by Chris Marcus, Miles Franklin:
BUT FIRST… FOR THE WEEK ENDING SEPTEMBER 4:
- Apple market cap exceeded the entire Russell 2000 market cap. Think Apple stock bubble!
- Apple and Tesla stock split. (signs of a top)
- Apple stock fell 20% (high to low) during this week.
- Tesla stock fell 26% (high to low) during this week. (How could this happen?)
- Tesla exceeded $500 for a short time – or $2,500 pre-split.
YES, WE TESTED POSITIVE…
Not for COVID-19.
Not for any Coronavirus.
Not for HIV.
Not for plague.
But we, as a nation, tested positive for stupidity and ignoring history. Consequences will torment most people for years.
- Did anyone consider the economic consequences of a shutdown before they crashed the economy? One might think “they” intended to crash the economy, create depression level unemployment, millions of foreclosures, bankruptcies and more. Was it as simple as ignoring consequences? Was the shutdown inspired by political gamesmanship? Or was there a darker motive?
- Maybe the shutdown saved lives. Was it worth the horrible trauma? How many lives were lost because of drug and alcohol abuse, suicide, and spouse abuse?
- There is no back button. There is no reset. The Fed can’t print jobs, wealth, or business demand. We must live with current catastrophes in the economy, employment, supply, and demand. Stimulus and free dollars to individuals, businesses, cities, and states will help only in the short term.
- We tested positive for stupidity and ignoring consequences.
- History shows that too much unproductive debt is dangerous. Economists know that excessive debt relative to GDP is counterproductive. The United States is “hitting the wall” now.
- But congress and the administration ignore the consequences of debt, create it by the trillions, and argue not about excessive debt, but who gets first shot at collecting the swag.
- We tested positive for ignoring history, greed, debt, and election year payoffs.
- History shows that fiat currencies die, and hard money currencies survive. Gold coins from a thousand years ago are valuable. Silver from the Roman era retains its purchasing power. Dollars, euros, yen, pounds, and other paper currencies are on a one-way trip to extinction.
Just my opinion: The official BLS inflation rate is accurate for those individuals and families that don’t pay rent or utilities, buy food, smoke cigarettes, pay college tuition, buy books, prescription drugs, or medical care.
- YES, WE TESTED POSITIVE FOR IGNORING THE HISTORY OF FIAT CURRENCIES.
- Someone announces, “this time is different” and provides convincing reasons. But history shows all bubbles implode.
- Bubbles are exciting before they pop. People crave the thrill of easy money. We love the “going up” and hate the “coming down.” Market bubbles are comparable to cocaine highs and debilitating hangovers.
- Maybe this time will be different, but don’t bet the farm on that outcome.
- Bubbles pop, end of story. Consider silver in 1980, the NASDAQ in 2000, crude oil in 2008, and Tesla (coming) in 2020.
TESTING POSITIVE FOR STUPIDITY AND IGNORANCE IS A PROBLEM. INSTEAD…
- Ride the bubble up and get out early. Leave some profits on the table. Easy to say, difficult to do.
- Remember history. Bubbles implode, fiat currencies never last, politicians are not trustworthy, fractional reserve banking adds to the currency in circulation and creates excess dollars chasing the same quantity of goods. Hence, we pay higher prices. Inflate or die.
- Back in ancient times, when Nixon was President, the dollar was worth 1/40th of an ounce of gold. Today it is worth 1/2000th ounce of gold. Consumer price inflation sucked the value from the dollar. Worse, wages for the lower 90% did not keep pace with the higher cost of living.
WHAT SHOULD WE DO?
- Invest is something safe, like 10-year Treasury Notes? Oops, excessive debt forced the Fed to lower rates so the U.S. government, corporations, and consumers could afford debt service. Your savings earn next to nothing, thanks to The Fed and excessive debt.
- Invest in Apple, Microsoft, or Tesla and hope they rocket higher instead of “doing an Enron.” Then exit at the top and smile. It’s easy to say in retrospect, but hard to do in real time.
- Invest in real estate. This works until renters stop paying rent, mortgages default, and tenants leave.
- Start a central bank. Create currency units from nothing, payoff congress to support your policies, buy Apple stock (or whatever) with newly created units (think Swiss Central Bank), and smile. This works for a limited time for very few people…
- Buy insurance to protect your savings from the actions of politicians, and central bankers, and from the consequences of excessive debt, consumer price inflation, bad policies, stupidity, and ignorance of history. That’s correct – buy gold and silver. They survived for thousands of years and, regardless of what CNN and CNBC say, precious metals protect your assets and savings.