We are currently in the grip of a temporary deflationary panic but based on the evidence I see from the Federal Reserve and its growth of the money supply, the long term trend is still inflationary and owners of tangible (non dollar-denominated) assets will be the winners at the end of this shakeout.  It’s disconcerting to see our portfolio values drop but being a diversified owner is still the best place to be if real world safety is your goal.

Bottom line:  I’m a buyer and not a seller.  And now is the time to be making financial decisions with your head, not your heart.

Update:  A transcript is linked below.

Roland Manarin:  Stuff like this happens.  I’ve been there before, ‘87 was far worse than what we’ve been through now and it ends.  I don’t know when.  I talk all the time to folks and they ask, “Can it go down a lot lower?”  Yes, because what you got going on is a panic. 

What’s important to see is what’s going on in the background.  What are they doing to stop this?  Well, we’ve all heard ad nauseam about the $700 billion bailout.  Eventually that’s going to have some very powerful positive effects, but it’s going to take a little bit.

00:52:  I’m going to show you a chart, but what this chart shows you is that they’re taking actions and actions have consequences.  The Federal Reserve injected money into the system, the monetary base, very, very important.

Here’s what it looks like, check this out.  Here’s what it’s been and then all of a sudden, this past week, ka-boom!  They put in a ton of money.  The last time I saw this was 9-11.  1998 when Long Term Capital hedge fund collapsed, I saw a huge spike in money.  Y2K in December, Greenspan spiked the money supply.  So that’s injecting liquidity and it takes a little bit of time for it to get out there.  So I don’t know what it’s going to take, but one of these days you’re going to see a melt up in my opinion. 

01:49:  So will it be from where we are today, the Dow Jones closed at 9447 or will it go to 7000?  I don’t know.  In ‘87 it dropped in half.  2001 - 2002 it dropped in half.  It’s just when you look at the long term charts it turns out to be a buying opportunity.

We just finished a newsletter that we’ll be sending out to our clients and it poses - it’s now the year 2015.  What about back in ‘08?  All will have been forgotten.  And the media will be focusing on the panic du jour.

3:00:  These are opportunities and I want to congratulate you clients who’ve been sending money in.  I think it’s a smart move.  All my past experiences of borrowing to buy at these lows, I usually jump in too soon and watch it decline some more.  But two, three years later I’ve got a handsome profit and I think that’ll be the case this time as well.  When you’re broadly diversified into nice mutual funds of common stocks, you own a whole bunch of businesses.

I think the concern that one ought to have is if you move over to a money market account, you might wake up one morning and the house of cards is collapsed, then you’re worth nothing.  So there’s my conundrum.  I’d rather own 500 good businesses in a currency collapse because when the dust settles and the new money comes out, I still own a portfolio of businesses.  So it’s a conundrum and I empathize, but this is what it’ll look like years from now.

3:50:  So hang in there, take a deep breath, stop watching the news, don’t open your statements and I’ll talk to you down the road. 

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