Does Any of This Make Any Sense?

Every morning (early) that markets are open, I check in with CNBC. My focus: the futures market in various assets (stocks, bonds, gold, etc.). Depending on the day, I might linger to catch headline stories. On rare occasions, I stick around for a story or two. It's rare that any story reveals anything worthwhile, but sometimes it does. 

The scroll at the bottom of the screen is another story. It rolls along while I'm doing all the above. So I take a gander. Who writes this stuff? I'm thinking of applying for the job. For the most part, it's clearly just stuff that's made up. I challenge you to watch the scroll and report back: Does any it make any sense? Please let me know if you find anything that does.

From there, after a pretty set morning routine, I head for the office. (Since it's at home these days, it's a short commute.) Since we're in the business of "wealth management" (a typical grandiose Wall Street/Financial Services term), we need to stay on top of markets. Once upon a time, I viewed markets from the perspective of value: Was a particular market over/under valued? Since markets always present either over or under fair value (however you calculate that), you'd think that investing when they're undervalued would be a prudent move. Conversely, you'd think that selling when they're overvalued would be flip side of that.

You'd be wrong. 

Now, it's always been true that restricting your decision matrix to this over/under approach has never really worked out particularly well. But, for the most part, these days it's especially foolish, especially when you consider stocks and bonds. One can reasonable argue that we're in something akin to an alternative universe when it comes to evaluating whether to invest in or sell stocks and bonds. It's a world where you're gains are totally dependent on "the greater fool" who will buy your securities when you try to sell for a profit. That game, played by some sophisticated souls with - they claim - a degree of success may not be for you. In any case, it's not for me. 

To put it tersely, when I consider buying securities that I believe are in a bubble - possibly a great BIG BUBBLE - I must ask myself: Does it make any sense?

(Aside: I just read an article summarizing the views of Howard Marks in one of my professional publications. Marks has a successful track record as an investor. He's sure there's no stock bubble. Basically he says that because we won't have a recession, and because people have pent up demand and money to spend after the lock downs, he sees a happy economy for 3 years or so coming up. The article doesn't explain exactly how Marks connects this with the stock market not being in a bubble except for this: "Money has to go somewhere, he said. Even if you don’t like the stock market, there is nothing else that has a more favorable return. Most people cannot invest in non-market solutions and cannot earn anything on money markets." We've all heard this now for years. Does that mean until the Fed allows the short-term interest rates to rise, resulting in alternatives for people to earn interest in safe places (CDs, Money Markets, etc.) that everyone will continue to buy stocks? Hmmm...Does that make any sense?)

So far, it's safe to say that the answers "Does that make any sense" are likely no, possibly but doubtful, maybe for now, but likely not in the future - something along those lines. But what happens when we pose this question as it relates to precious metals and commodities? Let's set up a simple scenario:

Looking at asset class results from 2011 through 2021, we find precious metals and commodities languishing at the bottom of the list. But, as a general rule, that which was great for the last 10 years is more likely to be not so great for the next - and vice-versa. Using that logic, based on observations of the past, it would seem that precious metals and commodities might be a better place to put your money. Does that make sense?

Well, maybe this all gets us thinking a bit about, especially in this world gone mad that we live in these days. But given our theme, we can't sign off before giving mention to the CDCs recent pronouncement on wearing masks and social distancing. This week they shook up a lot of folks with the blunt statement that if you've been jabbed, you don't have to wear a mask or keep that social distance anymore - sort of. After making the announcement, they then backtracked on a number of fronts leaving most folks a bit puzzled. I'll leave it up to you to do your own research on this. Getting into the details here might possibly add to the confusion. All we'll say here is this: If the vaccines are designed to protect you, why wear a mask. Oh, right, you might get infected (cf "breakthroughs") but you'll likely not suffer much if you do, having gotten the jabs. Then again, there have been some instances of hospitalization and death of jabbed individuals who got COVID. So you're protected - kind of - and so you don't need to wear a mask or socially distance - sort of.

Does any of this make any sense?