Forget the damage to markets when the passive bid dries up and the Fed is stuck cutting rates into stagflation. The psychological damage will be worse.
Well written and cogent thoughts, I hope your readers listen. I’ve been in finance for 45 years and this cannot be sustained. Buffett—whose preferred holding period is “forever”-hasn’t gone to cash for no reason.
“has sadly been the most effective way to generate returns over the last decade or two”
That is, unless you bought a lot of gold from 2000-2002 and stored it away and ignored everything else.
That has actually been the most effective way to generate the best NAV gain since the new millennium began.
And with the SPX/Gold ratio on the precipice of .50, and undoubtedly going to get there at some point in the near future, the CRE that follows a monthly close above .50 on that ratio, will likely mean gold will outperform everything else for at least a few more years.
Congrats on your sobriety. Keep it up one day at a time. I've been sober awhile now and I promise that you will not regret the path you are now on despite any temporary discomfort you might have to endure. In time you will be absolutely amazed at the new world that opens up to you. God bless.
Gold investors had to make it through that brutal crash in 2012 where the priced crashed and didn't bottom until 2018. Down 30% 2012-2018. And all the gold bugs in 2012 were saying gold was "going to 5,000 any day now"..."because QE & ZIRP were going to cause hyperinflation".
And people who bought gold in 2012 (which was most retail investors who get in last with all the hype)....didn't even break even nominally until 2022. So gold had that 10 year period of going nowhere. And miners got demolished. So it hasn't been an easy journey for people buying and holding gold or miners. It has taken a lot of faith that the thesis will play out.
It’s the peoples’ money being channeled through Wall Street courtesy of ERISA. The vast majority of people have no clue or input. It is being channeled to people who get paid tons of money to look the other way .
Keep getting the word out, if for nothing else for your integrity and sanity. That said, there is little the few can do but protect themselves as best they can.
You’re a good man, and we are fortunate to have your thoughts.
"We bailed out housing in 2008, and the result of that, if you ask me, is going to either be a currency or sovereign debt crisis."
The stock market may crash, but it will likely continue it's push upward. Have you ever looked into a crack up boom? 💥
I think the combination of inflation (which is near or at hyperinflation) and the devaluation of the currency makes a crack up boom a likely scenario. On paper, it looks great to have 40x or more, but in reality it's inflation in the financial markets.
Thanks for this. I think everyone here knows what the opposite of Fartcoin is, and should own some of it and *never* talk about it. Like Gandalf told Frodo: "Keep it secret! Keep it safe!"
While I don't disagree with your thoughts, and remain concerned over the current fiscal and financial situation and how it is coincident with the current markets, remember, the one thing Keynes got right was, markets can stay irrational far longer than you can stay solvent.
John Mauldin keeps referring to later in the decade for a big reset. Not sure why, Black Swan's migratory patterns change from year to year. It might be because we are close, but have not yet crossed that magical percentage of 130 (in that ratio of I can't ever remember what).
As usual Raven you are spot on...You know who has done the best since the 2008 GFC? Those who do not have the stomach to watch the daily fluctuations in the market and their portfolio...Those of us "dumb" investors who have dollar cost averaged into our 401K's for the past 18 years into a Vanguard SP 500 have done very well...I remember writing to one of the Internet pundits and asking why the imminent market crash has not happened and he simply replied, "I underestimated the Fed and their continued QE..."No one could have ever predicted their daily involvement in control of the Money Supply"...to which he is correct...There is an implicit "reliance" on trust in everything we do and unfortunately those of us who are entering our 60's have "trusted" our own Government to look after us...LMAO...George Carlin said it best, "it's a Big Club and You aint in it"...
Great column. I’ll just be mulling all this over at the gym tomorrow, not much more we can do.
“””guarantee of certain death via asteroid the very next day.“””—- on the flip side aren’t the odds of this happening in 2031 going up? Bullish for home builders 😆
It's about making money as an investor. It's true that's not everything. It's the only thing, per old school Vince Lombardi. (At least that's how I see it).
But let's face it. Those of us who've been market skeptics have gotten killed by a raging bull. Economic "theory" or "ideology" is useless, whatever the variety from Kenyes to MMT to Austrian. Whatever. It just confuses people into thinking they understand some highly complex system that they really don't understand. Our bearish fears for years were overblown and we were wrong. Wrong. Perma bulls are right more than perma bears -- just because stocks rise more often than they fall -- so if somebody sticks to the safe careerist Skinner Box banging the "bull" button is always safer. But when the perma bull is wrong they can destroy decades of gains. It's always sobering to think of that, especially later in life.
