Pain is Bliss When the Anticipated Policy Response is Infinite
Jun 04, 2020 | Educational
An infinite policy response is like infinite morphine. The pain hurts, but the morphine overwhelms the pain, to the point of generating bliss. This can create a twisted Pavlovian response, in which injury or illness is something to be happy about, because new pain means a new morphine dose. This can continue deep into the throes of addiction. It can…
Legal Market Rigging and the Panic of 1873
Jun 03, 2020 | Educational
Is the stock market rigged? That is to say, are there shadowy hidden forces influencing market prices, in a manner that most investors don’t understand and often aren’t even aware of? The answer to that question is yes. Absolutely and without question, the stock market is rigged. But perhaps not in the way one might think, and not for the…
Goldman Sachs Had an Embarrassingly Bad Take on Bitcoin
May 29, 2020 | Educational
On a May 27 video call discussing the U.S. economic outlook, Goldman Sachs tried to dismiss cryptocurrencies in general, and Bitcoin in particular. The Goldman powerpoint slide, which made the rounds on Twitter, was titled, “Cryptocurrencies Including Bitcoin Are Not an Asset Class.” The whole thing was deeply embarrassing — for Goldman Sachs. In fact, the power point bullets advanced…
“Deflation World” is Coming — and It Will Be Like Nothing You’ve Experienced
May 28, 2020 | Educational
“Deflation World” is coming. For many, if not most, it is going to be a bizarre and disorienting experience. Most investors will fail to understand what is happening, or to process the consequences of what deflation will mean. And many of the “normal” financial relationships investors have come to expect will seem to run backward, like a movie playing in…
Why Buffett Sold Berkshire Hathaway’s Goldman Sachs Position
May 27, 2020 | Educational
When Warren Buffett explained his logic for dumping airline stocks, he was blunt. “It turns out I was wrong,” Buffett said via teleconference at the Berkshire Hathaway annual meeting. “The airline business — and I may be wrong and I hope I’m wrong — I think it has changed in a very major way,” he added. For an investor whose…
Physical Gold Has a Centralization Problem
May 22, 2020 | Educational
Physical gold has a centralization problem. It tends to gather in centralized places, and be guarded by centralized forces, under the strict administrative control of some centralized political authority. In regard to this topic, Ed Seykota, a legendary trend trader, made a spot-on observation in his late 1980s Market Wizards interview: “Gold tends to be dug up, refined, and then…
Liquidity, Solvency, and Zombies
May 20, 2020 | Educational
“Free money from the Federal Reserve” sounds fantastic for stock prices. Picture a giant firehose of liquidity, just spraying cash in every direction, as the Fed expands its balance sheet by trillions. How could U.S. companies — and stock prices — not benefit from that bonanza? Pretty easily, that’s how. It has to do with the difference between liquidity and…
It’s Shocking How Much We Still Don’t Know About the Coronavirus
May 18, 2020 | Educational
The novel coronavirus is still a mystery to us. This is surprising given the sheer amount of research and intellectual firepower being thrown at the virus worldwide. In dozens, if not hundreds of countries, doctors and scientists and researchers are working around the clock to figure out what the novel coronavirus truly is — and how it does what it…
Are U.S. Equities the Second-Most Overvalued in History?
May 15, 2020 | Educational
Are U.S. equities at their second-most overvalued point in history, behind only 1999? That is the opinion of multi-billionaire David Tepper, one of the top hedge -fund managers in the game. The U.S. equity market prior to the May 13 decline was “maybe the second-most overvalued stock market I’ve ever seen,” Tepper said in a CNBC interview this week. “I…
Conditions are In Place for an “Inflationary Depression”
May 14, 2020 | Educational
Robert Skidelsky, an economic historian and member of the U.K. House of Lords, believes the conditions are in place for an “inflationary depression.” On May 6, he told Bloomberg the following: This is going to be a depression and an inflation at the same time, or an inflationary depression if you like, which is very, very unusual. It’s a bit…
