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Why Do We "Prep?" And The Market Report Bookmark

General Commentary...

Why Do I Mention Soft Prepping?

One of the questions I get every once in a while from folks is 1) why do you talk about soft prepping so much and 2) what makes you think you're an expert on the topic?  Hey, they're good questions, so let's get to it. 

One of the issues with writing a letter such as mine is simply trying to balance out the financial "stuff" with other real world advice, tips, instruction, etc.  If I stay on the financials too long, I'll get push back from folks that want to learn some other things. If I harp on something like "prepping" too long, I get push back from the financial folks. In 20 years of doing this, I don't know that I ever got the balance right. Oh well, I try. 


General Commentary...

Why Do I Mention Soft Prepping?

One of the questions I get every once in a while from folks is 1) why do you talk about soft prepping so much and 2) what makes you think you're an expert on the topic?  Hey, they're good questions, so let's get to it. 

One of the issues with writing a letter such as mine is simply trying to balance out the financial "stuff" with other real world advice, tips, instruction, etc.  If I stay on the financials too long, I'll get push back from folks that want to learn some other things. If I harp on something like "prepping" too long, I get push back from the financial folks. In 20 years of doing this, I don't know that I ever got the balance right. Oh well, I try. 

I don't know how many of you remember the 2003 blackout in the northeast. Once again, I sure do, I was there living in our bayfront house that is no longer there because of Hurricane Sandy!!  But follow along, because many of you don't know this... 

On August 14, 2003, shortly after 2 P.M. Eastern Daylight Time, a high-voltage power line in northern Ohio brushed against some overgrown trees and shut down-a fault, as it's known in the power industry. The line had softened under the heat of the high current coursing through it.

Over the next hour and a half, as system operators tried to understand what was happening, three other lines sagged into trees and switched off, forcing other power lines to shoulder an extra burden. Overtaxed, they cut out by 4:05 P.M., tripping a cascade of failures throughout southeastern Canada and eight northeastern states.

All told, 50 million people lost power for up to two days in the biggest blackout in North American history.

Are you all with me here? A freaking tree branch folks. That's what put me and 50 million others in the dark on that hot August day. So, if my grid can go out because of a tree branch, what happens when the influx of illegals crossing the border is found to also contain ISIL members, or other really bad guys with the intent on teaching the US a lesson??  Do you see my point? If a tree branch can take down the grid for 8 states for two days, what can some really determined folks do with some explosives, and high end computer training??  

But way before that, I had the unpleasant fortune to be living in the Pocono Mountains of Pennsylvania. I say unpleasant because while it was a beautiful place to live, the mountain we lived on was almost like being on another continent. I've never seen such cold and snow.  We had a beautiful home on 7 acres of mountain top. The mountain was called "poho-poco" which in old Indian I think means "You're nuts if you live here". 

Well we did live there. While we owned the "bay house" in NJ, at that point it was still our second home. Our primary home for about 12 years was indeed in the mountains of PA, about 90 miles north of Philadelphia. Well, many of you don't know, or remember this but here's a little snippet from Accuweather about the "Blizzard of 1996" 

A powerful nor'easter unloaded 2 feet of snow and more from Virginia to southeastern New England on Jan. 6-8, 1996. Up to 4 feet of snow was unleashed. Philadelphia was at the heart of the storm, getting buried by 31 inches of snow. The Blizzard of '96 still stands as the all-time biggest snowstorm for Philadelphia.

Well that was Philadelphia. Up in the mountains we had over 4 feet. But hey, we didn't mind too much, we'd dealt with wicked weather for a few years. What the news headlines didn't tell you about was the ice storm that followed. After that monster storm moved out, another weather anomaly rumbled through coating everything in its path with the thickest ice ever recorded in the area. Power went down instantly. Roads were impassible. For 11 days, the entire Pocono region of PA was dark, and it was the middle of January. Temps hovered around 10 degrees at night. No one's water wells worked, because of no electric. People froze to death. 

Many were the days, that my house was chock full of neighbors in sleeping bags. I was the house with Coal and wood stoves for heat. I was the house with extra 12 volt deep cycle batteries and power  inverters. I had heat, lights, and food.  I was literally the survival station for 24 people during that nightmare. 

When you add Sandy to the mix, you can say I've been through some real hell and back. But I always did well through each and every disaster; because of one simple thing...I prepared myself for what others didn't.  But on top of that, every one of these situations drove me to learn even more.  I bought the books, I went to the lectures, I contacted the experts. Am I a Government certified, survival instructor? Heck no. Can I keep you in water, heat, and food in a tough jam? You bet. 

So to answer the question, why do I speak of taking action steps for "short term" disruptions, it is because I've lived through a few and know they can happen again.  As to why I might come off sounding like some kind of authority on the  subject, it is only because I know more about it than most. Not everything by a long shot, but again, a lot more than most. 

