Can Our Financial Reporters Report Facts And Not Heresay?

Should our financial reporters report financial news based on facts and not heresay?

How?

Doesn't our financial news become very comical when the financial news reported are declared as misleading or as inaccurate (as witnessed in Telekom's case with TimedotCom)?

Here is another case of another financial reporter who does the same exact thing.

Have a look at these recent news articles by one Francis Fernandez, of the Business Times.

IJM said to be weighing plan to buy into Talam

• IJM said to be weighing plan to buy into Talam
  By Francis Fernandez
  bt@nstp.com.my
  October 28 2006
  IJM Corp Bhd, the country's second largest builder by revenue, is believed to be studying a plan to possibly buy into Talam Corp Bhd, people close to the shareholders of the builder said yesterday.
  IJM may offer as much as 40 sen a share to gain a 30 per cent controlling stake in Talam, but the sources stopped short of saying if IJM will buy out the entire shares held by Talam's controlling shareholders.

Which was denied by IJM: Article Entitled: "IJM said to be weighing plan to buy into Talam"

• We confirm that we are not studying or planning to buy into Talam Corporation Berhad ("Talam"), except that we would have an indirect interest in Talam should we complete the transaction for the proposed acquisition of 25% equity interest in Kumpulan Europlus Berhad, as last announced on 31 May 2006.

Same style. It's believed. Sources said.

Really.

Who are these sources really?

Do they even exist?

Or how about this one? Satang Jaya soars on talk it may acquire Airod

In which Satang said the statement is incorrect: ARTICLE ENTITLED : "Satang Jaya soars on talk it may acquire Airod"

• Satang Jaya Holdings Berhad ("the Company") would like to clarify that the statement is incorrect.

And how about this one? MTD Infraperdana plans RM460m capital payout

• It is believed that the payout proposal alongside a plan to raise as much as RM800 million in fresh debts was submitted to the board for consideration this week

Again, its believed. How about some actual factual reporting and not it is believed or according to sources?

• MTD Infraperdana plans RM460m capital payout
  By Francis Fernandez
  bt@nstp.com.my
  
  November 17 2006
  
  MTD Infraperdana Bhd, country's second largest toll road operator, is believed to be considering a proposal to return as much as RM460 million to shareholders, bankers familiar with the matter said yesterdayIt is believed that the proposal alongside a plan to raise fresh debts was submitted for consideration to the board this week.
  
  A capital repayment of 40 sen a share translates into a total cash payment of RM460 million, based on MTD Infraperdana's paid-up capital of RM1.16 billion.

And of course MTD Infra denies such proposal

• We wish to clarify that the Company is always evaluating opportunities to enhance its shareholders' value but the Board of Directors has not deliberated on the capital repayment proposal

So who are these sources that makes our financial reporters believing that even the moo-moo cow can fly?

How?

If such reporting is to continue then for what and for whom does our financial news serve?

Think about it.

And today, the very same financial journalist penned the following article: Plan to take Bernas private nears completion

• By Francis Fernandez
  bt@nstp.com.my
  
  December 14 2006
  
  TAN Sri Syed Mokhtar al-Bukhary is believed to be nearing completion of a plan to take private Padiberas Nasional Bhd (Bernas), the country's monopoly rice importer and distributor, bankers familiar with the matter said yesterday.
  
  Business Times was told that the tycoon is close to finalising a proposal to offer RM2.50 a share for the shares they do not own in Bernas.
  
  This means that the businessman may have to fork out more than RM800 million to buy out Bernas.

It is believed. Was Told.

Let's see what happens. Will Bernas deny this story?

And meanwhile, in regardles of whether the story is denied or not, the story is having a postive impact on the stock!

Yes, life is indeed wonderful.

Bernas is now up 15 sen or 7.69%!!!!

See what I am saying here?

If the reporter churns out stories based on un-confirmed sources, the story puts out a positive spin on the stock.

So who benefits?

And meanwhile, SC will surely querry Bernas.

