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Hello, Subscriber!
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Panic Mode
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Markets move on fear, greed, and emotion, not logic. Logic does usually prove fruitful over time, but patience is required to navigate the weeds, where people en masse jump at imaginary snakes in the grass, market movers piloting mutual and hedge fronds, and others with large sums capable of moving the market either expend their panic or their financial fuel. Investors work with logic; but investors must understand that markets do not; therefore investors must realize the fear, greed, and emotion of the day and plan for what lies beyond it. So far, with inflation finally rearing it's head after decades of built-up financial tension, we're still in "panic-mode".
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Each of the prominent investors I follow, many of them Billionaires, agree that in a climate such as this, financial assets like bonds, purely financial speculations of the markets such as funds, will only serve to flush your wealth down the rapidly forming financial maelstrom, the sucking hole resulting as when a toilet is flushed. I've heard such described as "return-free risk".
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The S&P 500 has lost 12.5%, from 4500 to 3942 over the past 4 weeks.
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The best advice I can offer is to "listen closely to people who are more adept and informed than you are" on any given subject. For the topics I tend to comment upon, that might be me for you. I also hope, as is true for all teachers, that my students outshine me sooner rather than later. Until then, I'm happy to let you know what's on my mind. I'm also happy to introduce you to those more adept than I through this newsletter.
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Each of these seasoned investors I follow agree on two points:
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[1] That tangible assets will prove more resilient as they are "tangible", a physical asset value which will never revert to zero, and for which you don't incur counterparty or "third-party-risk". Third party risk is your dependence on any other to deliver the value to you when you request delivery... like "your money" in "their bank"; in simplest terms. Precisely why a digital currency run by the state and banking sector is a monumentally horrid idea. Slightly off-topic; strategically related, but a fork in this road...
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A less clear cut example might be owning rental properties headed into a financial environment where the "dollar" is losing the last of it's value with inflation sky-rocketing. In such environment businesses are likely to cut back, the domino effect of which has more people taking cuts in pay or subject to "force reduction", RIF'd (reduction in force), laid off, or fired... It might become difficult to find a renter that can cover rent at levels that makes it possible to cover the mortgages. In this case, despite you holding the "tangible" property, you are dependent upon renters covering their rent. Once you can't find enough renters who can cover their rent, your tangible asset quickly reverts to a liability due to third-party-risk.
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[2] That the terribly unfortunate rebalancing of the financial climate, which for decades has been not influenced with a thumb on the scale, but rather an entire forearm and upper body weight, will incur a violent snap back to equilibrium. The cold hard fact of the matter is such justification of true value will affect the entire world. Those who created it have infected financial systems worldwide, and none are expected to escape wholly unscathed. In fact, the best case will likely be those who have "lost the least".
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This week's design effort resulted in this meme, and the same design on apparel (linked). The idea is to spark a conversation and offer a bit of insight that sheep are not likely to hear on "the news".
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The U.S. Dollar (Federal Reserve Note) is garbage, having lost 98% of it's purchase power since it's introduction in 1913. They ramped up production, took us into the roaring 20's, then pulled the beautiful Persian rug we decided to finance out from under us once the party got into high roar. Then they crashed the market, printed more money, bought up the assets at pennies on the dollar, even confiscated the gold and made it "illegal for U.S. Citizens to own it". Here we go again... Only, this time, the people have seen most of this before and we are generally a bit wiser and a bit more resistant to tyranny. There's little delusion remaining that our elected "representatives" are in Washington to see to our best interests. Most of us know they're wolves and the pack leaders lay offshore and sending their errand boys to distract the sheepdogs.
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A possible future scenario is to have the market recover to apparent new highs, only to have the true value or "purchasing power" decline; a situation that several have termed "crashing up" or melting up. The number of dollars, or the price, of indexes and securities might climb to reach new highs, but with the value of the U.S. Dollar crashing toward zero, the valuation would simply be "a pile of numbers" with far less exchange value than it might seem looking at the numbers. Unfortunately the same can happen to the average man or woman's bank balance.
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If you do have some steel in you, you might consider a shift with some cash assets into more tangible assets. There are commodities which are in demand no matter the economy. When the entire market moves on fear, the best securities go "on sale" along with everything else, which is where the mining stocks are at present. They were undervalued for years prior to this recent drawback. Not being a large nor mainstream market, the mining stocks get ignored by the market at large until there's nowhere else to hide.
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If we don't get active to reclaim our self-governance, and very soon, it will get more and more difficult until there aren't enough sheepdogs and shepherds remaining to defend the flock of sheep. The inflation monster is coming, and it can't be reasoned with.
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Apparently, the wolves can't be reasoned with either.
(breathe, it's just a figurative satirical cartoon.)
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Of these: fear, greed, emotion, and logic, which is the least likely to move the markets?[see end of email for the answer]
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If you find this interesting or helpful, please share it.
Here's some more worthwhile information:
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"Roots of Our Current Inflation: A Deeply Flawed Monetary System" "...central banks have fueled an ongoing credit expansion... a natural contraction has been prevented... The current outbreak of price inflation does not come by accident or because of external shocks."
Antony P. Mueller, Mises Institute [LINK]
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"Is this a Market Meltdown.... Or Is a MELTUP COMING?" Mike and Adam discuss market stability, currency devaluation, inflation, and the liklihood that "panic" is temporary while commodities and real property are long-term security.
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Mike Maloney & Adam Taggart [LINK]
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5 Reasons Why Gold Will Anchor the World’s Monetary System - We need a stable anchor, which cannot be manipulated, and paper or digital currencies, which can be expanded at will, cannot keep central banks and governments from abusing their influence like gold and silver could.
Richard Mills; Ahead of the Herd [LINK]
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Dow falls more than 500 points in sixth-straight daily decline, S&P 500 hits new 2022 low - "It’s my opinion that this is a market that’s trading on emotions and not rational logic,"
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More from idiots who think they control things...
"House Speaker Pelosi Seeks Price Controls and a Ban on ‘Excessive’ Gasoline Prices"
Please tell me someone, anyone in the 535 people that "represent us" in Washington D.C. has read or watched the movie conversion of "Atlas Shrugged". [FREE]
No? Shocker. Mish on Mish Talk; [LINK]
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"No state shall... emit bills of credit; make anything but gold and silver coin a tender in payment of debts..." And yet they have, it has ruined our currency, and undermines our financial security. This is how the world recovers.
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"Worse than 1929"
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When the eye-wall of the inflation and debt storms hit, it will be like nothing we have ever seen. 1929 was just a warm-up... Survival will demand two things:
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1. manage well what you have
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2. supplement your main cash flow
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Trading Time-for-Dollars has it's Limits!
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MoneySmart Chapter Tours
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Having more money to manage is matter of the habits you use to manage the money you have! Check out the MoneySmart online chapter tours here:
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Net-search and see if you can find the worst case scenario of the "market percentage lost over the 10-year span of the Great Depression" from 1929 through 1939.
[see end of email for the answer]
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This week's efforts to "lead the charge":
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xls: MS AgAu Pay Sheet
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Convert tangible property into dollar values (prices), allow seller and buyer to "agree on the terms of the trade", and negotiate a balance of "zero". While this tool was designed for trading gold and silver as "real money", you could use it to arrange trade and agree on value with any tangible property.
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$35.00 $25.00
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"You Are Being Played"
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Examined closely, the current political environment reveals there is nearly no one to trust in seats of power, regardless of their affiliation. From top to bottom all seems a scam and it is therefore left to "We the People" to correct it.
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