Category: Money

Everything money related – investments, savings, loans, economics.

20210124u Day 390: Personal Observations

2021-0124u-1200 Austin, TX

I wasn’t planning to write today. Something seems to be bubbling up and I’m not sure what it is. I hope that by writing my thoughts down now, whatever it is will reveal itself.

I just got off the phone with my beloved. We had a somewhat heated discussion about white privilege due to my not accepting my beloved’s belief in the importance that white privilege has played in benefiting me throughout my life. We found common ground in agreeing that racism exists in the world and the world would be better if it did not. We also agreed that many white people have benefited from white privilege. We also agreed that I have also benefited from white privilege. However, we disagreed as to the extent that white privilege played a role. I believe that the vast majority of my personal achievements would have been possible regardless of my race or skin color. I even believe that there’s a chance I may have benefited additionally as a minority due to affirmative action programs in existence during my education and early career. As I type this however, I’m becoming aware of certain times in which I felt “blessed”, or lucky, and I’m wondering now if my luck was due to the color of my skin, or my race, or being male, or some other discriminatory factor. I have to admit that there were times in my life that I have received large benefits and have not really been able to logically explain or understand from where these benefits came. I can accept the possibility that white privilege, male privilege, religious privilege, or some other privilege was a larger factor than I have previously believed.

Before my heated discussion, I watched a few videos – a press briefing from the new white house administration, and a couple videos on financial bubbles forming due to the easy money flowing through the system in response to the COVID-19 pandemic. I was pleased to hear Dr. Fauci present a reality that felt in alignment with the reality I believe to be true. I especially liked when he answered a question by saying he didn’t know the answer and that the Biden administration was adopting a policy of only answering questions for which there is a known answer – not making something up on the spot just to have an answer. For the financial videos, I was glad to see Dr. Ron Paul doing well on Kitco news and still promoting liberty, reduced government and sound monetary policy. I’m attracted to him because he does not pledge allegiance to either political party and has a consistent set of beliefs. I don’t agree with all of his beliefs, but at least I can follow his logic when he explains why he holds them. One of the other videos was an interview by Bloomberg news of an individual who seemed to be reading a prepared statement warning Robinhoodlers and Stonks purchasers that one day the FED will not come to their rescue.

Also, today, like every day this year, I had a conversation with my Aunt who is on the board of directors of my condo HOA. At the end of 2020, like a final kick in the ass, our HOA found out that our management company had been stealing our money for the last 5 years and that we were broke with over $30K in debt. I’m now in a universe in which I’m working full-time helping our HOA get back on it’s feet. I hope to use this full-time effort I’m putting forth to tunnel to a universe in which I’m putting in similar effort towards something meaningful AND also getting paid for it.

What are the chances? I just checked to see what was happening on Nov 1, 2016, the day that $25K was moved from the HOA money market to checking. The next day another $25K was moved and then all $50K was moved out of our control to another HOA. This was Election Day 2016! The same time period when most people around the world felt a huge shift from the normal time line to a very unexpected time line. The conclusion of this fraudulent activity ended about the same time that Trump left office. What are the chances? Synchronicity.

20201215T Day 350: Financial Market Predictions for 2021

20201215T-0637-AustinTX

Check-in: I woke up after 4 hours of sleep and it took me an hour to fall back to sleep. I was then got an hour of deep sleep before being awoken by a 6am alarm. I’ve now had some coffee – I’m still surrounded by universes in which I start my day with caffeinated coffee. Using a plastic filter holder, I filtered the freshly ground coffee into a mixture of half-n-half, cacao powder, and coconut oil. I spoke with my beloved yesterday and she is still feeling anxious about coming to Austin. She is highly sensitive to multiverse energies and her anxiety leads me to believe that the next few months will be chaotic as the northern hemisphere experiences moves through a surge of COVID-19 cases that will overwhelm many hospitals. I feel she will come in a week and stay for two.

The year 2021 will see value stocks outperform growth stock. Low debt value stocks will outperform high debt value stocks. Silver will outperform Platinum and Platinum will outperform Gold. Bitcoin will outperform Etherium and Etherium will outperform Silver. Both residential and commercial real estate will drop in real value but currency devaluation and low interest rates will keep prices from falling. Residential will outperform commercial real estate. Short-term bonds will outperform longer-term bonds.

