One shot: $20,000...
While Sean was telling you about his new handgun yesterday, I was bumping and bouncing along the mountain roads of a gigantic private reserve in southern California, learning a little about hunting. I had no idea some people will pay a guide $20,000 to guarantee them a shot at a Rocky Mountain Bull Elk. They pay that much because they like to hunt... a lot. Also, the guide promises to get them a shot at an animal that will score at least 350 points on the Boone & Crockett scale (www.boone-crockett.org). If you score high enough on this scale, everyone will acknowledge you as the Mac Daddy of hunters for however long your record stands.
The Wall Street Journal must be pulling my leg. It says the government might actually do the right thing for once and get the heck out of the mortgage market. The talk is, Komrade Obama plans to phase Fannie Mae and Freddie Mac out of the $10 trillion-plus U.S. mortgage market. That's a bold statement, since the two government-sponsored entities accounted for 90% of all U.S. mortgage originations last year. Plans were already in place to run off Fannie and Freddie's $1.5 trillion mortgage portfolios at a rate of 10% a year, but the administration may speed that up if market conditions allow it.
The White House recognizes this'll practically guarantee higher mortgage interest rates... and seems perfectly OK with it. Imagine Komrade Obama having a better understanding of financial markets than "Helicopter" Ben Bernanke. Then again... maybe it's not that hard to imagine it.
Wall Street might not stand for this. Wall Street wants someplace to unload mortgages so it can go out and lend more. It doesn't want to have to know what it's doing. It would rather sell a mortgage with a government guarantee behind it.
Wall Street seems to have hired Dr. Mark Zandi, a Moody's economist, to stick up for it. Zandi is telling the world that private mortgage markets are too dangerous... even though the government's oversight failed to prevent the greatest housing and mortgage bubble of all time. Zandi's idea is comical. He says we should have not two... but five or even 10 Fannies and Freddies. I kid you not.
He says there should be five to 10 private companies, all backed by federal guarantees, doing the same thing Fannie and Freddie do now. Zandi says we should have a system for mortgages like we do with the FDIC, which insures bank deposits... failing to address the topic of how the FDIC will dig itself out of its current hole. He didn't say a word about how all government insurance schemes fail and wind up loading the taxpayer with new obligations.
Perhaps you recall Franklin D. Roosevelt's infamous Executive Order 6102... On April 5, 1933, Roosevelt signed the order "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates" by American citizens. "Hoarding," of course, meant "owning."
And now, according to a story at Zero Hedge, a Dutch court just ordered a pension fund to sell most of its gold holdings. The glassworkers' pension fund, called SPVG, invests pension assets for 1,142 glass workers.
The Dutch central bank had previously ordered the fund to sell the gold. But the fund refused. So the central bank took the fund to court... and won. The central bank argued, and the court agreed… gold is a commodity. The pension fund had 13% of its assets in gold, versus the 2.7% average in commodities for other Dutch pension funds.
Law being the precedent-worshipping institution it is, this decision will certainly make it much more difficult for other Dutch pension funds... and any other type of fund... to own gold.
Why would the Dutch central bank want pension funds to hold less gold? Because central banks know what gold really is… Gold is real money. It's a threat to all currencies and paper financial assets.
From The Book of How Quickly We Forget... Chapter 975: "The Social Media Revolution"…
Executives at both Facebook and Google have recently held talks with the good people of Twitter. Price tags thrown around in the press run as high as $10 billion. Last year, Twitter did $45 million in revenue and lost money. As part of a $200 million financing, Twitter was valued at $3.7 billion in December, just two months ago. Twitter was valued at $250 million in February 2009 and $1 billion in September 2009.
If you're unfamiliar with Twitter, it's the newest Internet sensation. It's a social networking and "microblogging" service with more than 200 million registered users. It allows you to broadcast short messages (140 characters maximum) via your own Twitter page. Other users can sign up to follow your messages. Millions have signed up to get the latest information on the celebrities they worship and the products they buy (and just about every other kind of person or organization you might want to follow).
(I have Twitter account, but obviously can't do anything in less than about 12,000 characters...)
A Wall Street Journal article said Twitter's revenue in 2011 might be around $100 million. Twitter believes it can become a $100 billion company. And why not? If it can lose money on $45 million in revenues and achieve a valuation of $10 billion, what's to stop it from losing 10 times as much on 10 times the revenue and receiving 10 times the valuation?
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New 52-week highs (as of 2/9/11): CARBO Ceramics (CRR), HMS Holdings (HMSY), O2 Micro International (OIIM), Take-Two Interactive (TTWO).
In the mailbag, gun owners give Goldsmith some beginner's tips for owning a handgun. Send your thoughts to feedback@stansberryresearch.com.
"Congratulations, that's the same model I picked (only mine's a six-shot – I think the 686 Plus is the seven-shot). I've had mine for a couple of years now, and have never fired it. I don't need to, since I've often fired my mother's Model 66, which is almost identical.
"I've got some advice for you: If you're shooting at the range, you can economize by shooting .38 Special 'Wadcutter' loads, which are made specifically for target practice. If you plan on using hollow point ammunition (such as for self-defense), it's worthwhile to shoot a box or two at the range because they feel different (they make the gun have a bigger ‘kick') than the wadcutters.
