Our economic experience could be driven by a con game – a hustle.
Successful investors must answer three questions: Will we have serious inflation? Will interest rates increase? Will stock prices fall?
Expected returns are derived in two distinct ways: from Federal Reserve actions, since it is manipulating bond prices, and from momentum, which is driving stock prices. How long can both last?
The fate of the global economy and stock markets rests on the successes of just a few megafirms that reside in the U.S. But have the prices of the world’s largest companies been bid up beyond what is reasonable and fair?
Money supply has quintupled in the past year, and because of this money printing, inflation is here for the long run. Inflation will force increases in interest rates.
Last year, after the March market correction, I warned baby boomers against buying the dip. Since the market rebounded 100%, that was bad advice. But I double down on that advice today for the same reason.
Pooled employer plans (PEPs) are the latest 401(k) rage, but they can be an asset or a liability. The difference is in their qualified default investment alternative (QDIA).
The U.S. stock market is thriving, while China’s deteriorates. China could intervene to limit stock market losses, but it is not. Is China purposely losing a battle to win a war?
The stock market and economy are hanging by a thread over an economic abyss. That thread is zero interest rate policy (ZIRP).
“It’s different this time” is usually not true, but this time it is. Will we get amplifying extremes, or returns toward average? The feasible and likely scenario spells disaster.
We’ve had serious inflation, but don’t know it because the barometer we use to measure it ignores security price inflation.
Two Congressional chairs have authorized a review of target-date funds (TDFs). The last such review was in 2009, and all that changed was that risk increased. It would be a shame if this initiative failed to produce results.
Who isn’t baffled by the continuing run-up in stock prices? Behavioral scientists. They explain that we have a host of biases that make us irrational. Here are the reasons that we have a stock market bubble, presented in two tables.
The government’s COVID relief programs have cost $5.2 trillion, more than World War II, which cost $4.7 trillion. Those mountains of money will cause inflation, raise interest rates and reduce in stock prices.
Interest rates have never been lower, but that’s beginning to change and it’s causing a fuss. You’d think investors would be relieved by a return to a more normal situation. But be careful.
It would appear that nothing can pop the stock market bubble, but there is one straightforward “pin” that will do the job – rising interest rates.
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
There are two incorrect assumptions in most stock return forecasts.
Rescues by the Federal Reserve and aggressive monetary policies have helped stock and bond investors, but the degree of money printing will be paid for by future generations.
Venezuela’s hyperinflation, Japan’s experiment in MMT and China’s rise to global leadership carry ominous lessons for the U.S. and investors in its markets.
Below is the 95-year history of stock and bond returns shown in four illustrations.
Forecasts of 2021 security returns are gaslighting investors into believing the future is bright. But market corrections are highly likely next year.
When Jeffrey Gundlach says that the federal deficit is on a suicide mission he is understating the problem.
