Subtitle: Risks, Myths, and Investment Opportunities in a Radically Reshaped Economy.
Almost finished. The case he's making is cogent and crisply, sharply written. A quick read, though very meaty. His thesis is that smart investors, looking forward, must move from growth to value--- specifically into basic materials. Oil, gas. Gold, silver, copper, palladium, platinum.
We are in decline, economically. I have said as much for several years, myself. Some of the reason for it is that the world has emerged and grown and thrived, following WW II. We're not the 800-pound gorilla in the room which can throw its weight around the way the USA was able to do, decades ago. A big part of the decline, says McDonald, is geopolitics and overspending Inevitably, the gummint will NOT be able to literally pay down the debt, ever again. It's too massive. In order to handle it, the gummint will have to continuously roll it all over as it matures, and play interest rate games to help cover it.
McDonald has no use for economic sanctions, like the sanctions imposed on Russia and specific Russians, following the Russian invasion of Ukraine. (Crimea was previously stolen, annexed.) Russia has friends in other directions. Most are not even communist. Russia is still feeding raw materials to China so the Chinese can manufacture stuff. Gotta keep the power on. And they're not operating with any "Green Revolution" imposed upon themselves.
I was not surprised, in his treatment of that stuff in particular, that he simply ignored the ethical implications of not responding to the Putin-monster, and just letting him have his way. There is no investing conversation or essay or book which will go near anything to do with ethics. Obama, so I read, confronted Putin at a meeting of big-wigs, and told him flat-out: "We can do stuff to you." Granted, because of the multi-polar economic and political environment today, sanctions are proving to be as useful as trying to use your finger to push a string across the table.
Breathtaking quotations that gobsmacked me:
"44% of all US dollars ever created, were created in 2020 and 2021." Ya, that was the Covid era. But holy jaypers. DEVALUATION, much?????
"The US dollar has lost 93% of its value since the year 1900."
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McDonald includes summaries of some interviews he's had with some remarkably smart Shining Lights in the Investment Industry. I just finished up reading his account of a conversation with Charlie Munger. Final, distilled thoughts from that meeting actually lifted my spirits. I've made my share of mistakes in investing, but in broad terms, I could take some satisfaction, realizing I'd been doing these things by instinct, for the most part:
Charlie told him: "Trade and invest less. Sit back and wait for those top two or three opportunities that come along each year. Measure your level of conviction and allocate your capital accordingly. Above all, never trade or invest out of boredom or a desire to find something to do. Keep up your high level of passion for markets. Growing wiser is a combination of humility and diligent curiosity. Without the first, the second is useless."
Comments
Thanks for this thread.
I caught this interview that discusses some of his book's topics:
https://m.youtube.com/watch?v=DVZpIrRXr4o
44% is about right, looking at M2. Such an increase is not unique. There have been other times, other situations aside from Covid, calling for monetary expansion. LBJ's "guns and butter" economy (1964 through 1968) boosted M2 by, oddly enough, 44% also.
OTOH, the subsequent contraction in M2 (5% from April 2022 to Oct 2023) appears to be unique.
Source: FRED M2 interactive graph
"The US dollar has lost 93% of its value since the year 1900."
Both of the quotes are designed to shock (or as you colorfully expressed it, to gobsmack). Not to inform or enlighten.
A 93% decline in value in 125 years is an annualized inflation rate of 2.1%, just what the US is targeting. In comparison, a pound sterling in 1900 would have the purchasing power of just 0.6 pennies (UK) in 2024. A decline of 99.4%.
https://www.officialdata.org/uk/inflation/1900?amount=1
That's what an economy in decline looks like.
This is what the US economy looks like:
Many of us here recall, after the U.S. equity markets were in the tank during the '70's and then the 'upward pop' that began in August of 1982. Books, especially paperback books were everywhere, expressing any number of markets scenarios and 'where' to invest for whatever reasons the author(s) presented.
Being 'prescient' is a special gift and is usually not known or understood; until after the facts are presented.
Thank you.
Now they've moved on to talk about what his "Bear Traps Report" is all about....And now, McDonald was asked about the central thesis of his book.
Thanks! Getting it from the horse's own mouth! Gotta run now, but I'll come back to it.
*Sadly, his audio quality is poor. I turned on the captions. +1.
“One key lesson to take away is that for investors, bubbles are an incredible opportunity to make money—as long as you recognize when the sell-off is no longer a buying opportunity.”
Which is pertinent perhaps to the market of current times. I no longer feel compelled to chase the absolute highest returns, and I believe there’s a lot of risk in the S&P500 currently.
As I read on the blog”A Wealth of Common Sense”, “only an idiot gets rich twice”.
Current book is a good antidote to the AI craze and outlines the reversal of Globalization.
The Bear Trap Report has dozens of ideas and sample trades but you need to pay a big $$$ to get the weekly report
OK, that's his case. It still seems prudent to diversify. And I'll volunteer to say that I'd rather NOT be in stocks which are Exploration & Production oil/gas companies; that's a boom-and-bust industry. Instead, I've chosen a midstream MLP (ET) and an oil drilling pipe-maker, with a solid worldwide reputation. (TS.) As for the metals, I'm watching RIO, but not buying--- yet. ET is a bit more than 5% of my total. And TS is less than ONE percent: A deliberate "afterthought."
If its difficult to predict the past, what chance do I have to be *convinced* about the future.
And the current Russian regime is a bunch of mafia gangsters, supported by the military and the Kremlin apparatus. Increasingly applicable everywhere, indeed. Agreed. Still, I take his point that it's not a great idea to plow full steam ahead into a crowded trade. (Lots of us here do not trade; rather, we invest.) I personally love it when I discover a quality, neglected company that's not a big market mover.