Once you realise it's all nonsense,
it begins to make sense.
Here’s a list for you to consider whilst pondering on this extra pithy aphorism.
· Meme stocks
· Crypto “coins”
· Energy policy
· Monetary policy
· Dollar hegemony
· Democracy
· Markets
Meme stocks – a single tweet alleging a $115 million position in GameStop call options and the share price rises 75% adding $4.6 billion to the company’s market cap. The company’s accounts suggest that its true value is pretty close to zero. When will the game stop one wonders…
Crypto “coins”. The frenzy in the likes of Dogecoins for example (a coin that was first issued for a joke…) has died down, but there is still significant volatility in Bitcoin and Ethereum which may have some value, but I’ll stick to real, real assets if that’s okay with you.
Energy policy has been shanghaied by the woke, left, liberal, ESG, virtue signalling lobby. Solar, wind and EVs will, in time, be seen to have been the greatest misallocation of capital coming in marginally behind the egregious debt burdens of government around the world, part of which has been misallocated to the former. There can be no greening of the planet without continued use of oil, natural gas, coal and nuclear power. Solar and wind on their own just can’t produce enough of the right stuff at the right time. Governments are slowly rowing back on policy, but not quickly enough.
Monetary policy – the world’s leading central banks have been experimenting with the same policies for some considerable time with very little effect other than increasing the debt burdens to levels where repayment is impossible. With rising interest rates the cost of borrowing requires intervention (manipulation) to keep things on a vaguely even keel. Well, that’s the hope. Hope is never a good strategy.
Dollar hegemony – it’s a myth. At the margin, more and more trade, notably in energy and commodities, is being settled outside the dollar system. It’s at the margin where the greatest effect is felt, and it is gaining impetus. Wall Street is fighting the last “war”. The rules have changed as far as the Global South, Russia and China are concerned but nobody seems to be watching other than participants in the gold market.
The 60/40 portfolio is a classic example of rear view vision. Bonds are uninvestable in a rising inflation environment which will be exacerbated when the central banks are required to pour further liquidity into the markets to prop up the aforesaid bond markets. The new long duration plays for the 40% are real assets NB gold. In the 70s as rates rose to oxygen free levels and bond prices sank, institutions commonly held 10% of their assets in gold. Today significantly less than 1%. Why??
Democracy – the worst form of government apart for all the others, so said Churchill. There’s not much sign of it from where I sit. Totalitarianism is the current modus operandi. As another famous statesman opined, “Trust us we are from the Government”; the seven most terrifying words you will ever hear.
Markets – valuations only make sense if we have reached a ”permanently high plateau”. Now where have I heard that before. Interesting fact: in its history Nvidia has had corrections of more than 50% on seven occasions…
And finally, in similar vein, another aphorism that works well in this environment is from my good friend the Slog and it’s “IABATO” – It’s All Bollocks And That’s Official.
Or you could by me a cuppa tea https://buymeacoffee.com/bearhavenht