| By Bill Bonner Thursday, June 25, 2020 – Week 15 of the Quarantine That is no market for old men. The young with their Robinhood accounts. Money growing on trees. Those dying generations – left behind. – With apologies to poet William Butler Yeats SALTA CITY, ARGENTINA – Poor Warren Buffett. At 89 years of age, he can’t keep up. Out of sync with the markets. A relic of a by-gone era. The Sage of the Plains made only an 11% gain in 2019 at his holding company, Berkshire Hathaway, while the S&P 500 rose more than 30%. And now, he’s doing even worse. From the Financial Review: The famed stockpicker had his worst performance versus the S&P 500 in a decade in 2019, and 2020 is shaping up to be nearly as bad. Instead of taking advantage of the coronavirus crisis that hit markets in March, Buffett was a casualty. The question comes more loudly now than at any time since Berkshire missed out on the dotcom boom: has Buffett lost his touch? Our question for today: Has the Oracle of Omaha lost his touch? Or have other investors lost their minds? | Recommended Link | | Why Technical Analysis IS NOT Working Now If you trade… especially if you use charts and technical analysis to trade... Then you need to see Teeka Tiwari's Wall Street Project DEEPWave exposé tonight at 8 p.m. ET. The stock charts you use are HIDING 40% of the trades in the market. It doesn't matter if you use TD Ameritrade, Fidelity, TradeStation, TradingView, or any other platform... They don't show Wall Street's DARK MONEY… So your stock charts are missing 40% of the volume. | | | -- | Bubble Market Everybody knows this is no market for a “value investor” like Buffett. He’s wasting his time sharpening his pencils and taking apart balance sheets… carefully balancing assets against liabilities. Why Did The Wall Street Journal Hide This From You?! Nobody cares about assets. Or liabilities. Today’s investors think balance sheets are something you use when you do yoga. This is a new world… with a different kind of market. This is a Bubble Market… our fourth in the last 21 years. The first ended in 2000… the next in 2008… the next in 2020… And now, scarcely three months later… another one! Thank you, Fed. | Recommended Link | | The Best Way to Play the Tech Boom One small corner of the tech boom recently returned extraordinary gains… And most investors missed out. RNC made 900% in 34 days… FVAN made 3,400%… And one company, GGI, made 9,400% in just over three years. A $15,000 investment in GGI would've turned into $1.4 million. While investors were picking over the scraps of the 5G boom… Or trying to decide between Amazon and Apple… They missed a key part of the tech boom. It's not microchips or semiconductors or online advertising… | | | -- | Standard Procedure To fully understand what is going on… and put all dear readers on the same page… we must go back to the world that shaped Warren Buffett. That is, we must go back to when there was real money – before 1971. There were only two bubbles in the entire 20th century. One of them is the one that blew up just as the century ended (mentioned above). The only other one collapsed just before Buffett was born in 1930. This top financial expert just returned from a private meeting with members of the Senate Financial Services Committee… All bubbles blow up. The best thing to do is simply let the markets pick up the pieces and get back to work as soon as possible. But in the year Buffett was born, the feds intervened to stymie the natural recovery process, turning the following decade into the Great Depression. That is now standard procedure. In 1971, the U.S. changed the currency from a limited, gold-backed dollar… to a virtually unlimited, unbacked “Federal Reserve Note.” The key difference: Without the need for gold backing, the feds could print as many FRNs as they wanted… and intervene on a much larger scale. | Recommended Link | Massive disruption in Washington, lawmakers freaking out A new, competing financial system is taking root… This could be the biggest disruption to the U.S. dollar average Americans have seen in a century… And the technology behind it will change the world in ways you can't imagine. | | | | Greenspan Put But it wasn’t until Alan Greenspan took charge at the Federal Reserve in 1987 that America’s central bank began to fully partake of the lunacy available to it. After the brief stock market crash in 1987 came the “Greenspan Put” doctrine, which told investors that if stocks ever sank… the Fed would come in with more of these new fake dollars to push them back up. It is hard to imagine a more idiotic thing for a central bank to do. The Fed put out word that it had investors’ backs… and that, no matter how goofy their stock selections or to what wacky highs they pushed stock prices, the Fed would make sure they didn’t lose money. “Don’t fight the Fed” was a hoary truth on Wall Street for a long time. But the Greenspan Put gave rise to an addendum: “And front-run the stupid bastards.” That is, buy stocks and bonds before the Fed pushes up the prices. Integrity Matters And now, bubbles and crashes are a way of life. Prices bubble up when the Fed gives Wall Street more money. They crash when it stops the handouts. But bubbles are no place for old men. They’ve seen too many promises that were never kept… too many schemes that went belly-up… and too many pies-in-the-sky that turned bitter and fell to the ground. They have too much experience; they know bubbles never end well. Buffett once described how he sizes up business leaders: You’re looking for three things, generally, in a person: intelligence, energy, and integrity. And if they don’t have the last one, don’t even bother with the first two. Now, it’s the whole market that lacks integrity. It has been corrupted by the Fed and its fake money. This is not a market suited to the talents of the dying generation. Emboldened by Naivety But who is it suited to? On the evidence, it is perfect for day traders, Robinhood account holders, and callow youths too confident to worry… too green to see the danger signs… and too naïve to imagine that Mr. Market might be laying a trap. Just look at car rental firm, Hertz. Like so many other companies lured by the Fed’s low interest rates, it borrowed heavily… and now finds itself with about $4 billion in outstanding bonds, recently trading below 50 cents on the dollar. Plus, used car prices have gone down sharply, meaning their assets are worth even less than before. And air travel – the start of most Hertz customers’ journeys – is only a fraction of what it once was… and recovering slowly. The company filed for bankruptcy last month. Stockholders rank after debtholders in a bankruptcy. So a reasonable expectation for a Hertz shareholder is that he will get nothing… zero… for his stock. And yet… Hertz stock went up 680% after the bankruptcy. This so emboldened the Hertz team that it proposed selling more stock – in an Initial Bankruptcy Offer (IBO) – worth $500 million… or even up to $1 billion. Significant Risk Of course, it had to admit: There is a significant risk that the holders of our common stock, including purchasers in this offering, will receive no recovery under the Chapter 11 Cases and that our common stock will be worthless. Even so, the Not-Warren-Buffetts out in Bubbleland probably would have scooped up the new shares, had not the U.S. Securities and Exchange Commission (SEC) put the kibosh on the whole scheme. When you’re young… in love… in a war… or in a bubble… …there’s no time to think straight… or even think at all. Regards, Bill
Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com.
