The Financial Markets Are One Big Cartoon Network

It seems to never end.  The markets do the opposite of what would be expected based on common sense and on undeniable evidence about the fundamentals.   Just this morning, for instance, the S&P 500 pops up overnight and then promptly goes red after the NYSE opens. Then one of the Fed sock-puppets makes a comment about oil bottoming and the S&P 500 takes off like Roman candle.  Overnight gold was also up about $4.  A report hit the tape that some of the ECB members wanted more money printing.  Money printing is a fundamental event that should send gold inexorably higher.  Instead, gold was slammed $10 as soon as the news item hit the tape.

This drool that is served up from the policy makers and political leaders in the U.S. is nothing short of a laughable insult to our collective intelligence.  But, then again, it would seem that this country has slid down that slippery slope into idiocy.   I received this email from a colleague who is an investment advisor.  He’s one of the few that understand what is happening in this country.  Clearly his clients have been mesmerized by the clown show:

I can’t tell you how many times I have been in meeting with investors and explained common sense truths, only to have their eyes completely glass over.  Usually, they immediately proceed to ask me about Amazon, Netflix, Apple and Google.  People really are that clueless.  One of my clients, that owns PHYS, told me he really didn’t want any more than 10% gold and wanted me to look at cloud computing stocks.

I had another client leave me recently because we had an allocation to gold, cash and stocks.  They went to Fidelity and purchased 4 growth funds and long term bonds.  They told me that Fidelity was a bigger company and they were bullish stocks.  I laughed myself to sleep that night and watched their account fall 8% the first week of 2016.

It is totally insane how clueless your average person with investable assets is.  I can’t even imagine how insanely ignorant the people that are that live paycheck to paycheck.  It’s truly scary because those people really and truly believe it’s the rich that keep them poor and they believe the government is their only ally.

When the day finally comes that gold is recognized as real money your average person is going to be totally shocked.  I have a feeling they will blame everyone and everything other than themselves and the good old government.

The hardest part about being a retail advisor is when you first understand that people, even smart people, can’t accept that their beliefs are misguided.  People will take it hard when it happens.

I leave you with a final quote I heard years ago:  “If what you knew to be true turned out not to be true; when would you like to know about it.”  Unfortunately, for most people, they only want to know when it is too late!

Jim Quinn, of The Burning Platform, with whom I often share email chuckles over what’s unfolding in this country, has written a concise commentary titled, “Maybe Valuations Do Matter,”  which encapsulates the essence of the madness into which our system has lapsed:

I wonder if the brainless twits and shills on CNBC will be telling their audience that the S&P 500 is now lower than it was in May 2014. That’s right. Anyone in the stock market over the last 20 months hasn’t gained a penny. The S&P 500 is now down 11% from its all-time high in May 2015. Only 40% or 50% more to go to reach fair value.

He concludes that that the stock market needs to drop at least 50% to be fairly valued.  I have not had a chance to probe him on this, but I suspect his non-public number is closer to my number:   80%.   We were on that path in 2009 until the Fed and Obama bailed out the banks in order to enable them to continue sucking wealth out of the system.

The latest contrarian editorial “vogue” is to refer to the recent .25% nudge in the Fed funds rate as “a policy mistake.”  Sorry, that’s not even remotely close to the truth.  The policy error committed in this country was preventing the markets in 2008/2009 from doing what they will eventually do anyway.   And EVERYONE will end up paying for that mistake.

Out, out, brief candle!
Life’s but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing. (Macbeth, Act 5 scene 5)

3 thoughts on “The Financial Markets Are One Big Cartoon Network

  1. Sorry Dave, it’s international financial markets and governments every where.CON

    I really don’t know when people are finally going to wake up, perhaps when they are sitting on the street corner after they have lost their car, house and family.

    Keep up the great work and never ever give up !

    Regards

    Bugs Bunny

  2. I believe in holding PMs, however my concern is this: Executive Order 6102, a United States presidential executive order signed on April 5, 1933, by President Franklin D. Roosevelt “forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States”. The effect of the order, in conjunction with the statute under which it was issued, was to criminalize the possession of monetary gold by any individual, partnership, association or corporation.

    Are there any ways to protect from government confiscation?

    Hold it in non-US vaults?
    Bury it deep?
    Defend with guns?

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