If the US market closes Green tonight, the 31st of August, it’ll mark the best August performance for the US stock market (and, by default, global) since 1986!!
It matters little that the entire “market” is being dragged along by 5 stocks and a not so passive group of “passive” ETF index hunters (more on this to come).
Nor does it matter that GDP growth entirely disputes the claim of “greatest economy ever” by certain global leader(s).
But we do think that there is one share that is the poster child of all this malarkey. Tesla, one Tesla share (losing sh#*loads of $) is worth more than an ounce of gold! All this whilst trading on a on a trailing P/E multiple (price to earnings ratio, an “old” way of valuing companies) of 1000 times earnings is most definitely….awesome?
Its market capitalisation (value) is almost larger than ALL of the other brands in this chart below!!
As fun as it may be to go through the endless distortions central bank monetary policy creates in trying to hold this house of cards together, nothing should matter more to investors than last weeks US Fed Reserve update (compliments of the US Fed Chair J-Pow Powell) – specifically, on the new concept of “Inflation Averaging”…..inflation averaging?? Seriously? We almost spilled the popcorn.
To save you from the torture of trolling through the convoluted made-up dung this statement was, it can be summarised by “we now accept a higher than 2% INFLATION target band to make up for the years it wasn’t, after decades of targeting 2%”!
Is that like, because they wonked the numbers to seem like less than 2% for the last 10 years, it can be 5% for the next two years, or more, to make up for “lost ground”, and you need not worry?
WOW! We reckon a riled up civil population can’t wait for faster rising prices! Don’t forget, this is global, most other major central banks are on board.
Anyway, if you really go back and read or look at the way mainstream financial media reported on this most serious matter, our best summary is this:
Or,
‘Inflation Averaging’ means “don’t worry about rate-hikes, or any normalization of rates, we are so desperate for inflation we are going to encourage it and we want markets to love it… it’s a way of reassuring markets that there’s never going to be another interest rate rise!”
It will pay investors to take this seriously, even in Australia.
Most investors realise their purchasing power is diminishing, now it should be clearer central banks have chosen currency debasement as the “fix” of choice.
The only problem is, it is no fix. It’s a method of buying time so nothing serious (like reform) happens on the their watch. SNAFU.
This is happening, even during a “pandemic”, although we really hope most investors realise the financial issues started way before 2020.
This, below, is what Governments have had to do to retain order.
So, if you are now thinking about what else you can do to protect against the risks these policies pose, you should.
We think this bloke knew.
And so might this guy below.
After decades of dismissiveness, he’s now on board?
The fact he’s buying Mining shares (Barrick) not ETF’s tells you where he thinks the value is. He’s a value guy and the masses follow!!
Even if it was one of his other “managers” buying the Barrick position, there is absolutely no way it was done without his approval.
We also noticed, from the last filing of Buffets Berkshire Hathaway positions, was a large sell down in US Financials and, most surprisingly, the purchase of shares in Japan’s 5 most powerful trading companies.
Known as “Shosha”, these companies have long been the destination for the best and brightest “minds” in Japan. We watch that space with much interest.
As to whether ordinary stocks can soon start to reflect economic reality or take a bit longer is irrelevant. Stocks are overvalued on any criteria and anyone who stays over invested may have their greed severely punished!
And finally, this, below, from the ever great Grant Williams of TTMTGH fame!
Peace!
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