FEATURED READS U.S. Economy to Shrink by 8% This Year
The International Monetary Fund (IMF) has issued a stark warning. The effects of the COVID-19 pandemic are worse than they initially thought. In April, they forecast that the U.S. economy would take a 5.9% hit this year. But now, amid “unprecedented uncertainty” and deteriorating public finances, it forecasts that the U.S. economy will shrink by 8% this year. Wall Street Is Lying to Main Street
If you think you can beat the market by following financial news stories, think again. You’re up against a web of “fake” news. What Wall Street analysts tell you in the news is often the exact opposite of what they really think. They’re trying to put you off the scent of the biggest stories… or, even worse, get you to buy the stock they’re dumping. Having uncovered Wall Street’s dark secret, Teeka Tiwari has a way to “level the playing field.” Find out more here. MAILBAG First up, some dear readers write to say they are enjoying Bill’s updates from quarantine in Argentina… Today’s stories from the ranch were so delightful. It’s the subject I anticipate more than any other from your daily missives. A good dose of real life gives an easy perspective to the three-ring circus that continues here at home. – Rick B. I’m enjoying your letters about life at your ranch in Argentina. It reminds me of the great writer of the “Dow Theory Letters,” Richard Russell. His subject matter might have been different, but as you, he was a gifted writer, and I was always interested in what he had to say. I look forward to reading whatever is on your mind. – Chuck S. Meanwhile, more thoughts from dear readers on the repercussions of the Black Lives Matter movement and reparations… If the reparations have to be given and the stock market has to be supported, why don’t the powers that be “kill two birds with one stone” and give the reparations in stocks, with some financial education to those that want it? At least only half the money will have to be printed, and that is already a step in the right direction. – Elizabeth M. Where we are near life’s end comes as a consequence of just two things – what we were taught by our parents, and the choices we make as adults. White people openly discriminate against all other people (including other white people) by virtue of their age, education, and financial status every day. Since being poor or uneducated are not protected classes, it’s OK to do that. Reparations won’t help either of those social problems. People end up poor and uneducated by virtue of the programming they originally received from their parents and the choices they made as adults. The color of your skin has nothing to do with either outcome. If you want everyone to be “equal under the law,” then teach everyone the following subjects throughout their formal education from beginning to end, no matter where the end is. Since all decisions are fiscal in nature, teach them how money works. In addition to that, teach them about the Constitution of the United States and the amendments to the Constitution, as well as the law in the state they live in. They should also be taught how one person should treat another, regardless of the color of their skin, and the consequences, both legal and social, for not doing so. Teach them about the history of the United States, how to read and write, and mathematics. In the time left of their educational day, they could be taught whatever other liberal crap you want. Were this to occur, which it presently doesn’t, we would at least have an opportunity to behave better than we presently are, especially if the programming from our parents is missing lessons about kind interaction with other people in a color-blind way. – John D. Gordon R. dismisses the legitimate complaints of working white people under the age of 65 who have faced an entire lifetime of government-enforced racial preferences in favor of non-whites for entrance into colleges, jobs, government contracts, and now, private contracts. Government bodies are forcing the setting aside of huge portions of contracts for “diversity-owned” suppliers. When will this end? When will decisions be based on the “content of people’s character” and not the color of their skin? – Edward A. And finally, in response to Bill’s recent essay about the feds’ Four Monumental Imbecilities, a warning from Don S... Four – and counting – imbecilities. The Deep State is completely entrenched. Every giant organization is addicted to expansion. Today’s Department of Agriculture creates new giveaways and even finances mortgages and apartments. The so-called Justice Department has been lobbying idiots in Congress for over 50 years for no-prosecutor-left-behind laws, which allow them to convict anyone who breathes. The CIA is allowed to run amok in secret, with token oversight. Now government geniuses have taken control of the economy. 1984 is here. – Don S. Will teaching children to be “color blind” help to eradicate racism? Does the government enforce “racial preferences” in education, jobs, and contracts, as Edward argues? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… The War Against Capitalism Why are Treasury bonds suddenly going down… when they should be going up? Why is cash suddenly becoming so scarce... when the Fed is supplying hundreds of billions of dollars every week? Stocks are down 30%. Is it the bottom… or is there more damage to come? Our team of experts has been ready for this downturn for decades, and Bill Bonner is answering these questions in his urgent briefing that you can read right here. There may even be a potential to profit, if you're prepared… Don't wait, as this story is unfolding right before our eyes. Click here to read Bill's urgent briefing now. 
Get Instant Access Click to read these free reports and automatically sign up for daily research. | 
No comments:
Post a Comment