"I'm a fan of snake shot loads – miniature shotgun shells. They're a bit on the expensive side, but they do come in .38 Special/.357 Magnum. I put two of those in my revolver and four hollow points, because the gun is intended for home defense. First a shot shell, second a hollow point, third a shot shell, then the remainders are hollow points.
"Tactically, if I have to pull the trigger, I will shoot twice, then re-aim and shoot twice again if needed. After that, I don't expect any advantage from the shot shells.
"Get some speed loaders and practice with them. Make sure you get the ones that are appropriate for your revolver. You can reduce the hazard some if you practice this with Snap Caps, instead of live ammo.
"Get an appropriate holster for your intended use. Don't get a western holster if you intend to carry concealed. Pick the right tool for the job.
"Get a cleaning kit if you don't already have one. If you do already have one, get the .357 caliber brushes and appropriate swabs to augment your kit.
"Get some ear plugs and keep them in your shooting bag. Protect your hearing BEFORE you lose it. Once you lose it, you won't get it back." – Paid-up subscriber K.S.
"To say that after someone else's bigger gun made your six-inch-barrel Smith & Wesson less impressive, that's just not right. It was a very good choice for a gun. I used to live in LA about 30 years ago, you used to be able to bring 5 friends and a case of beer and drive out to the desert and shoot at the beer cans or anything that moved, being at a shooting range takes the fun out the experience. I think they frown on this behavior now days (beer and guns), however if you ever get the chance do it…" – Paid-up subscriber MWN
"Sean, don't believe a thing one of those clerks behind the gun counters tells you. They are only salesmen trying to sell you something. Those rednecks with the big handgun? Nothing but an unusable toy. To shoot someone with one, you would first need to don ear protection or risk permanent hearing loss and your first shot had better be good.
"I am a gun dealer. I sell guns for a living. Your 357 shoots the federal personal defense load with a 158 grain bullet at 1240 fps with 539 foot pounds of energy. Those rednecks probably had a 500 S&W revolver, costing over $1,000, that weighs in at over 5 lbs. Way too much to tote around. It shoots a 275 grain bullet at 1600 fps with 1682 foot pounds of energy. It is horribly loud and obnoxious.
"Now consider a lowly 12 gauge shotgun. It weighs about 5 lbs in a small light model. Shoots either a 438 grain slug at 1500 fps (feet per second) 2189 foot pounds of energy or a load of 00 buckshot, 9 round balls, just a fraction smaller in circumference than your 357, at 1325 fps. You can also shoot smaller shot sizes in the 12 gauge, or the smaller 20 gauge, or even a .410 shotgun. The benefit of the smaller sizes of shot is that while lethal at short range, will not penetrate nearly as much wood and drywall as the larger stuff. Comes in handy when you have relatives or neighbors about.
"Which brings me to the handgun I and other gun nuts use for protection. It is called The Judge handgun. Produced by Taurus. You can shoot either 45 Long Colt handgun ammo (the cartridge that won the west) or .410 gauge shot shell personal defense ammo. This ammo comes in a couple different flavors. The foremost being 4 pellets of 000 buckshot. This load comes out the barrel at about 1000 fps and these pellets are just a bit bigger around than your .357 at .400 of an inch. At 30 yards, my revolver lays these out side by side about 24 inches wide. Quite a bit of room for error if your aim is a bit off.
"There is also a No. 4 shot personal defense load that shoots a 1/2 ounce load of 4 shot. There are about 65 of these in each shell. They will kill whatever you shoot at across a room, but lose their energy fast when going through walls. Lots of people use them for snake protection. Less collateral damage.
"My revolver in a lightweight 3 inch barrel model weighs in at 27 ounces. They call them the Judge because lots of judges carry them in the courtroom. This little revolver also comes in at a little less than $500. You can buy a shotgun for about $250. There are a LOT of houses out here in rural Wisconsin and everywhere else for that matter with a shotgun behind the kitchen door. In a gun battle, the guy with the shotgun will win most every time. Did I mention you can shoot a shotgun or the Judge revolver outside without hearing protection, with no worries about losing your hearing from a single shot? That 357 of yours is quite loud, too. Now the real truth is, why not just get a Judge and have the best of both worlds. A small revolver with the power and forgiveness of a shotgun. Plus, once you figure out what makes it go boom, there is not a lot of practice required." – Paid-up subscriber B.K.
"I'm a new investor and a little confused on how to implement the trailing stops. When making a stock purchase, do I enter the trailing stop at the time the buy order is placed, or is that a separate sell order all together?" – Paid-up subscriber J.D.
Ferris comment: Never enter the trailing stop order when the buy order is placed. Just keep the trailing stop in mind, and if the stock closes at or below that level, place the sell order.
Regards,
Dan Ferris
Medford, Oregon
February 10, 2011One shot: $20,000... I agree with Obama (no joke)... Zandi: 10 Fannies/Freddies are better than two... Bernanke: No problem... Brazil and China: Problem... Different this time: Social media...