Now, isn't this such a bother to our public listed companies? Surely they would have some more productive thing to do then to answer to such querries.

So first Jose Barrock. Now Francis Fernandez. I wonder who is next.

Is There An Intent To Decieve?

Last night I blogged on the issue where the financial reporter for Star Bizweek, has written yet another incrediblly, creative story based on his source. A source till this very day, has been proven time and time again to be rather lacking for the listed companies always deny the story alleged by Mr.Jose sources. (See here for yesterday blog posting: According To A Source )

This is getting extremely embarrasing for it just highlights the lack of integrity from our Malaysian financial journalists. Aren't they supposed to report based on facts and not heresays, rumours or sources?

Anyway I was told by a friend that the story itself had one huge glaring misleading fact.

Have a look at the news article again. Here is the link: Dialog Group to list unit in Singapore Stock Exchange

• For the first three months of financial year 2007 (FY07) ended September, Dialog Group posted a net profit of RM12.8mil on the back of RM100.9mil in sales, which is a gain of about 56% and 29% respectively from a year ago. The company’s earnings per share gained by about 55% to 93 sen per share in the quarter under review.

What's so wrong?

Firstly, do remember the article is insinuating that Dialog Group plans to list its unit in the SES. News like this will generate interest to the stock. Now look at the above statement.

Earnings per share gained about 55%!!!

That alone paints another extremely rosy story.

And to put icing on the cake it states an earnings per share of 93 sen.

So what's so wrong?

Well here is the link to Dialog latest quarterly earnings : Quarterly rpt on consolidated results for the financial period ended 30/9/2006

Was Dialog earning per share 93 sen or 0.93 sen?

Could it be a mistake?

Take a step back again. The previous week he wrote about Timedotcom and Telekom. ( See http://whereiszemoola.blogspot.com/2006/12/zero-integrity-from-our-financial-press.html ) Telekom had since came out blasting that the article was inaccurate and misleading!

Secondly, have a look here again: http://whereiszemoola.blogspot.com/2006/12/where-is-integrity-of-our-financial.html

1. Take the case of AV Ventures. The reporter highlighted the previous year earnings (which was ok) but failed gravely to mention that AV Ventures were losing money for its most recent 2 quarters when the article was published. Subtle attempt to mislead?

2. Take the case of Salcon. The Earnings Per share was quoted to be 30 sen. And then it was highlighted that Salcon's PE was 9.3x. Actual earnings? 0.3 sen. Another subtle attempt to mislead? Typo mistake? Hard to believe because the reporter ownself stated that Salcon earned 575 thousand only.

3. The example of Tradewinds. Tradwinds was a company whose debt issue was a known issue. First he insinuated that Tradewinds is BELIEVED to earn 100 mil for the year. That was in Feb 2005. This is the quarterly earnings reported back at that time: here . See how far off he was? And then the total debts was wrongly stated. He boldly stated that Tradewind had cut its debt from 2.5 bil to only 1.2 debt? Actual debts? 1.894 billion at that time. How nice. Tradewinds debts shrunk by some 600 mil with one stroke of the pen! Could it be a mistake? Again hard to accept for the reporter knows how to dig such facts out but yet when it comes to cruial points, and in this example, the total debts was wrongly stated. Another subtle attempt to mislead?

I could go on and on and on.

Time and time again, same style, according to source + occasional 'intellegent' mistakes being churned out by this reporter.

So I ask again...

Do you reckon that there is an intent to decieve by this reporter?

Or perhaps as Rob Kirby would call it, a subtle attempt to manipulate?

According to A Source..

On the weekend, there was this article on Star Bizweek: Dialog Group to list unit in Singapore Stock Exchange

• OIL and gas player Dialog Group Bhd is planning to list one of its units on the Singapore Stock Exchange. The plan, if it materialises, may involve a sweet surprise for shareholders as the group may distribute special share dividends in the Singapore-listed unit.
  
  “The plans are looking good. The listing is likely to be pursued,” says a source close to the group.

IF it materialise. IF.

