I’m not above admitting I was wrong. If I had put money in the stock market when it was at 18,000 on the DJIA, I would be a richer man as I watch it go to 27,000 now. And that was within about 3 months. Not a bad ROI there at all. Kudos to anyone that did that. But it just feels wrong. To quote the wisdom of one Johnny Rotten of the band The Sex Pistols, “Ever get the feeling you’ve been cheated?"
Today I got up, enjoyed a cup of freshly brewed coffee, sat down to catch the Euro News for what had already gone on, and prepared to see how the US markets went over night. It’s a pretty boring routine I have. Since the weather here in Phoenix is entering the Summer Hell season, there’s a small window of time for an hour or so where it is bearable to sit outside, so I will do that with my tablet.
I guess it is a tradition that goes back a long time. People used to do this with the daily newspaper. At 3AM, people used to ride around on bicycles and throw the daily newspaper on the lawn or driveway of houses. Hell, when I was 12 years old, I started a small business doing exactly that and a few times a week I would be up at 3AM throwing papers in neighborhoods. It was kinda fun to do that before school, watch the sun come up, and make money doing it. But today that’s all gone the way of a phone or a tablet and various news websites and video channels.
When I went to bed last night, the news was that there were still riots on the street, and 1.9 million new unemployment claims were reported by the US Department of Labor. The total number of US person’s who are aged between 18 and 65 are about 204 million, and the total count of unemployment claims (these are claims for unemployment benefits by US persons), was at 42 million. Now I realize that not all of the 204 million are working, but if we do some simple math the unemployment claims represent 20.5% of workers, and that’s not taking into consideration those that gave up or were denied unemployment, so I’m thinking 25% is about right.
The slimmer of good news here is that the rate of unemployment claims has fallen as states re-open business again, and they re-hire. But I don’t know about you, but my experiences on the ground go like this. I went to the Post Office the other day to mail a package. There were 50% of the staff working. Services that were normally available 9-5, were restricted to 9-12. I went to my bank to deposit some checks, and only 1 bank teller was there, and 2 bank officers in the branch. Normally there are 4-5 bank officers and 4 bank tellers along with other middle management staff, etc. The local sandwich shop has 1 person handling all the orders, making the sandwiches, etc. Normally there are 3.
The count of “For Lease” signs on retail businesses is huge. Every second storefront is shuttered or closed for good. My tenants are paying their rents, but I know that 50% of them are doing it with government money from unemployment or stimulus checks, etc.
Now no one is starving in the streets just yet, but the eviction moratorium that we have in Arizona expires at the end of June, so the chances of higher levels of homelessness is dire. Some cities here are offering tenants some rent subsidies, but not all. And there are limits. Meanwhile we are paying our bills, and all is fine there. But you have to feel that things just are not right.
So back to this morning. I check the markets, and the DJIA is up 750 points! WTF? I look at the $AUD exchange rate and it has gone from $AUD 1 = $USD 0.58 to $AUD 1 = $USD 0.67. The Mexican Peso went from 25:1 against the USD to 21:1. And Gold spot price dropped about 8%.
Then I find out that the Eurozone have gone stimulus crazy which seems to have moved interest away from the USD to the Euro. So if you are a US exporter, you will love that because more people will order your products as it costs them less now. But how many US exporters do you know? The US economy is a consumption economy, and if the $USD is 5 or 10% weaker, that means your cost of everything just went up 5 or 10% overnight.
The current average cost of a gallon of gas at the pump in the USA is $1.99 (Regular unleaded), whereas a month ago it was $1.78. That’s an 11% increase in 1 month.
Additionally the US Department of Labor published the unemployment rate this morning at 13.3% - down from 14.7%. They are stating that we gained 2.5 million jobs in May.
Look, I realize these numbers are always in a state of flux. Things go up and things go down. These are numbers we humans have little control over. You place a bet on whether the numbers work in your favor. Unfortunately you are placing a bet with your life savings and all the product of your labor. So it is an important bet. It is not an ideologically driven bet - it is your ability to provide for you and your family, or your future sustainability when you are old and grey.
I don’t want to do the “turd in the punchbowl” thing. I like good news, but something is not right. I mean you do the math. And this is where you MUST be a critical thinker before you invest the proceeds of your labor or your gains into something. You have to go into something thinking, “What is my downside risk of things go to crap here?”. If you don’t do that, you will get REKT. Faith based investing is for losers. You must be critical.
It was easy when facts would give you something you could base decisions on. For me, as a contrarian, facts are everything. I must know if something is up or down, and that has to be quantified with science & math. Not some “feeling” because that is just a gamble and I don’t gamble.
But we have never been in a time when facts are manipulated to a hypnotized audience at so many levels that I fear I can’t make ANY decision based on what I am being fed on the news. How can it be that basic math that tells me the unemployment rate is between 20-25%, is then refuted with the US Federal Government stating it at 13.3%? That’s half of what basic math would tell you is the truth.
And then there is the value of the dollar you have in your pocket. If I check on the current rate of inflation here: https://www.usinflationcalculator.com/inflation/current-inflation-rates
I am told that it is 0.3% The previous month it was 2.3% WTF?
Meanwhile gas prices are up 11%, the value of a $USD is 8% lower, and if you go to any supermarket and try and buy food, it will be (particularly in the case of meat & poultry) about 10-15% higher due to COVID19 and shortages in the supply chain.
Then we have this move away from China as a trading partner. In this morning’s Australian news, they showed a poll called “YouGov Poll” in which Australians were asked if they were willing to pay more to buy locally made products vs. the cheaper Chinese imports, due to the negativity against China right now. 88% stated they would buy more locally made products, and 68% said specifically they were looking for local alternatives rather than the cheaper Chinese imports. Meanwhile the USA has shutdown US flights in and out of China, closed Chinese airlines from landing in the USA, and basically blocked off China in much the same way they would do it with North Korea or Iran.
