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Old 07-09-2014, 11:54 AM   #1
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Armstrong 1999

Just the other day Martin Armstrong posted this video of his presentation at a 1999 investment conference in Vancouver.

I see a lot of points in there that people are going to point to and say "oh see! he was right" but I would like to take note where he hedged himself quite a bit and was clearly wrong on a few things.

1st.. On emerging markets.. Armstrong was very negative on emerging markets and advised staying away from them. Specifically resource rich countries. He was basically having the attitude that as cost of labor dropped, they would just produce more natural resources and further harm themselves. So don't buy commodities. The timing of this call is laughable in hindsight. The next 7 years were fantastic for emerging markets that were commodity based. Brazil says hi. Things have been rough over the past few years but the commodities bull market has majorly helped resource rich countries.

2nd.. Kind of along the same lines but he was calling for a currency devaluation in China. Since 1999 The Yuan has only appreciated against the US dollar. It used to cost about 8.2 Yuan per dollar. Now it costs around 6.2. He was also arguing mark to market hitting Japan was going to cause their stock market to implode. He didn't correctly predict the actions of their central bank which caused the lost decade.

3rd.. In 1999 he was warning that a lot of internet companies would go bankrupt. Good call right? Well.. he added a small caveat to that near the end of the presentation. He basically told buy and hold investors to expect volatility. He believed we'd see 20% down quarters and then have the next quarter have those names come right back. It didn't exactly work like that did it?

4th.. The Euro.. He was VERY negative on the Euro. Now.. He primarily wants people to focus on the "digital currency" aspect of his predictions. Which is fine.. He was talking about digital currency 15 years ago. Great.. Fantastic.. How much money could I have made based on this prediction? Meanwhile.. The negativity surrounding his "capital is fleeing Germany" comments and talk of a bear market in the Euro was very poorly timed. The Euro was below .85 at the time of this speech and is around 1.35 today.

So in summary..

He was negative on emerging markets.. Negative on China/RMB.. Expected volatility but didn't recommend selling (so maybe he gets 50% credit).. and finally.. very negative on the Euro.

If you had followed his advice you would have missed the entire bull market. Now.. i'm sure his opinions changed over the next few years but still.. This is the part of the track record we have publicly available and it doesn't look very favorable. Maybe he had a shorter term outlook but it sure did sound like he was talking about a 5-7 year window.
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