Says a SOURCE close to the group!

And guess who wrote such nonsense yet again?

One guess!

Yup. Jose Barrock!

Jose who?

This Jose..

http://whereiszemoola.blogspot.com/2006/12/zero-integrity-from-our-financial-press.html

http://whereiszemoola.blogspot.com/2006/12/where-is-integrity-of-our-financial.html

• Subject : ARTICLE ENTITLED : "LISTING ABROAD"
  
  Contents :
  
  We refer to the query letter from Bursa Malaysia Securities Berhad ("Bursa Securities") to Dialog Group Berhad ("Dialog" or "the Company") dated 11 December 2006 on the news article that appeared on 9 December 2006 on page BW3 in the Bizweek section of The Star, which states that "…Dialog Group Bhd is planning to list one of its units on the Singapore Stock Exchange. " and "…the group may distribute special share dividends in the Singapore-listed unit.".
  
  We wish to clarify that in line with its business expansion regionally and globally, Dialog has continuously explore various options to fund these expansion. However, at this point in time, the Board of Directors has not made any decision in regards to a listing of any one of its subsidiaries on any stock exchange nor has appointed any consultant or adviser.
  
  As a responsible corporation, Dialog will make the appropriate announcement to Bursa Securities if there is any such development that requires an announcement to be made.
  
  Query Letter content :
  We refer to the above news article appearing in The Star, Bizweek, Page BW3,
  Saturday, 9 December 2006, a c

How?

Same nonsense!

The writer pulls a source out of thin air and writes stories, creative stories based on these sources.

Do these sources even exist?

And time after time, the plc involved has to divert their attention from their daily business operations to answer to querries based on one man's incredible sources.

Oh, are they doing their own very bit to promote the stock market in the most creative manner?

But....

For who?

Sigh!

Subtle Manipulation

In today's FSO write-up, Rob Kirby writes about Fundamental Vs. Technical Analysis and More. This section of his editorial is utmost interesting.

Enjoy!

<<<<<----->>>>>

The Subtle Side of Molding Market Sentiment

Other times, manipulations are more subtle. An example is illustrated from my correspondence with this particular financial reporter just this past Friday. I make specific mention of this because this particular piece has actually made it onto the front page of the business section of one of Canada’s major daily newspapers today, December 11, 2006:

The piece in question was reported Friday by MarketWatch:

By Steve Goldstein, MarketWatch
Last Update: 8:50 AM ET Dec 8, 2006

LONDON (MarketWatch) -- Worries about the strength of the global economy pressured the metals sector in London share trading Friday, though a solid report on U.S. payrolls growth and speculation of banking takeovers helped lift shares of other top British companies.

Merrill Lynch downgraded the entire metals sector to neutral on economic-growth fears and concerns about the manipulation of metals prices. …

So I contacted the author:

Mr. Goldstein;
Could you elaborate on Merrill's comments about manipulation of metals prices?

"Merrill Lynch downgraded the entire metals sector to neutral on economic-growth fears and concerns about the manipulation of metals prices

Here was the response I got:

I'll quote what they said:

Our view is that spot metal prices have been pushed to over-inflated levels by hedge / investor fund manipulation (eg 1 investor holding >50% LME Al stocks), and that there is a much greater risk to the downside from spot prices than to the upside. With slower global demand growth likely in 2007, particularly in the US, and a likely de-stocking of metals inventory in the G7 after a very strong demand growth in 2006, the risks are that base metals prices could correct ~30% from current spot levels, and this would negatively impact the equities. We continue to believe in the super-cycle, that metals prices will be stronger for longer; however, this means stronger than long-term average prices, not stronger than current spot prices. History shows us that no matter how much we believe that weaker commodity prices are already factored into equity prices, if the commodity prices re-trace, the equity prices of leveraged stocks follow. Whilst metals prices have outperformed the equities on a 12-month view, over the last 6 months, global mining equities have outperformed the LME index. In fact, as seen by the Bloomberg World Mining index in the margin chart, equities have been moving higher in recent weeks and have recovered much of the sector pull-back that occurred in early November. The laggard has been the AsiaPac mining index. However, we remain convinced that if the metals prices do see a correction from current elevated spot positions, equity prices will also correct. It is amazing to us that despite statements that liquidity will continue to flow, when sentiment

So I replied with this;

Steven;
I wonder if you bothered to question them about "a likely de-stocking of metals inventory in the G7 after a very strong demand growth in 2006."

