Learning From Other People’s Mistakes is Cheaper
One benefit of hindsight is that it imparts a cheap superiority over the past blunders of others.  We certainly make more mistakes than we’d care to admit.  Why not look down our nose and acquire some lessons learned from the mistakes of others?

Bitcoin, weekly. The late 2017 peak is completely obvious in hindsight… [PT]

A simple record of the collective delusions from the past can be quickly garnered from a price chart over time.  Market peaks appear so obvious, after the fact.  Perhaps with a little examination we can prevent some of our hard earned capital from being returned to dust.
Take bitcoin, for instance.  What were those morons thinking who bought bitcoin at over $17,000 in

Unsolicited Advice to Fed Chair Powell
American businesses over the past decade have taken a most unsettling turn.  According to research from the Securities Industry and Financial Markets Association, as of November 2018, non-financial corporate debt has grown to more than $9.1 trillion [ed note: this number refers to securitized debt and business loans, other corporate liabilities would add an additional $11 trillion for a total of $20.5 trillion].

US non-financial corporate debt takes flight – the post 2008 crisis trajectory is breath-taking, to say the least [PT]

What is the significance of $9.1 trillion?  And what are its looming repercussions?  Here, for your edification, we’ll take a moment to properly characterize this number.

A Growing Gap
The first quarter of 2019 is over and done.  But before we say good riddance.  Some reflection is in order.  To this we offer two discrete metrics.  Gross domestic product and government debt.

US nominal GDP vs total federal debt (in millions of USD) – government debt has exceeded  total economic output for the first time in Q4 2012 and since then its relative growth trajectory has increased – and it seems the gap is set to widen further. [PT]

GDP for the quarter, as estimated by the March 29 update to the New York Fed’s GDP Nowcast, grew at an annualized rate of 1.3 percent.  For perspective, annualized GDP growth of 1.3 percent is akin to getting a 1.3 percent annual raise.  Ask any working stiff, and they’ll tell you… a

A Gentle Nudge
The America we thought we knew – the country we learned about in grade school – vanished long ago.  In truth, it was gone well before we stepped foot in our first classroom.  But America’s myths and legends remain.

The Wild Bunch… where are their stetsons? Contrary to myth, cowboys rarely sported a stetson. They wore bowler hats instead. The stetson only became available in 1865 and wasn’t really considered fashionable before the turn of the century. [Myth buster PT]

The myth that America makes the world safe for democracy.  The legend that the role of free press in America is to hold government accountable.  The myth that the U.S. Constitution is the supreme law of the land.  The legend that the Fed maintains stable

Extrapolating The Recent Past Can Be Hazardous To Your Wealth
“Those who cannot remember the past are condemned to repeat it,” remarked George Santayana over 100 years ago.  These words, as strung together in this sequence, certainly sound good.  But how to render them to actionable advice is less certain.

George Santayana – purveyor of eminently quotable wise words by the wagon-load, but what shall one do with them in practice? [PT]

Aren’t some facets of the past – like the floppy disk – not worth remembering?  And aren’t others – like a first taste of romance – worth repeating… if only it were possible?
Where investing is concerned, remembering the past – and discerning what to make of it – can actually be a handicap.  Where does the

Not the Brightest Tool in the Shed
Shane Anthony Mele stumbled off the straight and narrow path many years ago.  One bad decision here.  Another there.  And he was neck deep in the smelly stuff.
These missteps compounded over the years and also magnified his natural shortcomings.  Namely, that he’s a thief and – to be polite – a moron.

Over-educated he ain’t: Shane Anthony Mele, whose expressive mug was captured by a Florida police photographer first in pensive and then in defiant mode. A few days ago he inter alia stumbled over his exceedingly well-developed inability to properly evaluate collectors items. [PT]

Recently the confluence of these two failings came together like a sewage spill to a river draining through the center of

Riding the Tailwinds of Fiat Money Inflation to Fame and Fortune
Warren Buffett bought his first shares of stock when he was 11 years old.  He saved up $114.75 and “went all in,” purchasing three shares of Cities Service preferred stock.  The day was March 11, 1942 – nearly 77 years ago.  Buffett recently reminisced about this purchase in his annual letter to shareholders:

“I had become a capitalist, and it felt good.”

The Oracle of Omaha – he was a great stock picker (lately he is suffering from “style drift”), but he also had the tailwinds of the greatest fiat money inflation in human history at his back during his entire career. Buffett would undoubtedly have been a great investor without it as well, but one cannot deny that the

One Great Big Difference
On a beautiful midsummer day, roughly six months ago, two distinguished men, of distinguished stature, crossed paths under precarious circumstances.  They are very much alike, these two distinguished men.