Last week we talked about preparing yourself for what I think is coming to an economy near you...namely, a currency and debt restructure. But today I want to talk to you about personal safety/survival prepping for a bit. Now the fact is that I cannot properly prepare you all for an extended disaster or grid failure, or societal upheaval in one or two newsletters. It's impossible to cover all the aspects that I'd like to relate to you. So, I want to keep it fairly basic, but still poignant. 

Because of my background and some of the incredibly talented folks I know; I can indeed teach you things about self defense, weapons, urban survival techniques, etc. But it's simply up to you to decide what you'd really accept as being important in terms of what you can believe might happen to you. So, while I have readers who are absolutely 100% off the grid, and truly ready for darned near anything, a lot of people simply wouldn't "go there". I understand, I don't go there either. 

With that in mind however, do you suppose that you should be at least prepared for something like a hurricane or the grid going down for a couple weeks? See, those things do happen, been there -done that, comes to my mind. Would you be willing to prepare for that?  What about a breakdown in society, following a currency reset, as EBT/welfare cards didn't work any more, and banks were shut for days as they rework the system? Could you envision that, and want to be prepared for it? 

So, the best way I can discuss things with you, is to show you what I think is important, and what action steps I have in place in case something untoward comes down.  Because trust me on this one, while all preparing is sort of connected at the hip, not all people, prepare broadly enough. Let me explain: I know folks who have learned proper weapons defense, that are indeed very capable of defending themselves and loved one's in even a very terrifying situation such as a "home invasion". And yet, they couldn't survive ten days in the event a nationwide electric grid went down. Likewise I know people well versed in your typical "natural disaster" planning (a few days of food and water for each person, etc) and yet never considered the fact that "people can get ugly" when all hell breaks loose and they never learned how to try and protect their homes or even their selves.   Again, it is all sort of connected. 

Now I'm not talking about putting a knife in your teeth and swinging through the neighborhood on vine ropes like some form of modern day Rambo here folks. But with the way this world is going, when a common event is the "Knockout game" in big cities, or daylight home invasions are a daily occurrence, doesn't it just make sense to learn weapons defense for home or person? Sure it does. 

Likewise, if you know that a storm like Katrina or Sandy, or the 1996 Blizzared,  can screw things up for weeks, doesn't it make sense to know how to get past something like that if it happened to you? Sure it does. But again, they're connected. When Sandy hit, it wasn't an hour after the water receded that thieves were breaking into every home in our development. The news media kept a lot of the "ugly" out of the news, but we had our share of violent acts taking place. Smash and grab looters, home invasions,personal assaults, you name it. So on one hand, people had to learn how to survive, and on the other how to keep themselves safe from that segment of society that sees disaster as their opportunity to strike.  

Now again, let me take that one step further. Storms are localized events. This kind of crap was happening in a very narrow corridor along the NJ/NY shore. Inland was water and power and gas and "safety". People "ran" away from the area, to the safety of relatives, friends and hotels inland. Well that's fine if indeed all disasters remain localized. I'm just not so sure that they can. 

It is things like that black out, or the Pocono Ice storm, or Sandy that prompted me to learn what is necessary to get through a rough patch. But the thing I found the most interesting is this...if you still have shelter, meaning your home or apartment is actually standing, it is relatively easy and cheap to get through a couple weeks of "roughing it". If however your home/apartment has been destroyed, that's a whole different ball game, and if you don't have another place to go, I am NOT versed on your options. 

 Because I took so much space talking about "why" I am adamant about folks understanding some basic survival skills, I won't be able to get into any solid nuts and bolts on what to do in this letter. But I promise you I'll lay it out over the next weeks or so. For today, the thing I will present however is your scale of necessary items. It is NOT as simple as the TV tells you. 

For instance everyone will tell you that the most important thing is water, and you'd best have about a gallon of water per person for at least 3 days. Yeah? Well let me tell you something. If you live in northern climes where temps get below 10 degrees at night in the winter, you're water is now hard as a rock. In fact, you might be too,  if you don't have any way to heat your home other than electric. Freezing to death is no better than dying of thirst. 

Sorry to be so graphic, but some times common wisdom isn't so full of wisdom. The FIRST thing you have to consider is "what is the most important thing in the short term if all power goes down??  Depending on where you live, ALTERNATIVE heat very well could be that answer. I am a FIRM believer that anyone that lives in an area that experiences long periods of sub freezing weather should have alternatives for their natural gas or electric heat. The most common being of course, wood or coal stoves. Then of course, having enough wood or coal stocked up.  Believe me you don't want to be trying to contact the wood guy the day an ice storm knocks your power out for 12 days. Sorry, it's gone. 

Oh and by the way, speaking of which is better, the answer might surprise you. In my house, I opted for a coal burning stove in the downstairs finished basement and a wood stove in the living room on the first floor. Coal is dirty, and most modern housewife's shudder. But, coal NEVER rots. It doesn't get bugs. It doesn't absorb water. It is compact. You can store 2 tons, enough for a couple months in a 4x4x4 plywood box. You can have 4 tons of coal delivered today and 5 years from now it will burn just like the day it was delivered. Wood on the other hand better be stored really well.  Wood fires are almost mesmerizing to watch. I can sit there and gaze at it for hours. Coal fires are much less attractive. But when the SHTF, coal lasts longer, is easier to store, produces more heat, and one 5 gallon bucket will get you 12 hours of an 80 degree house. 