The reality is that de-stocking of base metals HAS ALREADY OCCURRED!! - witness the all time critical lows of copper, aluminum, lead, zinc and nickel in LME warehouses.

Before "DE-STOCKING" can occur in the future - INVENTORIES HAVE TO FIRST BE REBUILT.

Rebuilding of critically low inventories would CONTRADICT this forecast - wouldn't it?

Regards,
Rob Kirby

And Mr. Goldstein then replied with this;

You may well be right -- we pass on the news, leave it to you to accept or reject.
Cheers, Steve

The HUGE Issues Here

First, these "allegedly professional" mega financial institutions sometimes put forth fundamentally FALSE and often CONFLICTED research for unknowing, unsuspecting consumers and - Second - the media so often takes this false and / or conflicted research, asks few questions as to its veracity, and presents it to the public as "NEWS" and then – only if pressed / questioned or cornered – it’s like we’re "all free" to accept or reject what they report as news.

Whatever happened to responsible journalism where errant reporting led to a retraction and an apology?

I bring all of this to your attention for a few reasons. First, a general understanding of the differences between technical and fundamental analysis gives investors greater clarity in deciphering the blur or hype of economic reporting in today’s market place. Second, regardless of which discipline you’re an adherent of – your results will always be dependent on the quality of inputs or soundness of your assumptions. The lesson here is ‘be careful who or what you hitch your wagon to.’

Remember; there’s no such thing as a dumb question when it comes to your investments. Knowledge provides comfort and it’s the basis of power!

Because events like the ones described above have a great influence on what happens to your investments on a day to day basis, understanding what is affecting your investments and sometimes WHY – might just lead to a greater comfort level and a better night’s sleep!

Looking Back..

The following written by Business Times, senior correspondent, R. Sivanithy certainly caught my attention.

• Fear, greed, and the fear of being left out
  
  By R SIVANITHY
  SENIOR CORRESPONDENT
  
  WE'VE reached that time of year when investors everywhere must surely be wondering what the New Year holds in store for stock markets.
  
  Coming at a time when the interlinked emotions of greed and fear are at all-time high levels, it makes the business of objective prediction all that much more difficult - greed drives everyone to keep predicting prices will keep rising, while the fear lurking at the back of everyone's minds tells them that there is a slowdown to contend with, present prices are probably not supported by future earnings, and markets everywhere are becoming increasingly vulnerable to setbacks.
  
  There is also another facet of fear, that is, the fear of losing out. Anecdotal evidence from brokers is that retail clients have reached - or are close to reaching - their maximum frustration point over the past week.
  
  Angry at not having made enough money in the run-up this year but yet worried at the levels at which they are contemplating their entries, many are turning to 'junk' to ease their frustrations.
  
  Thus, it is that half-cent and one-cent counters are seeing massive daily volume, as are all those priced under 5 cents. Stockmarket apologists might defend this sort of activity as a sign of a healthy trading market, but we suspect it speaks volumes about rising speculative froth more than anything else.
  
  As for what 2007 might offer, much depends on the US economic outlook and interest rate expectations. All analysts agree that the US will suffer a slowdown next year, but not all agree on how bad this might be and the consequent implications for interest rates.
  
  Perhaps the most bullish is BCA Research, which in its Friday Global Investment Strategy report said equity markets around the world are still cheap, that re-ratings in multiples should dominate, and investment strategies should have a pro-equities, pro-growth bias.
  