These predictions are based on the current state of the financial market which has appearances of financial bubbles in various areas of the market, such as the bond market, popular index ETFs, celebrity stocks, speculative small cap stocks, and even most fiat currencies.

Using these predictions, and assuming that they will most likely be wrong, then a diversified financial portfolio might be weighted in the following order:

  1. Bitcoin
  2. Etherium
  3. Silver
  4. Platinum
  5. Gold
  6. Low debt value stocks
  7. High debt value stocks
  8. Growth stocks
  9. Residential real estate
  10. Commercial real estate
  11. Cash
  12. Short-term bonds
  13. Long-term bonds
  14. SP500
  15. Celebrity stocks
  16. Speculative small-cap stocks

I’m not a strong believe in crypto-currencies, but until these are outlawed by governments then the major ones will likely continue to outperform the “old school” stores of value silver and gold. There are universes nearby in which governments add Bitcoin to their reserves instead of outlawing crypto-currencies. It is these universes that cause Bitcoin and Etherium to top the list above.

20200519T Day 140: Drive Shack Opens Up

Wind Surfing Beach near Davenport, CA – May 19, 2020

One stock that my brother recommended to me was Drive Shack. It is a Top Golf competitor that, as most other non-essential businesses, has been closed down due to the COVID-19 pandemic. This week, they opened back up and their stock opened up on Tues as well, closing at $1.43.

On Tues I visited a new beach where I saw some wind surfers. It reminded me of my kite surfing in Morocco.

I also worked a bit on my RV – mainly cleaning it up and testing the fridge which still refuses to operate.

 

20191227F Day -4: A Wedding and a Stock Market High

20200511M Santa Cruz, CA: On the 27th of December, I attended my cousin’s wedding in Texas. I didn’t realize that wedding ceremonies like this would be a rarity in 2020.

San Antonio Botanical Garden, Dec. 27, 2019 (Credit: SurfingTheUniverse.com)

The stock market also hit a high for the year on this date. I found this article and headline by Ben Levisohn of barrons.com to be appropriate looking back:

The Dow is Closing Out 2019 With a Bang. Good Luck in 2020.

Some quotes from this article:

The market will probably have a hard time living up to 2019. The Dow Jones Industrial Average has risen 23% in 2019 after gaining 190.17 points, or 0.7%, to 28,645.26, this past week, while the S&P 500 index has gained 29% after rising 0.6%, to 3240.02, and the Nasdaq Composite has climbed 36% after finishing the week up 0.9%, at 9006.62. The S&P 500 and the Dow both closed the week at all-time highs.

For reference, today – May 11th – the DOW closed at 24,221.99, the S&P 500 index closed at 2930.19, and the Nasdaq closed at 9192.34.

As the market attempts to perform a V recovery as Trump wishes, these final thoughts of this article are worth noting:

All that’s missing is what could go wrong. We have a few things: The trade war between the U.S. and China could heat up again. Europe could become President Donald Trump’s next trade target. Inflation could heat up and cause the Fed to start thinking about raising rates again. And the economic acceleration the market appears to be expecting might simply fail to show up.

Everyone else may be looking at the bright side. We have our doubts.

 

 

 

20200508F Day 129: Long Stock Picks for June 8th and Beyond – 5 Week Update

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In 20200403F-05u Days 94-96: Long Stock Picks for June 8th and Beyond, I listed some stocks I purchased on that day. I just checked the return of the stock picks and it matched  the S&P500 over the last 2 weeks, exactly, at 18.2%. This compares with up 15% 3 weeks ago.

I am a bit surprised that these long picks so closely matched the SPY. With 500 stocks, the SPY provides better diversification. I prefer to be a bit more conscious of the stocks I am picking and don’t want to blindly invest in an index.

For some reason, I started looking at the current price of the S&P 500 of $2929.80 and looked back to when it was about this price in the past. On Oct 4, 2019, S&P 500 closed at $2951.01. Much more synchronistically, the S&P 500 hit a local top of $2925.51 on Oct 3, 2018. Over the next 3 months from that date, the S&P 500 dropped 17% to $2447.89. The Oct 3, 2018 date is synchronistic to me because I referred back to it in AAPL Stock Prediction for Oct 3, 2019, in which I noted:

On Oct 3, 2018, AAPL hit an all time high of $233.47 and today it is down over 20% from that high, opening at $178.37.  Could I surf to a universe where APPL stock is up over 25% from today by Oct 3, 2019?  In that universe, AAPL would be above it’s all time high price of $233.47.  While I can imagine how I could increase my odds of that universe, I do not feel a calling to do so due to the limited influence I believe I have on that event.  So, I’m left with a sense based primarily on wishful thinking that AAPL stock will hit a new all time high before Oct 3, 2019.

