How to Buy Low When Everyone Else is Buying High

Posted on February 2, 2018 by MN Gordon

The common thread running through the collective minds of present U.S. stock market investors goes something like this: A great crash is coming.  But first there will be an epic run-up climaxing with a massive parabolic blow off top.

Hence, to capitalize on the final blow off, investors must let their stock market holdings ride until the precise moment the market peaks – and not a moment more.  That’s when investors should sell their stocks and go to cash.

Certainly, this sounds like a great strategy.  But, practically speaking, how are you supposed to pull it off?  Specifically, how are you supposed to know the exact moment the stock market peaks?

Is the definitive sign of the top when your shoeshine boy offers you a hot stock tip?  Is it when your neighbor tells you about his surefire strategy to juice his returns by shorting the Volatility Index (VIX)?  Is it when your early morning gym acquaintance proudly boasts how he just purchased a luxury pair of Sea Doos using something called a “portfolio line of credit?” Continue reading →

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The Donald Saves the Dollar

Posted on January 26, 2018 by MN Gordon

The world is full of bad ideas.  Just look around.  One can hardly blink without a multitude of bad ideas coming into view.  What’s more, the worse an idea is, the more popular it becomes.

Take Mickey’s Fine Malt Liquor.  It’s nearly as destructive as prescription pain killers.  Yet people chug it down with reckless abandon.

Or consider central banking.  Has any other single idea extracted more wealth from the lowly wage earner?  The Federal Reserve’s backdoor taxation program has snookered honest hard-working Americans for over 100 years.

Why is it that bad ideas are often received more favorably than good ideas?  Perhaps, it’s because bad ideas generally promise something for nothing.  That one can live off the forced philanthropy of their neighbors.  That one can get more out of their retirement fund than they put in to it.

Promises of fruits without labors are fantastical.  They’re also the surefire way for politicians to get elected.  How can it possibly be a good idea to spend more and tax less, and fill the gap with more and more debt? Continue reading →

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Tax Reform and Trump’s Chinese Trade Deficit Conundrum

Posted on January 19, 2018 by MN Gordon

Most things come easier said than done.  Take President Trump’s posture on trade with China…

Trump doesn’t want a bigger trade deficit with China.  He wants a smaller trade deficit with China.  In fact, reducing the trade deficit with China is one of Trump’s promises to Make America Great Again.  In May 2016, he even told a campaign crowd:

“We can’t continue to allow China to rape our country and that’s what they’re doing.  It’s the greatest theft in the history of the world.”

Yet as Trump approaches the conclusion of his first year in office, he’s achieved the exact opposite of what he said.  The trade deficit with China hasn’t gotten smaller.  It has gotten bigger.  Actually, it has gotten a lot bigger.

For example, the U.S. trade deficit with China from January through November 2017 was approximately $342 billion.  Over this same period in 2016, the trade deficit with China was $317.4 billion.  This amounts to a 7.7 percent widening of the U.S. trade deficit with China that has occurred on Trump’s watch. Continue reading →

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As the Controlled Inflation Scheme Rolls On

Posted on January 12, 2018 by MN Gordon

American consumers are not only feeling good.  They’re feeling great.  They’re borrowing money – and spending it – like tomorrow will never come.

On Monday the Federal Reserve released its latest report of consumer credit outstanding.  According to the Fed’s bean counters, U.S. consumers racked up $28 billion in November in new credit card debt and in new student, auto, and other non-mortgage loans.  This amounted to an 8.8 percent increase in consumer borrowing.  It also ran total outstanding consumer debt up to $3.83 trillion.

Perhaps this consumer spending binge will finally propel price inflation, as measured by the personal consumption expenditure (PCE) deflator, up to the Fed’s illusive 2 percent target.  Academic economists and central planners consider 2 percent price inflation to be the sweet spot for attaining economic heaven on earth.  We have some reservations.

Controlled inflation, or what’s sometimes called financial repression, is what the Fed is after.  Because controlled inflation is the grease that keeps the gears of the debt based monetary system turning. Continue reading →

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