This post was updated on .
In my previous investments, I made one serious miscalculation. I knew that the masses had become morons since the year 2000, but I seriously underestimated how stupid they would become. And this has practical investment implications. What has happened is that the masses have become so stupid that they are incapable of resisting the globalists. The very last resistance is President Trump, and that will end when Biden becomes president. At that point the globalists will be in complete control.
Let's consider precious metals as an example. I invested in precious metals on the assumptions that current government currencies will become worthless and that this will cause people to lose confidence in government currencies, and so turn to precious metals. The first assumption is clearly correct, current government currencies will become worthless. But then what happens? The government will blame covid or Russia or white nationalists or whatever. Anything except the true cause. Then the government will issue a new digital currency which the government will promote using various lies. The government will condemn gold as being racist or causing covid-21 or whatever lie occurs to them. Gold ownership may be banned. And the moronic masses will believe whatever the government says. So much for precious metals.
So what investment makes sense? First, one should assume that the globalists will always win. The masses are just too stupid to resist. So invest on the globalist side. And this means stocks. The corporate world will only consist of businesses aligned with the globalists. Any business not aligned with the globalists will be crushed. So investing in the stock market is investing in the globalists.
What of the argument that current the P/E ratio is too high? This misses a fundamental change in the world economy. We are headed into a dark age that will be poor and miserable. So investment returns in general will be poor for probably the next 1000 years. The lower P/E ratio simply reflects this fact. Stocks will not drop because nothing else will give better returns.
How best to invest in stocks? I bought the Vanguard Total World Stock ETF (VT). Individual stock prices are affected primarily by 2 factors. First is what is trendy among the moronic masses. And second is what the globalists currently support. Since I know nothing about either of these, I don't pick stocks. Furthermore nations have become irrelevant, so I don't want to pick nations either. A total world ETF solves all this. It is simply a bet on the globalists as a whole.
What about cryptocurrencies? The argument for bitcoin is similar to the argument for gold, but much weaker. At least gold is unique. There are a lot of cryptocurrencies similar to bitcoin. I think the globalists realize that bitcoin is basically just a ponzi scheme, and they are happy to let this play out until bitcoin investors lose their money.
But I think there is a valid argument for the right cryptocurrency. When governments release digital currency, cash will disappear which means that anonymous financial transactions will become impossible. The right cryptocurrency could replace cash as the means of anonymous transactions. This cryptocurrency must allow for fast transactions and an untrackable ledger. I am only starting to look into cryptocurrencies now, and if I find such a cryptocurrency, I will invest in it. If this investment thesis is correct then there is a lot of money to be made here. My view is contrary to the two mainstream views. The mainstream view of most crypto investors is that crypto will replace government currencies. This is complete nonsense, typical of the moronic masses. The mainstream view of many investors is that crypto can't succeed because governments will outlaw them. My view is that the globalist governments will make life so intolerable for small business that much of it will be driven underground anyway, so an illegal crypto that can replace cash will become very valuable. I don't think governments would go after such a crypto too much because it doesn't threaten them. It would be something like alcohol during prohibition.
While the stock market investment is a bet on the globalists, my crypto idea would be a bet on an underground economy that I think is inevitable in a globalist world. A globalist world means that the world would look like one giant third world country. All resources and major industries would be controlled by the elite, while the rest of humanity would struggle to survive as serfs (employees) or in the underground economy. And I will invest based on this assumption.
This post was updated on .
I want to clarify this in the context of this video by Ray Dalio:
I agree with most of what Ray Dalio says here, but he is missing one important point when he says that the real economy has little impact on the financial economy. He is right in inverting P/E to E/P which is equivalent to a bond interest rate, namely the return on money. And he is right in saying that the increase in money drives up stock prices. The price of anything is determined by supply and demand. The demand side of stocks is determined by available investment capital which keeps increasing as money is printed. But what about the supply? This is ultimates determined by the real economy, and here is the connection he misses. As the real economy shrinks, the supply of stocks worth buying shrinks which also drives up stock prices.
All this is contrary to normal investment thinking. Normally when the economy slows down, stock prices fall. But this is basically a trade based on the assumption that the economy will recover. In a recession, the P/E ratio goes up because earnings drop, so investors sell and wait for the recession to end and then buy again. The assumption here is that the high recession P/E ratio will revert to the mean. But what if there is no recovery, no reversion to the mean, and earning are permanently impaired? Then selling make no sense because earnings won't recover. The P/E ratio will stay high because E/P will stay low.
My core point is that investment returns ultimately reflect human productivity. As humanity turns to shit, productivity will go negative, so real investment returns will go negative. And this means a secular bull market in stocks for a long time because real E/P will continue to drop meaning P/E will continue to rise.
One can understand this somewhat in the context of bonds. We had a long secular bull market in bonds over the last few decades as interest rates continually dropped. In other words, as real bond returns declined, bond prices rose. And now we have bonds with negative yields, something unimaginable in the past. The same will happen with stocks over the next few decades. In the case of bonds, the declining yields were driven by government policy. In the case of stocks, the declining yields will be driven by declining productivity as humanity turns to shit caused by loss of religion. But the end result is the same for the investor.
Of course P/E can rise without P rising, only by E falling. So why will P rise? Because the supply of stocks paying even the lower E will also fall, while the demand side of stocks will not fall. This is fundamentally because the most of the economic decline will hurt the poor, not the rich. The rich will continue to have money to invest, but increasingly little worth investing in. So it is also the increasing imbalance of investment money (of the rich) compared to the wealth of general economy that will drive up P.
In reply to this post by fschmidt
If one needs a clear example to demonstrate the gap between the financial economy and the real economy, and what drives the stock prices/crypto in our days; all he should do is look at "Signal Advance" stock. ticker SIGL. in the last days the stock soared to ~$20(even got to $70) from about $0.6.
Why is that? because Elon Musk tweeted to use Signal app. But the thing is..."Signal Advance" stock (SIGL) is not related to the referred Signal app. One could think to himself, realizing this "mistake", to short-sell the stock for an easy money. But the fact of the matter is the stock is still above $10- several days after the mistake was well published my the media. What forces now drive the stock price? certainly too many speculative money - and IMO the stock lost any anchor to anything real. till when? One can't tell.
(There is an argument however, that the new price is justified from the fact there is no inside selling so far, and that presumably means that the managers think the price is justified and they believe in the company. At any case, it does not change the fact of the events to demonstrate by what forces the financial market is ruled)
Yes, short term prices of individual stocks are driven by mass insanity. But long term prices are driven by fundamentals. I have VT which is the world stock market, so this isn't much affected by the insanity-driven movements of individual stocks. And I am investing for the long term.
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