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We first began to notice this “possible De-Bubbling” recently in our Aggregate Index charts. There is a major pause (reverting to “normal?”) going on in several domains of finance.
Cryptos: Dreams and Demons
We have a couple of reasons to be offering (again!) our advice to be extremely leery of digital anything’s. A CNBC story, for example, noted that BTC had dropped under $50,000 recently. But, the key part for us was their notation that “Treasury Secretary Janet Yellen called bitcoin “extremely inefficient” and warned about its use in illicit activity.”
An hour before “click-time” today, the digital-darling was down to $47,000 and change.
You’re no doubt sick of me telling you this, but:
There is no reason for the US FedGov to offer ANY convertibility to a blockhead currency when one is “officialized.”
Moreover, since there are more than 2,000 different currencies (and in our view, there’s no compelling reason for ANY of them to have state-sponsored conversion). we view cryptos as not only one cause of power problems but also a con that’s long-in-the-tooth.
As we have held since day one, people who play with cryptos:
- Are taking advantage of people too dumb to know what (Tulip) manias are about.
- They hate climate change and environmental preservation – since cryptos use huge amounts of energy to make nothing *(except made-up numbers) as deliverables.
- They sell to Greater Fools – and it’s like the old Iraqi Dinar scam for a decade or two back. True believers want to believe.
Meantime, we’re appalled to think – owning a tree farm, selling back power to the grid, and never having accepted a single crypto – that our future’s being pissed away. With crooks making up money and people today being too dumb to spot a swindle when one comes along.
But, hey…that’s just me. No doubt, this part of the De-Bubbling will move in fits and starts. We might even be able to notch higher highs, before it all implodes. That’s the Nature of Bubbles.
Philosophically, I feel Warren Buffett’s and Charlie Munger’s pain:
As co-chiefs of Berkshire Hathaway, they have made fortunes using a simple-enough concept: Value Investing.
Some basic notions to keep in mind:
- Stocks need to “pay their own way” either in terms of growth or by paying dividends to investors.
- Better: Companies that have high book values compared to prices. The $400-million dollar lemonade stand (um, like Tesla?), that make great lemonade that sells a few hundred thousand in lemonade just doesn’t make sense.
- Even with an 8-1/2% drop in share prices Monday, Tesla still had a market cap of $764 billion and change. Actual revenue (lemonade sales) were $31.54 billion on a trailing twelve months basis. Exsqueaze me, but isn’t that revenue of 4.13% of stock (bubble)?
- Ure looks at this as 1-part performance and 19-parts story. Good story, told with flair, but what was it Jerry Maguire said? “Show me the money!”
- Which circles back to why Buffett and Munger probably don’t have a long shopping list. Yet.
Not Like They’re Alone, Though
“De-Bubbling” is going to be ugly. And, it may have already started.
Two charts that ought to be more sobering than running out of hooch: The first is one you can generate yourself at Yahoo Finance which we highly recommend as a data source. Start with ^DJI 31,521.69 27.37 0.09% : Dow Jones Industrial Average – Yahoo Finance and lay on some comparisons with the Nasdaq and S&P 500:
Don’t know how clear it will be, but see the red line? That’s a view of the Dow. Mainly Big Stocks and some actually pay dividends. Top trace is the NASDAQ *(which doesn’t pay as much proportionately, focusing on “growth”). See anything? Like a series of divergences headed toward a mean?
The Art of financial management by the government is not so much art but dumb luck. We’ve been through bubbles before (1929, the Internet Bubble, and Housing bubble) so we have an idea how they work out.
1929 is a fascination for us, though, since it has such an outsized “communications” parallel playing out. You do remember than the Radio Trust was the big driver in the late Twenties? And you’re awake enough to see the social media bubble?
Thus, the wave form comparison on the Peoplenomics side is one of our best indicators of where we are likely sitting in the “historical bleachers.”
Write this down and remember who said Shakespeare was right: “Beware the Ides of March.”
We’ll lay out some timing ideas on the Peoplenomics side tomorrow.
What Else is “News?”
Well, since Peloser and Shifty can’t seem to get stimulus done, kind of interesting to see how fast a dem-in-trouble-with-a-recall (GavNoose) and company can hand out money. California OKs $600 stimulus payments for 5.7 million people. Not worth moving, for, though.
The House (of Fools) is still fiddle-dee-farting with more bloated Pork Paper….and then it’s on to the Senate. Facing eviction? I wouldn’t bank on any help from these clowns. By April Fools? Bets?
Elaine and I have been holding back on mRNA vaccinations for CV-19. As such, we were pleased to see FDA advisers to consider EUA recommendation for single-dose Johnson & Johnson Covid-19 vaccine this week. Gee: No serial jabs and no untested tech…wouldn’t that work?
J. Powell tries to talk sense to the child-like idiots this morning. Powell to Testify as Focus on Economic Pain Persists. (Child-like because they don’t read, yet. We keep waiting for voting by lawmakers on unread legislation to become a felony, but that’s never gonna…)
Iran’s gone crooked again. And – thanks to Slow Joe – they will get away with it. The grim in “Iran begins restricting watchdogs’ access to nuclear sites: report.” We figure it’s only a matter of time until O’Biden sends more payoffs east.
Not hard to figure: But, if you need help, see “Why Taipei Revealed That U.S. Marines are Training in Taiwan…”
On that chipper and cheery summary of how bad can it get, off to boil more water. Oh, that’s coffee?
Big post storm day today: Vehicle start and test day for us…and getting my charge to walk more, and do more reps of the post-hip surgery routines.
Part 2 of this morning’s report will be the Case-Shiller Housing data up around 8:15 AM Central, or thereabouts.
Write when you get rich,