,
vii
viii Introduction to the Paperback Edition
then the effect could be immense. Unfortunately, they have a long tradition of being
a ‘‘me too’’ party—basically holding that taxes are fine, they’re just too high;
regulation is necessary, there’s just too much; military spending, however, is too
small.
I wish them well, if only because they sometimes say some of the right things
(as do the Democrats, on different subjects). But the fact that they really have never
had a coherent philosophy (a hodgepodge of traditionalism and conservative nos-
trums doesn’t qualify) dooms them to again snatch defeat from the jaws of victory.
The chances are excellent that the gathering meltdown in the markets will be blamed
on them, and they’ll be booted out in ’96.
But will the Democrats be reelected? Somehow I think the whole paradigm is
about to change, and it will no longer just be a case of musical chairs involving the
two wings of what is actually the Demopublican Party. The views expressed in
Chapter 31 (‘‘The New Class in the No-Fun Nineties’’), Chapter 33 (“Where Have
All the Nazis Gone?’’), and Chapter 34 (‘‘The Real Problem’’) are more valid now
than ever.
THE REAL ANSWER
It really doesn’t (and shouldn’t) matter to you how the political situation settles out
in the United States over the next decade. Although the United States is still a giant,
it’s becoming increasingly less significant in the scheme of things. It has only 4
percent of the world’s population, and its economic growth is only a half or even a
third that of newly free marketizing economies in Asia and Latin America. The
trend seems likely to continue, even accelerate.
Is this a matter of concern? In the long run, no, for the reasons covered in
Chapter 1 (‘‘The Great Transition and the Greater Depression’). And even in the
short run, this change—like all changes—will present plenty of opportunities along
with the dangers. The real answer is to ensure that you do well; the world at large
has a life of its own.
I believe the advice in this book—especially now, with the release of this
edition—will keep you safe and dry, even though a financial tidal wave may wash
away a great deal of the U.S. economy in the near future.