The Market is not at All Time Highs
And the Dollar doesn't buy you what it used to
If the Dollar doesn’t buy what it used to, why do we value our stock holdings in a depreciating asset?
If the stock market goes up but our purchasing power goes down, maybe the stock market is just a place where folks are playing the monetary version of hot potato?
Speaking of potatoes, no one is a farmer anymore. No one is an industrialist. We are all playing monetary games.
It’s the only thing I can think of why we have the luxury of ideas that don’t tend to make a country great or sustainable.
So my second question is: Is the market in bubble territory?
It sure looks like one
If you look at the news and a regular chart of the SP500 or Nasdaq, the price has only one way to go.
And even the President is getting in on the action, if judged by recent news reports:
But it’s not priced in physical assets, like Gold
Despite what Benjamin Graham and others want, gold doesn’t seem to be disappearing from our notion of value. Gold truly has intrinsic value.
Gold has tended to do a good job in reflecting true government data, inflation, fear, and geopolitics.
Look at this chart of the Dow Jones Industrial Average…the longest-running stock index worldwide, and makes up 30 of the largest corporations in the USA.
Until recently, all TRUE stock market peaks (in recent memory) occurred when gold was undervalued. The ensuing years led to a recession and true uncertainty.
A true stock market peak is different than a monetary stock market peak, where monetary stimulus and hot air by Silicon Valley and the media help spark the mania.
A true stock market peak is when real companies are priced above perfection and take a while to return to normal. You know a true stock market peak because those companies are still with us today (just look back and you’ll see). While monetary leaders tend to go extinct.
We have bastardized our labor force, our population growth, and slipped poison into our education system. The only way out is for our wonderful machines, made up of binary code (0/1), to be objective truth-finders in any science, so we can get back to being a great social and economic force.
A real bubble is when the majority doesn’t realize we are in one. We are experiencing trauma from monetary booms and busts.
If the uptrend from the 1900s breaks, just focus on commodities. It won’t matter what stock you pick since they’ll underperform hard assets.
Until then, we are still in a 100-year bull market and at record highs, but not bubble highs.
Be optimistic (just not overleveraged)
And what if China? Korea? And the USA kick-start a global bull market altogether? Have we truly seen anything like it?
Eric