The AAPL stock prediction was close. AAPL closed at $220.83 on Oct 3, 2019 and a week later set a new high of $236.21 on Oct 11, 2019. On Mar 20, 2020, AAPL hit a year low of $229.24.

If it’s synchronistic, then there must be some meaning to it. The meaning that I’m feeling is that the world is at an inflection point and something unexpected is about to happen.

 

20200428T Day 119: Oil, Gold, Silver, and Dollars

Blue Rhino Natural Gas Dispenser at Santa Cruz CA Gas Station Broken Into – April 28, 2020

Even though gas prices at the pump are cheap, relatively speaking, there are still those for whom the price is not low enough. Propane tanks were stolen recently from a Blue Rhino gas dispenser. This event is closer to a universe where goods are scarce, such as a universe I blogged about yesterday in 20200427M Day 118: Who Is John Galt?, before filling my car up with gas today. It was interesting how I came to notice. I saw the Blue Rhino dispenser and, for some unknown reason, was drawn to go look at it even though there was no damage from the exterior and no real reason for me to go check it out. As I walked towards it, a guy with a mask on started whistling at me from outside the gas station. When I turned to notice him, he told me that the dispenser had been broken into. It was then that I decided to investigate it further and see how the back of the dispenser had been pried off.

A few days ago I was moved to take a picture of a man blowing bubbles along West Cliff (20200423h Day 114: Bubbles in the Air). I wonder now if the US dollar is in a bubble. The value of the US dollar has remained strong, relative to other currencies, and has even held up fairly well against the price of gold. Investigating some ratios involving oil, gas, and the US dollar will help us understand the universes around us.

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Figure 1: Barrels of Oil that can be purchased with a $50 American Gold Eagle (1 oz gold) – Courtesy macrotrends.net

In Figure 1, the recent drop in the price of oil due to the supply/demand imbalance can be easily seen, even when priced in ounces of gold. Apparently, the demand for gold has not dropped, or at least not dropped more than the supply of gold.

sp500-to-gold-ratio-chart-2020-04-28-macrotrends
Figure 2: S&P500 value when priced in $50 American Gold Eagles (1 oz Gold) – Courtesy macrotrends.com

In Figure 2, it’s interesting to see how much of the S&P500 increase in value is over the long term is actually due to the decrease in the value of the measuring stick – the US Dollar. When the S&P500 is measured in the closest thing we have to a gold-backed currency, $50 American Gold Eagles, then a more real evaluation of the value of the S&P500 over time can be seen.

gold-to-silver-ratio-2020-04-28-macrotrends
Figure 3: Gold/Silver Ratio since 1915 – The rough number of $1 American Silver Eagles (1 Oz Silver) you can exchange for a $50 American Gold Eagle (1 Oz Gold). Notice how the ratio deviates between half and double the par value of 50. Courtesy macrotrends.net

Figure 3 is evidence for why I am currently long Silver. I primarily purchase Silver through the ETF $SLV because I can purchase using my retirement account and quickly move in and out of a position without worrying about loading up a truck.

historical-gold-prices-100-year-chart-2020-04-28-macrotrends
Figure 4: Gold Price in Inflation Adjusted Dollars (via Consumer Price Index) – Courtesy macrotrends.net

Figure 4 is interesting because it values the price of gold in inflation-adjusted dollars. This, of course, hides the depreciation of the US dollar. If CPI is to be believed as an accurate measure of this depreciation, then gold appears to be over-valued at this point. I think it is more likely that the CPI is lower than the actually inflation rate. The way CPI was calculated was changed in 1980. If CPI were still calculated in the same way, it would be higher (see Figure 5).

sgs-cpi
Figure 5: Consumer Inflation alternatively measured – Courtesy ShadowStats.com

What seems likely to happen in the short-term is:

  1. Demand for oil will increase as the world economy comes back online. This will cause the value of oil to return to it’s pre-pandemic value;
  2. The Fed will continue to prop up the bond market, including mortgages and corporate bonds, thereby preventing a deflationary implosion that would result otherwise;
  3. The “free money” that businesses and people receive through unemployment and stimulus checks will also prevent deflation from spiraling out of control;
  4. The supply/demand ratios for goods and services will both decrease and, once the economy is back, this will cause an increase in prices; and
  5. The Fed will hesitate to raise interest rates too fast and this will result in cheap money flooding the financial system, which will encourage what will look like speculation in the financial and housing markets.