  BCA's analysis is based on the 'soft landing' scenario, in which global economies - led by the US - enjoy moderate growth amidst low inflation, a scenario it says last played out in 1995-1996. It also looked at historical price-earnings trends and concluded that stocks are still a buy.
  
  (Investors who buy into BCA's 'history could repeat itself' argument should also be mindful of that other historical occurrence ten years ago, namely, the Asian currency crisis of 1997.)
  
  In the not-so-bullish camp are the likes of UBS Investment Research (UBSIR) and BNP Paribas. In a Dec 4 Global Economic Perspectives report, UBSIR said it believes 2007 will be characterised by 'sub-trend global growth and ebbing profitability, with a shift in the composition of growth away from the US and away from consumer spending'.
  
  This cautious view is mainly because of the US. 'The conviction we have in the global view is strong. We have a high conviction, for example, that US demand will become more handicapped by housing-related weakness over the months ahead, outcomes that are not, in our view, fully discounted by some US forecasters and policy makers.'
  
  BNP's Fixed Income unit, in the meantime, said in a report entitled 'Hard Landing' that the US Fed will probably have to cut interest rates aggressively in the first quarter because of downside surprises to growth coming from a collapsing housing market.
  
  So much for the broad outlook for next year. The week ahead sees the US Federal Reserve conduct its periodic Open Markets Committee meeting tomorrow at which it is expected to keep its federal funds rate fixed at 5.25 per cent.
  
  The local market should trade sideways until the meeting is over and done with, although property stocks could have to contend with residual selling left over from Friday, following the conclusion of the integrated resort bidding saga.
  
  The one thing we can say for sure is that fear, greed, and the fear of being left out will continue to drive stocks more than ever before, making for a volatile week ahead.

This reminded me of this posting i wrote last year: If ze Market continues to rise..

<<<<< ----- >>>>>

Read this interesting piece the other day...

Asset allocation and evaluation of results

• “During the strong market of the 1990s, most investors who rode the wave ignored traditional ideas about valuation. Some money managers remained invested on the basis of a practical calculation: "If the market continues to rise and I'm not participating, I'll lose my job. But if it falls dramatically, I'll be in the same situation as everyone else." Others were conscious market cynics who thought they could successfully exploit the foolishness of others. Momentum investors didn't need an opinion about valuation. They were consciously saying, "The market may be overvalued-we don't know and we don't care. All we know is, it's been going up, and we're going to invest as long as it does-and get off the train before everyone else." The problem lies in executing the greater-fool theory. If you get off every time the market ticks down and then reestab­lish your position when the market starts to go up again, you're going to get killed, because even rising markets fluctuate on the way up. And if you wait, you risk going down with everyone else.

This got me thinking.. hmm... if the market continue to rise ... am i gonna miss Ze opportunity?

Should an investor's reasonings to invest and hold a stock be based on that particular stock's underlining fundamentals or should it be based on the prevailing market conditions?

What say u?

Me? I prefer doing it based on what i know best. If a stock is over-valued, i would sell. If a stock's fundamentals is deteriorating, i would sell. If a stock is fairly priced, it simply means it is fairly priced. And if a stock is worth investing then it is worth investing. And if the management or owner of the stock attempts any funky corporate manouveres to cheat me, ain't it a no-brainer to kiss the stock goodbye forever and ever?

To base my investment reasonings on the stock market? Should i invest in a stock because the stock market is going up? Gosh! It's simply beyond me because there is simply no way i could tell if the stock market is coming or going! Me pants would definitely be on fire if ever i told u i could. So where is the market heading? Issit bull or issit bear? I have simply no idea! I dunno lah. Do you?

