I use Reuters as measure of the market's zeitgeist, and this passage from a story written in the midst of yesterday's market rally was worth a bookmark for me:
Powell said he is inclined to support a 25 basis point rate hike in March, quelling some concerns about an aggressive 50 basis point rate hike, odds of which had largely unwound since the Ukraine crisis deepened.
"You're bringing some levels of certainty to the market. It also kind of helps the market assess the seriousness of the war and what the real counter risks may have been," said Eric Schiffer, chief executive officer of California-based private equity firm Patriarch Organization.
"And if the Fed felt that those risks were stronger, there would be a question of whether they would raise at all."
I don't mean to pick on Reuters, a trusted source for me, or Eric Schiffer, whom I have never met, but that quote summed up investing in 2022 for me. "In Powell We Trust". It's not just that we trust this feckless technocrat - who has been so absolutely, devastatingly wrong about inflation and its causes - to tell us about the U.S economy, but now we trust him to advise us on the "seriousness of the war."
Are you kidding me?
God, we are so deeply buried in this Confederacy of Dunces that John Kennedy Toole must be rolling over in his grave. Here's the thing: Powell knows nothing about geopolitics... and virtually nothing about the real U.S. economy. You know more than he does. Your kids probably do. Even I do, and I am just some crazy man raging against the machine on his laptop.
I'm just so sick of this narrative being fed to the investing public. You have got to do your own work. Trust me, I saw these people - the "experts" - in action during 2008, and 2001 and during LTCM in 1997 when I was at DLJ. Many don't remember that last one, but I could get even more obscure, especially from my days in London, where the financial "plumbing" is subject to much more blockage - and international intrigue - than it is here in the States.
So, do your own homework. Have you been to Target (TGT) recently? Was it active? Did you end up spending more than you had planned to? Yes?? Then buy the stock. If you did that last week...jackpot!
But did I spend more on my Target Red Card because I bought more stuff or because the price of each individual piece of stuff was MUCH higher than it was six, nine, or 12 months ago? Bingo! That's inflation. Just as Target is now advertising $24/hour wages as an enticement for new associates in some stores, the price of everything is going up. People, raw materials and finished goods, or "Stuff."
Open your eyes!
Ignore Powell and go extremely long natural resources, which was the genesis of my HOAX portfolio (here) in late December.
Thirty percent later, I am sitting in the enviable position of deciding where to reinvest my clients' money as 1Q dividends roll in. The coal stocks ( (ARCH) and (BTU) are in HOAX) have gone nuts. The major oil integrateds ( (CVX) , (XOM) and (PBR) are in HOAX) are en fuego now and will have covered their scheduled 2022 dividends/buybacks easily by mid-year if not by the end of March. So I will likely reinvest the dividend payments into long-time Portfolio Guru/Excelsior Capital favorite Antero Midstream (AM) . AM has risen "only" 4.6% since HOAX's inception and is yielding "only"...wait for it... 8.9%.
That's crazy. And, dammit, that's what I do. I short "crazy high" and I buy "crazy low."
There are just so few original thinkers in this homogenized word, and, honestly, that type of ridiculous groupthink among Western leaders is what allowed Vlad Putin to launch an attack that should have surprised no one. It's awful. And Russia's invasion of Ukraine adds awful amounts of inflationary pressure to a global economy that desperately does not need any additional price pressure.
Wake up!
Ignore the day-to-day noise. Embrace inflation and ignore peoples like ARK Cathie Wood ( (ARKK) is HOAX's benchmark, which it is outperforming by a mere 61 percentage points in the 10 weeks since inception) who think that deflation is a risk - she has said this in many media interviews - or even a "thing." Deflation ain't walking through that door. It was never a real risk, but whatever infinitesimal chance there was for an onset of deflation two weeks ago, Vlad has killed it.
I am just as horrified by the news as most other people these days. It's terrible. Just make sure your portfolio is benefiting from the terrible by-product - inflation - of a terrible geopolitical situation, and not seeing its value eroded by it.
