Money Morning Mailbag: A Look at the Past Shows Us the Profit Opportunities Now Headed Our Way

Question: Recently, several readers have questioned the significance of the removal of the Glass-Steagall Act in 1999, the current financial meltdowns and the similarities between now and the short period leading up to the Great Crash of 1929. In my readings a number of years ago, I came upon the testimony of Mr. Robert Kuttner, who appeared before the U.S. Committee on Financial Services on Oct. 2, 2007. Would you consider reviewing that testimony and sharing your thoughts with our readers?

- Michael R. Scott

Answer: Thank you for pointing me to Robert Kuttner's October 2007 testimony (which readers can access by clicking here.)

I, too, am struck by a sense of d�j� vu as to where we are now and where we were when Mr. Kuttner gave his testimony in 2007. It is not unlike the d�j� vu Mr. Kuttner points to between where we were in October 2007 and where we were previously in the build-up to the 1929 crash. As the old adage tells us: "Those who forget the past are doomed to repeat it."� Unfortunately, we are still on that same Ferris wheel, going up and going down - but with no forward progress.

Rather than share my own thoughts on the parallels between then and now, it may be more helpful to point those interested in making money to the opportunities inherent in repeating obvious mistakes.

We know that capital will move in and out of investments, either seeking opportunity or exiting losing positions. What everyone needs to be aware of is that those movements, or "capital waves," are going to be increasingly larger and faster.

I urge all of Money Morning's subscribers to read Mr. Kuttner's testimony and to use that insight to capitalize on the waves that will result from policy decisions and economic realities that are unfolding even as I write this. Instead of being knocked down and crushed by these mounting waves, the changes that we're seeing should be recognized for exactly what they are - an incredible opportunity to profit from repeated mistakes.

There's money to be made from the current easy-money policy. There's money to be made when the wave of liquidity gets mopped up. There's money to be made in the new bubbles that are forming and money to be made when those bubbles inevitably burst. In fact, I believe that the opportunities before us are phenomenal - precisely because the road map has already been marked and the road well-traveled.

Driving forward, my view is always safer when you keep an eye on the rearview mirror. We should thank Mr. Kettner for polishing that mirror to give us another clear look backwards. It's tough to get rear-ended when you know what's coming.

The bottom line: We've already seen how this all plays out ... if you've seen the script for the original movie, you can guess the ending of the sequel.

[Editor's Note: Frankly, we've been blown away by the response we've received here at Money Morning to Shah Gilani's recent commentaries on capital-wave investing. One article in particular is not to be missed: In it, the retired hedge-fund manager and noted credit-crisis expert painted a global portrait in which he detailed where investors should go to find the biggest profit opportunities today. If you missed that Money Morning article, it's available here free of charge. If you're also interested, feel free to watch Gilani's just-released video, in which he further fleshes out his capital-wave investing strategy. That video is available for viewing, also free of charge.]

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