Anywayyyy..... in short.... i would rather miss such opportunity.... and if the market goes flying, it goes flying... so be it.... as Ah Beng Kor would sing in his bath-tub.. Que Sera Sera mah... :D

err.... this is just me personal opinion lah... and if u dun agree, do feel free to leave ur comments, ya? :D

The last bit of that write-up is certainly a great reminder to all... i think... :D

• Finally, there is the challenge of evaluating results. For stretches of time, a stock picker may outperform the market for reasons that have nothing to do with skill. He may simply be in sync with the biases of the market-favoring telecommunications stocks, for example, during a pe­riod when the market as a whole favors them. Or he may be lucky. The "random walk" theory posits that if a large number of monkeys pick stocks by throwing darts at stock tables, half will do better than the aver­age stock picker and half will do worse. If the winning monkeys then re­peat the exercise once each year for ten years in a row, one out of 1,024 will beat the average every year, merely on the basis of probabilities. A stock picker who beats the S&P 500 ten years running will almost surely be lionized as having a special genius-and some may-but others will do so merely as a matter of chance.”

Hmmm... doesn't it make sense? During 1999-2002 .... there were a lot of cheap stocks..... The underlining market was simply cheap and stock picking was simply easy then... .... so stay modest lah....dun get so big-headed lah... whatever good results achieved then... doesn't mean much really. The underlining market was simply cheap and stock picking was simply easy then... :D

Oh.... and.... if any stock picker(s) starts boasting their investment results based on these periods of time, say 1999-2002 or even 2003, and starts giving investing advice(s) based on their so-called excellent track record....do take it with a pinch of salt! For these buggers might not be as geng as u thought, they were simply lucky to be investing in a period of time where stocks were simply cheap! So dun simply-simply call any1 sifu and dun simply-simply follow lor.

But then.... stock investment is not a game of follow you, follow me mah.... tiok boh?

:D

<<<<< ----- >>>>>

Fast forward 11th Dec 2006.

Ze market has certainly moved up, up and away...

How?

Will Big Name Funds Gurantee you Success?

Came upon this article posted on Bloomberg. It's about the performance of Goldman Sach's flagship fund, Global Alpha Fund. Mind you, we are talking about a hedge fund worth some US$10 billion.

Here is the link to the newsclip: here

• Goldman Sachs Flagship Hedge Fund Falls 11.6 Percent (Update1)
  
  By Katherine Burton
  
  Dec. 8 (Bloomberg) -- Goldman Sachs Group Inc.'s $10 billion flagship hedge fund dropped 11.6 percent this year through the end of November, extending earlier losses as its managers misjudged the direction of global stock and currency markets, according to two investors.
  
  Goldman's Global Alpha Fund lost money partly on wrong-way bets that equities in Japan would rise, stocks in the rest of Asia and the U.S. would fall and the dollar would strengthen, the investors said. In August, the fund lost almost 10 percent on unprofitable investments in global bond markets. New York-based Goldman is the world's largest hedge fund manager, with $29.5 billion in assets.
  
  Global Alpha, managed by Mark Carhart and Raymond Iwanowski, both 40, is designed to make big, risky wagers, which can produce large returns as well as heavy losses. Other so-called macro funds that bet on global stocks, bonds, currencies and commodities are up an average of about 7 percent this year through November, according to Chicago-based Hedge Fund Research Inc. Last year, Global Alpha returned almost 40 percent, said the investors, who declined to be identified.
  
  ``The fund was anticipated to be volatile -- it has had volatile periods in the past,'' said Peter Rose, a Goldman spokesman in New York. ``Since inception it has delivered positive returns for investors,'' he said. Rose declined to comment specifically on the fund's performance.

Would I be wrong to say that it would appear that big names, top guns, top reputations do not neccarily gurantee one success.

Money Talk from Dr.Doom

Dr. Marc Faber aka Dr. Doom had a dinner speach organised by CSLA last Monday in Singapore. Business Times' Teh Hooi Ling, who pens the Show Me The Money Column was there, and she gave a highly interesting write-up on the speach.

http://business-times.asiaone.com/sub/money/story/0,4574,217867,00.html?

• Since 2002, the prices of everything have gone up. Now, art dealers are bullish about art, property dealers are bullish about property, and bond traders are bullish about bonds. Everybody is bullish about some thing.
  