Let’s confuse him…  [PT]

Both are men of enormous ego.  Both are filled with ambitious delusions for the future.  Both are masters of persuasion.  Both offer a cause and conviction people can rally behind.
Both deliver frequent promises of greatness.  Both hold up historical allusions of eminence, and do so with confidence and flair.  Both claim destiny is on their side.
Does one read The Wall Street Journal?  Does one not?  We don’t know.
But we do know there’s one great big significant difference between

Almost Predictable
One of the more enticing things about financial markets is not that they’re predictable.  Or that they’re not predictable.  It’s that they’re almost predictable… or at least they seem they should be.

For a long time people believed – and from what we read and hear, many still do – that economic cycles move in easily predictable, regular time periods. All you had to do was create a chart of the up and down waves of your favorite cycle model and extrapolate it into the future, and presto, your prediction was ready to be sold. But it turns out it is not that simple. The chart above was published by the “Inflation Survival Letter” in the late 1970s and purported to show the future trend of the so-called Kondratiev Wave, a

Unexpected Inflection Points
High inflection points in life, like high inflection points in the stock market, are both humbling and instructive.  One moment you think you’ve got the world by the tail.  The next moment the rug’s yanked right out from under you.

The yanked rug… [PT]

Where the stock market is concerned, several critical factors are revealed following a high inflection point.  These factors are not always obvious at first.  But they become apparent over time.  Most notably, it is revealed that the period leading up to the high inflection point was more suspect than previously understood.
The stock market, as represented by the S&P 500 Index, became a sort of money minting machine over the last decade.  Quarter after

The Recline and Flail of Western Civilization and Other 2019 Predictions

“I think it’s a tremendous opportunity to buy.  Really a great opportunity to buy.” – President Donald Trump, Christmas Day 2018

Darts in a Blizzard
Today, as we prepare to close out the old, we offer a vast array of tidings.  We  bring words of doom and despair.  We bring words of contemplation and reflection.  And we also bring words of hope and sunshine.

Famous stock market investment adviser Field Marshal D. Trump [PT]

After all, the New Year’s nearly here.  What better time than now to turn over a new leaf?  New dreams, new directions, and new delusions, are all before us like a patch of ripe strawberries.  Today’s the day to make a double-fisted grab for

Offering Peace and Joy
Heading into the final weekend before Christmas we’ll take a brief hiatus from the economy and markets. We do so, however, with intent and purpose. Our principal objective is to offer peace and joy as you go about your merry way.

Unfortunately, Santa isn’t coming this year. Right after losing his behind in cryptos, he went all in with everything he had left on FANG stocks, margined up to his eyebrows. He trusted his well-worn ability to deliver the traditional “Santa Claus rally”, but was waylaid by the dollar-dissolving vampire bat Ptenochirus Iagori Powelli  hiding in a snowdrift. He needs some time off to forget. [PT]

Who wants to contemplate the unemployment rate or the consumer price index while singing

Stars in the Night Sky
The U.S. stock market’s recent zigs and zags have provoked much squawking and screeching.  Wall Street pros, private money managers, and Millennial index fund enthusiasts all find themselves on the wrong side of the market’s swift movements.  Even the best and brightest can’t escape President Trump’s tweet precipitated short squeezes.

The Donald mercilessly hits the shorts with a well-timed tweet. But as it turns out, this market is in a really bad mood at the moment. [PT]

The short-term significance of the DJIA’s 8 percent decline since early-October is uncertain.  For all we know, stocks could run up through the end of the year.  Stranger things have happened.
What is also uncertain is the nature of this purge:

Mud Volcanoes
There are numerous explanations for just what in the heck is going on with the economy.  Some are good.  Many are bad.  Today we’ll do our part to bring clarity to disorder…

Two data series it is worth paying attention to at the moment: the unemployment rate (U3) and initial claims. As the chart at the top shows, when the former makes a low it is time to worry about the economy. Low points in the U3 UE rate slightly lead the beginning of recessions. Claims on the other hand are near coincident indicators of the stock market, this is to say, lows in initial claims tend to happen within a time period of four to six weeks surrounding major stock market peaks (in most cases they lead slightly, but small lags have occasionally

How to Blow $9 Billion
The life cycle of capital follows a wide-ranging succession. It is imagined, produced, consumed, and destroyed. How exactly this all takes place involves varying and infinite undulations.