So we would expect to be paying 40% more for products at the checkout. Imagine that your cheap laptop computer no longer has Chinese componentry. Are we returning to the $2,500 laptop computer days? Are we returning to the $2,500 HDTV days?
All of these things affect us. Our real costs are going up exponentially. Yet the US government are stating a 0.3% inflation rate?
Lies, lies and more lies. Meanwhile I’m sitting here feeling like I missed out on some opportunities because I had the audacity to listen to “Facts” as I calculated them, against the “Lies” that the government are telling me.
But it is our money and future at stake here. We as a citizenry have the right to be told the truth. We can handle it. We are not some weakened, panic stricken population who will rise up in protest? Oh.... Wait. Yeh, we are.
I guess this is our overlords stating the old Jack Nicholson line in the movie, “A few good men”. YOU CAN’T HANDLE THE TRUTH.
Truth = Conspiracy Theory
To make matters worse, the fact that anyone questions the “official line” runs the risk of being branded as a “conspiracy theorist”. Clearly we are all sick of hearing from nutjobs out there telling conspiracies in order to gain attention. We have been living with clickbait on the Internet and citizen based journalism where clearly the citizens don’t have the resources to get all the information, but are willing to make grandiose statements based on some alignment of observations. I’ve been guilty of that myself. I mean even this article is guilty of that.
But at what point does truth shine a light on spin, and clearly show it to be lies? At what point do we, the people, lose our faith in government to let us put on our big boy pants and be told the truth? And at what point does this spin machine play into the hands of the circus ringleaders that would benefit from distortion and lies to support their cause?
Case in point, our President is going a victory lap speech this morning on these numbers. He will talk to those too busy working, scraping together the money to keep their family in a safe home, fed, gas in the car, etc. that they don’t have the time to look to what is going on. They get their information in 30 minutes each night on the evening news - not spending hours a day consuming it, digesting it, making sense of it, seeking out other sources to validate or invalidate a theory, etc. That’s what I do. It takes a lot of time because there is a lot of lies out there. But the average Joe doesn’t get that chance. So they take what they are fed and treat it as the basis of their belief system. If they like the news, and clearly we humans and our psychology like positive information more, then we prefer to hear that. We would prefer to not feel that we were being swindled. We would prefer to think that we are smarter than that - that we won’t fall for that trick.
Yet we are falling for it everyday. And the more we fall for it, the more it degrades everything we do. Everything we invest in, everything we support with our money from our hard earned labor.
At some point, the crazy nutjob conspiracy people start to make sense. Not on all things, but you see a pattern that they are at least willing to question the party line. That, alone, garners them an audience. And we all should question the party line.
You do the math
This is the only thing that I suggest to you. Take the basic raw material of data that you feel is indisputable. What you see with your own eyes. Go forth into the world with eyes wide open and look. Determine what you think is truth from your own observations. Remove any filters - any ideological inclination to inject your belief into what you see, and see it for what it is. Learn to be sensitive to things.
Then take the totality of those observations together and sit down with a cup of coffee and ponder. What do you believe is really going on? What do you think the future might look like? What, in the past, was like this and what happened as a result of it?
Take away your ideology. Be willing to be wrong, and be willing to learn. Everything changes, and when you feel you have a position on something, then act. Invest. Or Sell. You do what you think is going to give you the greatest long term reward.
But remember, life is not a 24 hour news cycle. Life is not a day, a week or a month or a year. Life is a lifetime. You might think you need money today to survive, but you will also need money tomorrow, next year, next decade, etc. You must be able to break your positioning into short, medium and long term strategies and you are looking for complimentary strategies on all fronts. When the world is full of lies, when people are hypnotized to react to spin & lies to distort reality, then it is really hard to have faith in investing for a long term future. And that is hard.
One must have faith in something, or run the risk of missing out. But when the world around us is so distorted with lies, you can’t have any factual basis of creating a theory on anything. And that’s when all investments are a gamble in a casino.
It is why I hate the stock market. It is the ultimate casino. Today, many people will be high fiving themselves over making money as the DJIA goes up. That includes our President. But remember that the markets are a reflection on human belief in the future. If that belief has been manipulated by lies, spin and hypnosis, the highs in the market are just like sugar highs. They go up for a short period of time and everyone feels good, and then the crash occurs.
You have to make your own decisions here, but those that are making money right now are the traders. They are basically the “house” in the casino metaphor. They make their money on the arbitrage between buying & selling, and that’s a risky game. Most of us don’t have the inside information or data to predict how to play like a day trader and we’ll get REKT trying to do that. Our only hope is long term prediction that the markets will go up. That the future will be better than the past.
But the ultimately naivety comes down to using a measurement of a $USD as the basis of all of it. If the dollar, which is conjured up by magicians and illusionists with a computer, is determined to be of worthless value, then we are all screwed. You can make money measuring numbers, but if the basic construct of your numeric system is flawed, it is really hard to know what exactly anything is worth. Those that are “gold bugs” will always appear to be the naysayers, but ultimately the do hold something of value. The same could be said of Bitcoin or crypto-currency. If your faith in what your government tells you, what your TV media tells you, what your banks tell you, is low, then your faith in $USD is probably low as well. And sometimes that even comes down to your faith in the land where you are domiciled or where you were born.
It is ok to be skeptical, and it is ok to be a naysayer. And it is ok to be a contrarian. The most important thing is that you accept that you have the right to seek out the truth for yourself and base your decisions on that. Let’s just hope we can find the actual raw material of facts out there and be able to use them productively to create a better future for all of us.
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