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I’VE HAD ENOUGH OF THIS BULLSHIT!

This article was contributed by James Davis of Future Money Trends. 

On Sunday, I wrote the first of two WARNING ALERTS about the stock market. Today, I am publishing the second one. My message boils down to this: as of right now, the S&P 500, the NASDAQ 100, and the Dow Jones Industrial Average are EXPENSIVE.

The chief reason for this is the LACK OF VIABLE ALTERNATIVES for generating returns in a ZERO-RATE world.

This is factored in, but some people still SHAKE THEIR HEADS in disbelief regarding how much the markets have extended themselves, so here’s some perspective as to how much more expensive GOVERNMENT BONDS are than stocks:

  1. A 10-year U.S. Government Treasury bond is GUARANTEED to lose income since it yields 0.65%. As a whole, the G-10 governments offer less than 2%. On the flip-side, the S&P 500 has a P/E ratio of 27, which implies an earnings yield of 3.7% (100/27). Add the dividend yield of 1.7% and the “lack of judgment” on the part of investors becomes clear: STOCKS are better than BONDS. It’s not even a question. Given the choice, I’d buy an index fund over a bond any day of the week.

 

  1. The RISK FACTOR with bonds and stocks has changed. Bonds used to be looked at as ULTIMATE SAFE HAVENS, but fewer and fewer people ASCRIBE A PREMIUM to a government than to the world’s best businesses.

Can anyone really say that they are more concerned about the future prospect of a company like Google or Starbucks than with Washington? To me, the safety that some companies have in their brand’s loyalty is bulletproof.

Some businesses are bigger, better, and more resilient than most of the world’s treasury departments.

Courtesy: Zerohedge.com

But, as much as I think that a basket of high-quality stocks are more attractive than bonds, I also have to say that GOLD STOCKS beat the traditional equities right now!

No matter how I spin it around, I love the resource sector’s health, strength, corporate behavior, and I MOST LOVE the fact that the product it sells is in HIGH DEMAND and its price is in a bull market.

Since June 2019, this newsletter has profiled more than TEN OPPORTUNITIES that have doubled in price or more. One company is up close to 400% and another is close to 300%, yet I feel that it isn’t the end of this.

In September, some of this EUPHORIA MODE with retail investors will die off.

No one knows how SEVERE IT will be, but any LOSS OF MOMENTUM would immediately shine a light on gold again.

Courtesy: Zerohedge.com

As you know, Warren Buffett is buying stocks, so he clearly knows that he can’t KEEP WAITING for lower valuations like in the last few decades because we live in a DIFFERENT REALITY.

The point is that stocks do look more attractive than bonds, but the resource sector is the MOST UNDERVALUED within the major industrial sectors.

Any weakness exhibited by the S&P 500 will serve as a MIRROR OF CONTRAST to how good gold companies have managed their BALANCE SHEETS.

Don’t struggle with why stocks are so richly valued as an index:

  1. Either act as a STOCK PICKER, focusing solely on those that offer good value, OR
  2. Step outside of the general equities and look at the value in the resource sector!

When gold SURGES ABOVE $2,000/ounce again, this sector will ERUPT!

The post I’VE HAD ENOUGH OF THIS BULLSHIT! first appeared on SHTF Plan – When It Hits The Fan, Don't Say We Didn't Warn You.

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THE FED DEMANDS YOU BUY GOLD!

This article was contributed by Tom Beck with Portfolio Wealth Global. 

This week, the Federal Reserve hosted its first-ever VIRTUAL Jackson Hole Meeting. I had three screens OPENED SIMULTANEOUSLY: one on gold’s price, the second on the S&P 500 and the third on Powell’s testimony.

It was amazing to see – gold went from $1,927/ounce to $1,973 in the span of seconds. The markets went up by 0.4% in a minute, as Jerome Powell kept educating the world of institutional investors on how the FED sees the landscape, in its attempt to fulfill its DUAL MANDATE of stable pricing and maximum employment.

The momentum in stocks is SO STRONG at the moment that an additional 4% will actually make this rally the GREATEST EVER.

Courtesy: Zerohedge.com

Billionaires like Buffett, Gundlach and others are SITTING THERE puzzled by this, unable to come to grips with the idea that it might be a different world than the one they made their fortunes in.

It’s like the world is divided between those who believe that this is an INSANE BUBBLE and those who don’t understand what the alarmists are shouting about, since there’s no OTHER ALTERNATIVE to stocks.

To that SECOND CAMP, the below chart means absolutely nothing on its own!

Courtesy: Zerohedge.com

They’re not concerned by it, since they justify that EXPENSIVE VALUATIONS aren’t to be viewed in the same light as they were in 1998, when interest rates were higher, when China was non-existent, when the Internet was just a tiny dot on the global economy and when hardly any people had cellphones.

These investors define themselves as business analysts and stock pickers; they DON’T CARE how expensive the stock market is, in general terms. All they care about is the following question:

According to the present time, where is the BEST PLACE to put my money?

If the answer is a particular stock, they pull the trigger, NO QUESTIONS ASKED.

The macroeconomic picture is not a chief part of their calculations, since they assume these things are already priced in.

This strategy WORKS WELL, when you have a raging bull market.

These investors FAIL TO ASK one question, though:

WHY are markets running like this?

This is a very important question, since properly answered, it considers that there’s an ARTIFICIAL COMPONENT to the present condition, which carries a HEAVY PRICE with it.

Courtesy: Zerohedge.com

Let’s process this global economy together; EVERYWHERE, governments are running unsustainable tabs, so the VALUE OF CURRENCY is eroding, which makes investors get out of cash, whenever they have some sitting idle.

Why have cash on hand, they ask, if the Federal Reserve and other central banks virtually guarantee that prices will keep going up and when they plummet, the central bank will INTERVENE as aggressively as they lawfully can?

The answer is that NO ONE can guarantee the next FED Chairman will do the same as this one OR that the system won’t reach its limit of distrust. When the limit is reached, the purpose of the bailout won’t appease investors, since they’ll be more concerned with insolvency and zombie companies than with a credit bubble.

The Federal Reserve has told you as much: We are HERE, come rain or shine, but we aren’t all-powerful. We have our OWN AGENDA, so make sure you fully understand that we can either work on your behalf or CRUSH YOU.

You have to CHOOSE: Gold or cash. My mind’s MADE UP!

The post THE FED DEMANDS YOU BUY GOLD! first appeared on SHTF Plan – When It Hits The Fan, Don't Say We Didn't Warn You.

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