Hi Chris, your daily thoughts are the reason why I happily pay you and other "newsletter writers" (on Substack mostly).
Austria has the best economists, us French people have Bastiat, and the US has some great Cassandras like you, Peter Schiff, or Lyn Alden. It's not easy to be contrarian, but in the end you'll be vindicated.
Just a back of the envelope calculation. The interest that Bershire will generate on the $334B in cash (ST UST's) will be approximately $15B which is bigger than the Market Cap of the bottom 80 companies of the S&P 500.
Frankly, I think the powers that be are giving time for everyone to get on the gold train, and as Luke G says, do not be surprised if we wake one Monday morning and Gold is revalued MUCH higher. The USD will plunge stocks will go to the stratosphere trying to keep up with Bitcoin.
Modern monetary theory has acted like a risk-hunger marijuana edible that all traders and investors have been forced to swallow, resulting in an insatiable, decades long case of the market munchies.
You hit on everything in this article QTR. The thing that has been hard for longer term investors to wrap their minds around this cycle post GFC is that we haven't got the classic "reversion to the mean". Instead we get dollar debasement. So stocks keep going up. Real estate never crashes. The unemployment rate stays low. Retail spending stays up.
Investors trained over history have not seen a cycle like this. 16 straight years of no reversion to the mean in PE ratios, or a normal business cycle downturn. Even in the 1970's inflation you had big stock market crashes (1973/1974), and many bad recessions where unemployment went up. This cycle is entirely different than anyone has seen anywhere. People expecting stock prices to revert to the mean, unemployment to go up, a credit default cycle to happen, real estate foreclosures to rise.....have been very disappointed. Really strange days. It's like Alice in Wonderland or a Salvador Dali painting....where logic, proportion, laws of physics are all turned on their heads. Gravity moves objects up instead of down.
Yep. People thought Keynes was exaggerating about markets remaining irrational . . . etc.
Aren't they supposed to be "efficient"? Maybe they were this crazy in history but it seems most bubbles collapsed long before this one.
In this cycle it's like markets have created their own reality. Their own cash flows, their own persistence beyond any historical limits. I doubt Amazon could have endured as long as it did losing money in its formative years in any previous long-term bull cycle. That would have taken individuals like Morgan, etc. to fund it "forever". It and the whole VC/Tech complex figured out how to lose money for years and years, keep getting funded over and over, and stay in business due to some inevitable future.
I doubt this would ever have been possible historically.
Then that collective financial/tech jauggernaut becomes the very future that it asserts. Most people just have to accept it. What choice is there? OK, maybe they could have said the same about the automobile. But it seems to me this one has been unstoppable by any human resistance.
So now we have that future and it's all anyone knows who wasn't alive before it happened.
Somebody may have seen all this developing, seen the evolution of capital markets, the evolution of VC strategies, growth of big money pools, etc. and "predicted" it that it's gonna be years of bullish growth dominance. Yet even then they would have had to predict that sentiment would have stayed positive as long as it has.
All the old verities failed to guide. All of them.
Not an economist so don't throw rocks at me. I am old enough though to have lived through the Reagan revolution. Didn't have any stocks then but saw the whole mood of the country change and economic stress almost totally dissipate. I made $1,100.00 a month back then and in my memories I don't recall financial hardship. Now after being through the last 20 years and the economic bludgeoning from our government it would be easy to be a bear. What I don't see in these discussions though is how things could dramatically change with the Trump administration and sound fiscal policy, lower taxes and regulations. Has a Reaganesque feel to me. For that reason I have to be an optimist at least to a degree.
Well written and cogent thoughts, I hope your readers listen. I’ve been in finance for 45 years and this cannot be sustained. Buffett—whose preferred holding period is “forever”-hasn’t gone to cash for no reason.
Thanks for the feedback and for the read. Appreciate it from someone with far more experience than I have.
I'm not fully prepared for the worst case scenario but I am certainly taking steps to get there.
The key is where we stand now it doesn’t have to be a “worst case” — even just “slight discomfort” could send the masses panicking.
Indeed. It may make 2020-21 look like child's play.