In the longer term, there is a measurable probability that real inflation will finally get above 2% and possibly even get out of control. This definitely happens in some nearby universes – just not sure now how prevalent these universes are.

I’d like to end with some quotes from fellow wordpress.com bloggers:

From 2020-04-17 notayesmanseconomics: We are facing both inflation and disinflation at once

Regular readers will be aware that a feature of my work is to look at the impact of inflation on the ordinary worker and consumer as opposed to central bankers who love to torture the numbers to get the answer they wanted all along

From 2020-04-21 Lorne Anderson: Inflation

I had thought that given the neighborhood the house, despite its small size, would sell for about $400,000. That would be a sizable increase from the price it sold for 60 years ago. I was wrong though. Asking price is $599,900, 50 times what my parents paid for it. No wonder my mother and I were a bit discombobulated.

From 2020-04-17 Jay Currie: Depression, Inflation, I’m So Confused!

A grand inflation in front of a depression is pretty much the end of an economy. If the government prints money in serious quantities and issues debt in more or less unlimited quantities the game is over. The gold bugs will have won.

A rather smart investor named Rick Rule once said, “We don’t want to live in a world with $10,000 an ounce gold.”

Right now there is a greater than zero chance that this will be exactly the world we live in.

 

 

 

20200421T Day 112: Surfing Towards A More Diversified Stock Portfolio

20200421_StockList

The stock market is still quite volatile, as evidenced by the daily movement in my top 6 stock picks: AAPL, IBM, WETF, SLV, AMD, and SFM. This is definitely not as diversified a list as I would like, with 3 technology companies in the mix. However, it is much better than it was 6 months ago when it was all in AAPL and AMD at about a 75%/25% mix. In December and January, I sold some AAPL and AMD and waited for the coronavirus crash before buying or adding to positions in IBM, WETF, SLV, and SFM. My mix is now 44%/20%/14%/11%/6%/5%. From a diversification point of view, I feel much better. My average price for these stocks are $1.23, $109.20, $3.50, $14.25, $10.00, and $16.48.

I would like to be in a universe in which there is an app, program, or website that will give me a summary financial report of my stock holdings. As a website, I would send up some JSON such as:

{ “AAPL” : 0.44, “IBM”: 0.2, “WETF”: 0.14, “SLV”: 0.11, “AMD”: 0.06, “SFM”: 0.05 }

and get back a combined set of financial parameters such as P/E, Cash Flow, Market Cap, etc. Mutual funds, especially a commodity fund like SLV, would likely need to be ignored.

20200412u Day 103: Stock Market Thoughts and Predictions

Santa Cruz, CA: Last week the stock market had a good week – one of the best in quite a while. A few days ago I spoke to a friend from the future who is betting against the market. She is not alone. I just googled “hedge fund bets on sell off” and found the following – interesting from Nov. 22, 2019!

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Ray Dalio replied to the WSJ by posting that it is misleading to report that he had a bearish view of the stock market and that his hedge fund, Bridgewater Associates, had no “net bet” that the stock market would fall. What seems clear is that he was hedging his stock portfolio to protect it from a drop in the overall market.

So, Ray was apparently feeling the recent market plunge back in October of last year and started buying “insurance” against a total market correction. It would require delving into conspiracy theories to ponder the reasons why he felt the need for such insurance. Perhaps he took notice of the Event 201 Pandemic Simulation Exercise. From the website:

Event 201, hosted by the Johns Hopkins Center for Health Security, envisions a fast-spreading coronavirus with a devastating impact

In an article from almost a month ago, Bridgewater has placed even bigger bets – $15B against Europe and UK. From the article:

The world’s biggest hedge fund manager’s short positions amount to more than $5.3 billion in France and $4.7 billion in Germany, while in Spain its shorts add up to almost $1.4 billion and $821 million in three Italian companies.