I simply brought that up to show you that it isn't as "easy" as "have some water and flashlight batteries in case of emergency".  Sorry, that's TV time air fill to make it sound like they're doing something for you. Job one is always determining, what is the single most important thing in getting past the next few days?  In some instances, it isn't just water folks. Think about that. 

The Market..

You guys all know that I talk a lot about the propaganda that Government and Wall Street pushes on us concerning our economy. If I ask the man on the street how the market is doing, he'll say "wow the market keeps making all time new highs". Well he'd be right if he considered the "market" to be the DOW and S&P. But there are other components to the market, such as the NASDAQ and the Russell small caps. Well guess what...they're in a horrible funk. 

The NASDAQ has 47% of its components actually 20% down on a year to year basis. The IWM, which is the Russell 2000, has 40% of it's components down 20%. So, while they love to put on a grand show, and the weekend talk shows always point to the "roaring market"...the roaring market is a lot Skinnier than most realize. 

With the FOMC meeting on tap for Wednesday, I figured that Monday and Tuesday they'd try and keep the market "stable". So, we opened Monday sort of soggy and then shortly after they brought the DOW positive while the S&P hovered slightly in the red.  Even by the ending bell, we had the DOW up 43, but the S&P down about 1.5. 

Tuesday was a classic example of how manipulated and strange this market really is. We opened flat and were all set for a long grinding day, as no one would probably want to make any big moves the day ahead of the Fed release. But no, it turned out to be a wild day. Why?  Two reasons; first the Chinese announced news that they'd be pushing 500 Billion Yuan into many of their major banks, in a sort of backdoor QE program. Well, since Wall Street loves seeing free money get pushed around, they loved that. 

But then, Jon Hilsenrath hit the wires. Jon is a journalist that we call the "Fed whisperer". He is the guy the Fed's use to sort of leak Fed information that they want to judge the reaction to. So, what happened? Well the market was worried to death that the Fed's were going to change the verbiage in their statement concerning the "considerable time" period that they'd keep rates low. Many felt the Fed's would use this meeting to remove those words, sort of "winking and nodding" that rate hikes would be coming sooner than many thought. Since the market only moves up on Fed money and low rates, it had everyone in a bad mood. 

But old Jon said he "thinks" the Fed's will leave the wording of considerable time in the statement. The implied result of that of course is that they're not going to let rates rise any time soon. So the market took the Chinese news and Jon's "leak" and ran us 125 points.  So much for market fundamentals, eh????  

This morning the big news was that Fedex beat their estimates. Everyone on CNBC, especially Cramer were just orgasmic over it. But if you read the company's OWN release they say flat out that their stock buy back added 15 cents to the bottom line. In other words if they hadn't spent gazillions to buy back their own stock, they'd have MISSED earnings by a penny. Oh and by the way, you know all that Fed talk about no inflation? Well they plan on hiking shipping rates by 5% January.  Tell me about that Janet. 

In any event, the market opened a bit green, and everyone looked forward to the Fed meeting. Well it seems like old Jon Hilsenrath got it right, the Fed did leave the "considerable time" in the statement and as you might have guessed the market just LOVED it.  Then we had to endure the next hour of Yellen doing her best Alan Greenspan double speak. On one hand she says that the labor market is improving and on the other talks about the excess slack in the labor market. Over and over she'd say one thing and contradict herself in the next. She's going to make a fine Fed Chair, talk for hours, confuse everyone and say nothing. 

When it was all over and the final bell rang, we had gained 24 on the DOW, and about 3 on the S&P. That isn't quite as "rabidly higher" that many might have thought we'd get, after she repeated that she's in no hurry to let rates rise.  What's up with that? Well, the Dollar rose today, and instantly people started thinking that "hey, if our buck keeps rising, how are we going to sell stuff overseas??"   But not only that...we still have that issue with the UK going on. Are the Scot's going to vote for independence? 

Finally, we need to think about this... No matter what Yellen says about rates staying low, a lot of market participants know that when QE1 ended, the market fell. When QE2 ended, the market fell. When the twist ended, the market fell. Now Yellen says that QE will indeed end next month. Some amount of traders will get nervous over that. But there's one other thing that actually goes hand in hand with that... this week will be a triple witching options expiration. In the past 22 years, the week after the September triple witch has been down 17 times. Add that up with Yellen ending QE and we "could" see today's bounce fade out and we roll right back down some over the next few weeks. 

My point is simply this... yes they might circle the wagons, call in the cavalry and push us higher. But it isn't written in stone yet that the all clear signal has been flashed. We need to let things develop first, just to make sure we're not setting up for a whip saw.  Have a great week folks. 

PS.. If you'd like to see the exact stocks/options/metals/ETF's and 401K moves we will be looking at for this week, please consider becoming a member of the "Insiders Club" located here: Click Here

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