  'But we will not have everything going up on a sustained basis,' said Dr Faber. 'Somebody is going to be wrong - and I think it's the bond traders. The worst thing to do now is to buy bonds.'
  
  The biggest risk, he thinks, is geopolitical. 'I believe the US will bomb Iran, or Israel will bomb Iran, or they will do it together. And I think Iran should have nuclear weapons. Singapore should have nuclear weapons as well. Either everyone has or no one has.'
  
  Then of course there is the risk of a flu pandemic, or disastrous fallout from global warming.
  
  'I think now is not a bad time to sell,' said Dr Faber, when asked whether investors should take some money off the table. Yet, as he said, while there will be short-term corrections, the long-term uptrend is inevitable.
  
  
  
  

Friends and Foes of the US Dollar

Monty Guild from Guild Investment Management Inc has written a very interesting piece of editorial, called View from the Sandbox, in which Guild speculates on what the allies and the enemies of the US Dollar would do.

Here is a snippet from his editorial.

5 YEAR CHART OF THE U.S. DOLLAR

THE MARKETS ARE REALIZING THAT THE US BUDGET DEFICITS
ARE HERE TO STAY

This means more bond sales by the U.S., more interest expense and bigger deficits. It also requires finding someone to buy the bonds.

Many friendly countries have been going through the following process for the last few months, and realizing that a balanced U.S. budget is far in the future.

• Realizing that President Bush is militarily and economically overextended.
  
• Realizing that the U.S. is in a very weak negotiating position, many countries are using the current opportunity to protect their big asset in U.S. dollar debt.

How will the friends of the U.S. do this?

• By shifting their assets from the U.S. dollar to the Euro or some other currency.
  
• By buying more gold to hold as an asset in their treasury instead of IOU’s from a free spending, heavy bond issuing country.
  
• By stockpiling more base metals and oil.

They want to diversify out of the dollar, but want to do so without setting off a major rout of the dollar. It is a delicate balance, especially for the friends of the U.S.

The enemies of the U.S. have an even bigger goal. It is to destroy the U.S. as an international power. In this effort, they are being aided unwittingly by those who will spend public funds to a level beyond the means of the U.S. economy to support the expenditures.

>>>

Interesting eh?

But...

What if you are just in it for the money?

What's the logical thing to do? And looking ahead, what lies ahead for the US Dollar.

Here's some suggestion and more commentary from Guild:

>>>>>>>>>>>>>>>>>>>>>>>>>

The dollar is falling because of the problems outlined in above.

What we see ahead is more of the same. But why?

How can the U.S. quickly correct the problem? I cannot think of a quick fix for this problem. All the solutions, even the most radical, will take at a minimum of several years. Many will take much longer.

A recent study by State Street Research points out that U.S. consumption of goods and services exceeds domestic income by 7 %. In recent years, people have borrowed against their assets to finance this spending. The study shows that asset values (mainly real estate) and household debt would have to rise forever in relation to incomes to keep the current U.S. growth rate trending at the same level.

I would now like to quote John Plender of the Financial Times who said in an article entitled, “The Waning Dollar and the Brave new World” published Dec 4 2006:

• “Markets are adjustment mechanisms. When liberalized, as the capital markets have been on a global basis, they tolerate extremes for longer while retaining the potential to revert more brutally to the mean when policy fails to address economic problems.”

Most obviously, U.S. economic policy has failed to address the problem of our triple deficits. In my opinion, a REVERSION TO THE MEAN would send the dollar to much lower levels versus other major currencies. Part of the adjustment process could easily be the U.S. standard of living falling for an extended period of time. Not a pretty picture.

1 YEAR CHART OF THE U.S. DOLLAR

SUMMARY

PROTECT YOURSELF

Live within your means, and vote for people who will have the U.S. live within its means. Own foreign currencies, precious metals and foreign stocks, which may hold their value much better than the U.S. dollar over the long run.

These are themes we have supported for a long time. The recent and continuing decline in the U.S. dollar brings them more into focus and should cause more investors to get serious about protecting themselves and beginning to act to solve the problem.