Markets mirror their environment. In a country and a world that have largely become irrational, markets have slipped their logical moorings as well. America now celebrates lawlessness, so it should not surprise us that our markets seem lawless as well. Value and competence are out. Popularity and easy money are in.
Such conditions are a challenge for logical analysts. Irrationality is hard to predict. That’s true in people and institutions. Yet cultures throughout history have followed very similar paths, so there is a degree of predictability even in madness.
In fact, we’re seeing played out the veracity of Charles Mackay’s dictum that, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.”
Has this process begun? Are individuals recovering their sanity one by one? We can hope so. There is evidence to that effect, but the numbers are not encouraging. Still, that can change quickly in times of high societal stress.
In the meantime, the work of deep-thinking analysts can be invaluable in times like this. Not only can they help you understand what’s happening, they can offer ways to help avoid the worst of the consequences prolonged lawlessness causes. Such is our hope, and the publications below are offered in its pursuit.
- Work productively, not just well
- “To be or not to be” makes for crazy
- Are gold and silver the only good investments now?
- Analyzing irrationality
The McAlvany Weekly Commentary: David and Kevin parse the crucial difference between productive work and nonproductive work this week. Just because work is being done—even if it’s excellent and impressive—doesn’t mean it helps people live better. The discussion also brings in present-oriented work vs. future-oriented work, building on last week’s theme, to emphasize the value of accomplishment that lasts. One indication of America’s fixation on nonproductive work is the fact that the government spent 20 billion dollars in 2023 to increase tax revenues by eight billion dollars. Any thinking person can see that that’s a short road to trouble. As the hosts point out, however, it’s not necessarily that the government is bereft of thinking persons, it’s that those at the top are thinking of reelection, not the country’s welfare. And in that vein, David points out that though the Fed is supposed to be independent from politics, that’s not how it plays out in real life.
Credit Bubble Bulletin: “I believe odds favor an evolving de-risking/deleveraging dynamic taking hold in 2024. Inherently problematic, unsustainable market melt-ups hasten their own demise.” Doug explains these assertions in greater detail, further clarifying that, “Today’s late-speculative cycle backdrop ensures a highly uncertain and unstable market environment. We should anticipate erratic interplay between mounting caution and deeply ingrained risk embracement.” That tension can produce some craziness in the market, which we’ve already seen in 2024. Doug explains, and gives numbers to add form to the fact. He also notes that schizophrenia extends to the Fed, some governors of which say there will be further monetary tightening and some of whom indicate loosening. To stay on top of such irregular activity in money and markets, be sure to seek out CBB on at least a weekly basis. But also know that it is published daily, offering pertinent information every weekday.
Hard Asset Insights: Though an unapologetic believer in the virtues of precious metals, Morgan is not a one-trick pony. Nor is he a narrow thinker. The extreme conditions in which the markets now operate have put a premium on safety and value retention in uncertain times. PMs are the only investment that fully deliver on these difficult attributes, but as a wealth management professional who knows the value of diversification, Morgan wants more. If his analysis is correct—and it’s certainly factual, unemotional, unbiased, comprehensive, and logical—he’s about to get it. As the market is eventually forced to withdraw from hopium and seek substance instead of FOMO, real things will become much more valuable than memes or fads. Be sure to read HAI this week for Morgan’s take on a very likely beneficiary of this development.
Golden Rule Radio: Market charts are not maps, they are compasses. They don’t tell you the path markets will take to go from A to B. They tell you the north or south direction they are moving over time. It’s up to the chartist to put current movement in historical context. Can that be done? Generally, yes. Specifically, only incidentally. Again, a chart is not a map. Miles, Tory, and Rob again host the show this week, and their humility in the face of market vagaries is on full display. We are all merely human, and the future is God’s. Still, He has given us tools, and the hosts are skilled users of the tools of market analysis. Properly used, these tools tell analysts where an asset wants to go and how badly—notwithstanding “there’s many a slip ’twixt the cup and the lip.” Markets are complex things, affected by many variables. Gold and silver are no different, but their analysis can be a fascinating study of force, interrelatedness, and value. Don’t miss the hosts’ look at these assets and more this week.