“has sadly been the most effective way to generate returns over the last decade or two”
That is, unless you bought a lot of gold from 2000-2002 and stored it away and ignored everything else.
That has actually been the most effective way to generate the best NAV gain since the new millennium began.
And with the SPX/Gold ratio on the precipice of .50, and undoubtedly going to get there at some point in the near future, the CRE that follows a monthly close above .50 on that ratio, will likely mean gold will outperform everything else for at least a few more years.
Great point. How TF did I miss that? With 90 days sober today, can no longer blame the beer. Shit.
Congrats on your sobriety. Keep it up one day at a time. I've been sober awhile now and I promise that you will not regret the path you are now on despite any temporary discomfort you might have to endure. In time you will be absolutely amazed at the new world that opens up to you. God bless.
Thanks so much. 91 days today. Appreciate you.
Gold investors had to make it through that brutal crash in 2012 where the priced crashed and didn't bottom until 2018. Down 30% 2012-2018. And all the gold bugs in 2012 were saying gold was "going to 5,000 any day now"..."because QE & ZIRP were going to cause hyperinflation".
And people who bought gold in 2012 (which was most retail investors who get in last with all the hype)....didn't even break even nominally until 2022. So gold had that 10 year period of going nowhere. And miners got demolished. So it hasn't been an easy journey for people buying and holding gold or miners. It has taken a lot of faith that the thesis will play out.
It’s the peoples’ money being channeled through Wall Street courtesy of ERISA. The vast majority of people have no clue or input. It is being channeled to people who get paid tons of money to look the other way .
Keep getting the word out, if for nothing else for your integrity and sanity. That said, there is little the few can do but protect themselves as best they can.
You’re a good man, and we are fortunate to have your thoughts.
Thanks Bob.
"We bailed out housing in 2008, and the result of that, if you ask me, is going to either be a currency or sovereign debt crisis."
The stock market may crash, but it will likely continue it's push upward. Have you ever looked into a crack up boom? 💥
I think the combination of inflation (which is near or at hyperinflation) and the devaluation of the currency makes a crack up boom a likely scenario. On paper, it looks great to have 40x or more, but in reality it's inflation in the financial markets.
Nailed it!
Thanks for this. I think everyone here knows what the opposite of Fartcoin is, and should own some of it and *never* talk about it. Like Gandalf told Frodo: "Keep it secret! Keep it safe!"
While I don't disagree with your thoughts, and remain concerned over the current fiscal and financial situation and how it is coincident with the current markets, remember, the one thing Keynes got right was, markets can stay irrational far longer than you can stay solvent.
John Mauldin keeps referring to later in the decade for a big reset. Not sure why, Black Swan's migratory patterns change from year to year. It might be because we are close, but have not yet crossed that magical percentage of 130 (in that ratio of I can't ever remember what).
That’s the 4th turning denouement timing. End of the decade
As usual Raven you are spot on...You know who has done the best since the 2008 GFC? Those who do not have the stomach to watch the daily fluctuations in the market and their portfolio...Those of us "dumb" investors who have dollar cost averaged into our 401K's for the past 18 years into a Vanguard SP 500 have done very well...I remember writing to one of the Internet pundits and asking why the imminent market crash has not happened and he simply replied, "I underestimated the Fed and their continued QE..."No one could have ever predicted their daily involvement in control of the Money Supply"...to which he is correct...There is an implicit "reliance" on trust in everything we do and unfortunately those of us who are entering our 60's have "trusted" our own Government to look after us...LMAO...George Carlin said it best, "it's a Big Club and You aint in it"...
Great column. I’ll just be mulling all this over at the gym tomorrow, not much more we can do.
“””guarantee of certain death via asteroid the very next day.“””—- on the flip side aren’t the odds of this happening in 2031 going up? Bullish for home builders 😆
Thanks for always checking in Dean.
Just ignore the critics.
Who cares?
It's about making money as an investor. It's true that's not everything. It's the only thing, per old school Vince Lombardi. (At least that's how I see it).
But let's face it. Those of us who've been market skeptics have gotten killed by a raging bull. Economic "theory" or "ideology" is useless, whatever the variety from Kenyes to MMT to Austrian. Whatever. It just confuses people into thinking they understand some highly complex system that they really don't understand. Our bearish fears for years were overblown and we were wrong. Wrong. Perma bulls are right more than perma bears -- just because stocks rise more often than they fall -- so if somebody sticks to the safe careerist Skinner Box banging the "bull" button is always safer. But when the perma bull is wrong they can destroy decades of gains. It's always sobering to think of that, especially later in life.