The Stroh Brewery in Detroit. The company provided an example of how wealth that has been accumulated over generations can be completely destroyed due to just a handful of really bad decisions. [PT]

One generation may produce wealth, while the next generation burns through it.  Various facets of a person’s capabilities, understanding, industry, and character can determine if they are producers or consumers. The most determinant facet of this, however, is how one approaches their unique circumstances.
The July 21, 2014, edition of

Political Correctness Indoctrination
[ed note: we are posting this belatedly as it was originally supposed to be published on Thanksgiving Day. Unfortunately your editor was out of commission… but MN Gordon’s article is still worth reading. – PT] 
Ordinary ideals of Americana range as far and wide as the North American continent.  The valued conviction of one American vastly differs from that of another.  For example, someone from the Mid-Atlantic may have little connection with someone from the Midwest.  Their connection with Cascadia may be even less.

Socrates thinking at students and tourists in front of the Academy of Athens [PT]

Next door neighbors often find their similarities to be sparse.  One may celebrate adventures in

Investment Grade Junk
All is now bustle and hubbub in the late months of the year.  This goes for the stock market too. If you recall, on September 22nd the S&P 500 hit an all-time high of 2,940.  This was nearly 100 points above the prior high of 2,847, which was notched on January 26th.  For a brief moment, it appeared the stock market had resumed its near decade long upward trend.

We actually did not believe in the validity of the September breakout attempt: the extremely large divergence between the broad market and the narrow big cap leadership was one of many signs that an internal breakdown in the stock market was well underway. It is probably legitimate to refer to the January 2018 high as the “orthodox” stock market peak – the

Remaining Focused
A rousing display of diversions this week assured the American populace was looking every which way but right under its collective nose.  Midterm elections.  White House spats with purveyors of fake news.  The forced resignation of Attorney General Sessions…

Old drug warrior (otherwise recused) on his way home to Alabama…

Sideshows like these, and many more, offered near limitless opportunities to focus on matters of insignificance.  Why stop to really understand what’s behind a headline when hundreds of new headlines pop up by the minute?  Why bother to try and figure things out when real thinking is such an inconvenience?
What’s more, the S&P 500 jumped nearly 3 percent between market open Monday and market close

Schemes and Shams
Man’s willful determination to resist the natural order are in vain.  Still, he pushes onward, always grasping for the big breakthrough. The allure of something for nothing is too enticing to pass up.

From the “displays of disbelief, revealing touching old-fashioned notions” file… [PT]

Systems of elaborate folly have been erected with the most impossible of promises.  That prosperity can be attained without labor.  That benefits can be paid without taxes.  That cheap credit can make everyone rich.
Central to these promises are the central government and central planning authorities.  They take your money and, in return, they make you a dependent.  They promise you a secure retirement, and free drugs, while running a

Going All In
All people, of both good and questionable character, share a singular talent.  They excel at taking something that’s tolerable in moderation, and then pushing it to the outer limits of absurdity.  Why live with restraint when you can get radical?

A fairly famous stretch of LA riverbed graffiti… [PT]
Photo credit: saber

Public and private debt levels, NASDAQ stock valuations, the federal register, face tattoos, canned energy drinks.  You name it.  Overpowered by fear.  Blinded by greed.  People across the spectrum lace up their boots each day and go all in.
Take Greater Los Angeles, for instance.  Sometime in the early 20th century the fever to rapidly develop it caught on with supreme enthusiasm.  A new race towards

End of the Road
The confluence of factors that influence market prices are vast and variable.  One moment patterns and relationships are so pronounced you can set a cornerstone by them.  The next moment they vanish like smoke in the wind. One thing that makes trading stocks so confounding is that the buy and sell points appear so obvious in hindsight.  When examining a stock’s price chart over a multi-year duration the wave movements appear to be almost predictable.

The fascinating obviousness of hindsight – it is now perfectly clear when one should have bought AMZN. Unfortunately it wasn’t quite as clear in real time. [PT]

Trend lines matching interim highs and lows, and bounded price movements within this range, display what, in

Life After ZIRP
Roughly three years ago, after traversing between Los Angeles and San Francisco via the expansive San Joaquin Valley, we penned the article, Salting the Economy to Death.  At the time, the monetary order was approach peak ZIRP.

Our boy ZIRP has passed away. Mr. 2.2% effective has taken his place in the meantime. [PT]

We found the absurdity of zero bound interest rates to have parallels to the absurdity of hundreds upon hundreds of miles of blooming crop fields within the setting of an arid desert wasteland.
Given today’s changing financial conditions, namely the prospect of a sustained period of rising interest rates, we have taken the opportunity to refine our analysis.  What follows is an attempt to bring clarity to

Orchestrated Larceny
The government continues its approach towards full meltdown. The stock market does too. But when it comes down to it, these are mere distractions from the bigger breakdown that is bearing down upon us.

