Why You Should Expect the Unexpected

Posted on October 19, 2018 by MN Gordon

The confluence of factors that influence market prices are vast and variable.  One moment patterns and relationships are so pronounced you can set a cornerstone by them.  The next moment they vanish like smoke in the wind.

One thing that makes trading stocks so confounding is that the buy and sell points appear so obvious in hindsight.  When examining a stock’s price chart over a multi-year duration the wave movements appear to be almost predictable.  Trend lines matching interim highs and lows, and bounded price movements within this range, display what, in retrospect, are the precise moments to buy and sell.

In practice, the stock market dishes out hefty doses of humility with impartial judgement.  What’s more, being right does not always translate to success.  Sometimes it’s more costly to be right at the wrong time than wrong at the right time.

One fallacy that has gained popularity over the last decade is the zealot belief that the Fed disappears risk from markets. Continue reading →

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Choking On the Salt of Debt

Posted on October 12, 2018 by MN Gordon

Roughly three years ago, after traversing between Los Angeles and San Francisco via the expansive San Joaquin Valley, we penned the article, Salting the Economy to Death.  At the time, the monetary order was approach peak ZIRP.  We found the absurdity of zero bound interest rates to have similar parallels to the absurdity of hundreds upon hundreds of miles of blooming crop fields within the setting of an arid desert wasteland.

Given today’s changing financial conditions, namely the prospect of a sustained period of rising interest rates, we’ve taken the opportunity to refine our analysis.  What follows is an attempt to bring clarity to disorder.

The natural starting point for the topic at hand is from a place of delusion.  That is, the popular delusion that central planners can stimulate robust economic growth by setting interest rates artificially low.  The general theory is that cheap credit compels individuals and businesses to borrow loads of cash – and consume it.

Over a sample size of five to ten year, say the growth half of the business cycle, central bankers can falsely take credit for engineering a productive economy. Continue reading →

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Are the Voices in Fed President Kashkari’s Head Speaking Lies?

Posted on October 5, 2018 by MN Gordon

The government continues its approach towards full meltdown.  The stock market does too.  But when it comes down to it, these are mere distractions from the bigger breakdown that’s bearing down upon us.

The average working stiff has little time or inclination to contemplate gibberish from the Fed.  They’re too worn out from running in place all day to make much of it.  This fact accounts for the limited inkling the populace has for why there’s a great prosperity imbalance between wage earners and the creams.

If there was a better understanding of the scope and scale of the orchestrated larceny being conducted, practitioners of mass money debasement would be tarred, feathered and paraded down Main Street.  This seems a small penalty for turning markets into casinos and debasing the rewards of an honest day’s work.  Instead, they preserve their misplaced stature through the backwards process of taking the absurdly simple and twisting it up into the inordinately complex. Continue reading →

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Oil Mania Redux

Posted on September 28, 2018 by MN Gordon

By now, late September of 2018, it has become increasingly evident that something big is about to happen.  What exactly that may be is anyone’s guess.  But, whatever it is, we suggest you prepare for it now…before it’s too late.

Several weeks ago, if you hadn’t heard, an undisclosed rich guy enthusiastically bid up and then bought Norman Rockwell’s portrait of John Wayne for a cool $1.49 million at the 12th Annual Jackson Hole Art Auction.  According to auction coordinator Madison Webb, “There was a really positive energy in the room.”

Indeed, it takes a lot of really positive energy – and a healthy bank account – to shell out that sum of money for a painting of “The Duke.”  Still, positive energy, like good weather, can quickly turn negative.  Soon enough, we suppose, the purchaser’s excitement will retreated to a serious case of buyer’s remorse.

Of course, we could be wrong.  The buyer could have a special liking for old John Wayne movies.  Perhaps he’s a collector of Norman Rockwell paintings.  Or maybe he won the lottery and is compelled to burn through his winnings in odd and outlandish ways. Continue reading →

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