…

Data was not available to show whether Bridgewater, which has $160 billion in assets under management, holds more European stocks than it shorts.

Another hedge fund manager, Bill Ackman, posted about a 100x return on his company’s website:

On 23 March, we completed the exit of our hedges generating proceeds of $2.6bn for the Pershing Square funds, compared with premiums paid and commissions totaling $27m.

I’m sure if I searched I could find other examples of huge bets against the market. Given the fear caused by the pandemic, and the obvious negative effect it is going to cause on the world economies, a bet on the market failing seems like a safe one. However, my thought is that any bet on a failing market should be truly a hedge in this time of uncertainty and act to cushion the loss in value of a net long position. By being long on solid companies and adding a hedge against the entire market dropping, hedge fund managers should be able to sleep better at night.

My thoughts on where the stock market is going is all of the above. It will drop due to the increasing costs of the pandemic, it will rise due to the monetary and governmental stimulus, and it will stay the same due to the balance of these two. There are a set of universes for each of these three scenarios and I would like to plan so that my portfolio stays roughly the same in each of these cases.  For bonds, I like floating over fixed, shorter over longer, and treasuries over non-treasuries. For real estate, I like residential over commercial. For equities, I like American over non-American – although the stronger dollar is going to be a weight on American companies. For currencies, I like the Dollar over the Euro and Yuan and the Yen over the Dollar. For precious metals, I like Silver over Gold. There is a high likelihood that one or more fiat currencies experiences hyper inflation and the Dollar is not immune.

20200403F-05u Days 94-96: Long Stock Picks for June 8th and Beyond

My brother asked me for stock picks for Monday and this is the list I gave him, with prices as of the end of the day last Friday, April 3rd. Once the U.S. makes it past June 8th, the following stocks should, as a group, be a diversified portfolio that will beat the performance of the SP500 (SPY=248.19, S&P=2488.65). I plan to track them from here until June 8th, and until the end of the year.

20200404_StockPicks
Stock Prices end of day April 3rd, 2020

I noticed the post yesterday has the wrong day of the week (0402F). It should have been “0402h”. I’m sure the fact that I wrote it on Friday contributed to this mistake. But, it could also be explained by universes colliding. I hope to get back to posting every day, at least until day 160 of this year, June 8th, by which time I hope to be back in a universe in which I’m rarely thinking about or posting about coronaviruses or pandemics.

Today I experienced merging back into a universe I was in a week or so ago. Before the California shelter-in-place order for Santa Cruz County, I had planned to rent a room in a community house. Then, when the initial order was until April 7th, I delayed my move in until that date. Later, when the initial order was extended until May 3rd, I decided to stay where I am until the end of April. However, after feeling into the different universes, I feeling a stronger alignment with the universe where I move in April 7th. I spoke with the owner of the house this morning, and now plan to move in on that date. I wonder if this will pull closer to me universes where the Santa Cruz County shelter-in-place order ends earlier than May 3rd, or at least doesn’t get extended longer.

Some other sets of universes merging this weekend are:

  1. Universes where hydroxychloroquine is or is not part of the treatment for COVID-19 patients (Ref: https://www.cnn.com/2020/04/05/politics/white-house-malaria-drug-hydroxychloroquine-disagreement/index.html);
  2. Tigers at US zoo test positive for SARS-CoV-2, bringing us closer to the universes in which COVID-19 is spread via pets;
  3. Japan has not yet, but may, declare a state of emergency due to COVID-19; and
  4. The US has COVID-19 outbreaks under control or not – Dr. Fauci says the US doesn’t and is instead struggling.

 

20200327F Day 87: Unemployment, Stock Market, and COVID-19 Cases are All Up

This week a record 3.28 million Americans applied for unemployment benefits. Yesterday, the Dow had it’s best 3-day gain since 1931 and today it finished the week up 12.8%, it’s best weekly advance since 1938. The S&P 500 rose 10.3% – best week since 2008. The Nasdaq rose 9.1% – best week since 2009. U.S. COVID-19 cases topped 100,000.  U.S. Influenza A cases topped 128,000 and Influenza B cases topped 113,000. Also, the largest relief package ever, at $2 trillion for coronavirus relief, was signed into law.