Prosperity imbalance illustrated. The hoi-polloi may be getting restless. [PT]

Average working stiffs have little time or inclination to contemplate gibberish from the Fed. They are too worn out from running in place all day to make much of it.  This fact accounts for the limited inkling the populace has for why there is a great prosperity imbalance between wage earners and the creams.
If there was a better understanding of the scope and scale of the orchestrated larceny being conducted, practitioners of mass money

Positive Energy
By now, late September of 2018, it has become increasingly evident that something big is about to happen. What exactly that may be is anyone’s guess.  But, whatever it is, we suggest you prepare for it now… before it is too late.

Art auction energizer: Norman Rockwell’s portrait of John Wayne. You can’t go wrong shelling out top dollar for me, pilgrim, can you? [PT]

Several weeks ago, if you haven’t heard, an undisclosed rich guy enthusiastically bid up and then bought Norman Rockwell’s portrait of John Wayne for a cool $1.49 million at the 12th Annual Jackson Hole Art Auction. According to auction coordinator  Bloomberg  reports:

“Major oil trading houses are predicting the return of $100 crude for the first time

Happy Destiny
There’s great elation flowing from the various economic bureaus down through President Trump. They bring us good tidings. If you haven’t heard, here in the USA, we live, work, and play in the dazzle and delight of an economy in which GDP growth exceeds the unemployment rate.

The president has clearly had a hand in job creation. 🙂 Seriously, there can be no doubt that aggregate economic activity has increased as a result of the measures the government has implemented, including deregulation, tax cuts and increased deficit spending. Note that the latter is offsetting the salutary effects of the other measures in the long run, even though government spending is added to GDP and therefore provides a near term boost to official

Misadventures and Mishaps
Over the past decade, in the wake of the 2008-09 debt crisis, the impossible has happened.  The sickness of too much debt has been seemingly cured with massive dosages of even more debt.  This, no doubt, is evidence that there are wonders and miracles above and beyond 24-hour home deliveries of Taco Bell via Door Dash.

The global debtberg: at the end of 2017, it had grown to USD 237 trillion. Obviously this is by now a slightly dated figure, as debt issuance has continued with gay abandon this year. [PT]

But how can dosages of more debt be the cure for too much debt?  Can more Cutty Sark be the cure for a dipsomaniac?  Certainly, in both instances, and after some interim relief, the cure always proves to be

A Fake Money World
The NASDAQ slipped below 8,000 this week. But you can table your reservations.  The record bull market in U.S. stocks is still on. With a little imagination, and the assistance of crude chart projections, DOW 40,000 could be eclipsed by the end of the decade.  Remember, anything and everything’s possible with enough fake money.

Driven by a handful of big cap tech companies, the Nasdaq Composite has made new highs – but the broad market (here shown in the form of the NYSE Index) has not even made it back to the January blow-off peak. It is a good bet the return of the average investor’s portfolio mirrors that of the latter. Such divergences are typically a sign of steadily weakening market internals which are seen near

Squishy Fact Finding Mission
Today we begin with the facts.  But not just the facts; the facts of the facts.  We want to better understand just what it is that is provoking today’s ludicrous world. To clarify, we are not after the cold hard facts; those with no opinions, like the commutative property of addition. Rather, we are after the warm squishy facts; the type of facts that depend on what the meaning of ‘is’ is.

Fact-related pleas… [PT]

The facts, as far as we can tell, are that we are presently living in a land of extreme confusion.  The genesis of this extreme confusion is today’s fake money system.  And the destructive effects of this fake money system have spread out like a virus into nearly all aspects of daily life.
Plain

Financial Potemkin Village
A rising stock market has the illusory effect of masking the economy’s warts and blemishes.  Who cares if incomes are stagnant when everyone’s getting rich off stocks?  Certainly, winning wealth via the stock market beats working for it.

Learning from history, 2018 style [PT]

Without question, the pleasure that comes when opening an inflated quarterly brokerage statement is much more satisfying than a lackluster biweekly paycheck.  But not only does paper wealth grow when the stock market rises, implied intelligence grows too.  The quarterly statements, with growth lines moving up and to the right, prove it.
Why grumble over a labor participation rate that’s at a 40 year low when Netflix is up over 6,000

Cold Dark Clouds
The sun always shines brightest in the northern hemisphere during summer’s dog days.  Here in America, from sea to shining sea, the nation burns hot.  But, all the while, cold dark clouds have descended over the land of the free.

In case you ever wondered – yes, they really did say it… [PT]

For example, Senator Mark Warner – an absolute goober – is currently running interference for the Democrats on a proposal to silence political criticism.  Yet for Warner, and his cohorts, all political criticism is not created equal.  Criticism of President Trump is allowed and encouraged.  Criticism of Washington insiders, like Warner, is what they want to prohibit.

Mark Warner, who at the behest of the leftist lamestream media