WOW!!! This soliloquy could be “Cliff Noted” as follows: “We are Totally F--ked” . Teasing aside……Great Work! 🙏
Hi Chris, your daily thoughts are the reason why I happily pay you and other "newsletter writers" (on Substack mostly).
Austria has the best economists, us French people have Bastiat, and the US has some great Cassandras like you, Peter Schiff, or Lyn Alden. It's not easy to be contrarian, but in the end you'll be vindicated.
Wishing you a good weekend.
Just a back of the envelope calculation. The interest that Bershire will generate on the $334B in cash (ST UST's) will be approximately $15B which is bigger than the Market Cap of the bottom 80 companies of the S&P 500.
Frankly, I think the powers that be are giving time for everyone to get on the gold train, and as Luke G says, do not be surprised if we wake one Monday morning and Gold is revalued MUCH higher. The USD will plunge stocks will go to the stratosphere trying to keep up with Bitcoin.
Love this:
Modern monetary theory has acted like a risk-hunger marijuana edible that all traders and investors have been forced to swallow, resulting in an insatiable, decades long case of the market munchies.
Gotta stick to what I know… :)
Yup...It sure is looking that way.
A politicized Fed is not a good thing.
A Transnational captured MSM cheers it on. The common good has been hijacked with reality show highlights.
You hit on everything in this article QTR. The thing that has been hard for longer term investors to wrap their minds around this cycle post GFC is that we haven't got the classic "reversion to the mean". Instead we get dollar debasement. So stocks keep going up. Real estate never crashes. The unemployment rate stays low. Retail spending stays up.
Investors trained over history have not seen a cycle like this. 16 straight years of no reversion to the mean in PE ratios, or a normal business cycle downturn. Even in the 1970's inflation you had big stock market crashes (1973/1974), and many bad recessions where unemployment went up. This cycle is entirely different than anyone has seen anywhere. People expecting stock prices to revert to the mean, unemployment to go up, a credit default cycle to happen, real estate foreclosures to rise.....have been very disappointed. Really strange days. It's like Alice in Wonderland or a Salvador Dali painting....where logic, proportion, laws of physics are all turned on their heads. Gravity moves objects up instead of down.
Yep. People thought Keynes was exaggerating about markets remaining irrational . . . etc.
Aren't they supposed to be "efficient"? Maybe they were this crazy in history but it seems most bubbles collapsed long before this one.
In this cycle it's like markets have created their own reality. Their own cash flows, their own persistence beyond any historical limits. I doubt Amazon could have endured as long as it did losing money in its formative years in any previous long-term bull cycle. That would have taken individuals like Morgan, etc. to fund it "forever". It and the whole VC/Tech complex figured out how to lose money for years and years, keep getting funded over and over, and stay in business due to some inevitable future.
I doubt this would ever have been possible historically.
Then that collective financial/tech jauggernaut becomes the very future that it asserts. Most people just have to accept it. What choice is there? OK, maybe they could have said the same about the automobile. But it seems to me this one has been unstoppable by any human resistance.
So now we have that future and it's all anyone knows who wasn't alive before it happened.
Somebody may have seen all this developing, seen the evolution of capital markets, the evolution of VC strategies, growth of big money pools, etc. and "predicted" it that it's gonna be years of bullish growth dominance. Yet even then they would have had to predict that sentiment would have stayed positive as long as it has.
All the old verities failed to guide. All of them.
Internet rates at the start of the 70s was 7% and had doubled to 13-14 % by the end of the decade pushing to 20% in the 80s
Bankrupt businesses, unemployment with no new jobs to be found, bank failures etc
——
What is diff today…helicopter money every time things blow up…
And will continue until x day
Not an economist so don't throw rocks at me. I am old enough though to have lived through the Reagan revolution. Didn't have any stocks then but saw the whole mood of the country change and economic stress almost totally dissipate. I made $1,100.00 a month back then and in my memories I don't recall financial hardship. Now after being through the last 20 years and the economic bludgeoning from our government it would be easy to be a bear. What I don't see in these discussions though is how things could dramatically change with the Trump administration and sound fiscal policy, lower taxes and regulations. Has a Reaganesque feel to me. For that reason I have to be an optimist at least to a degree.