As I say, we ought to buy and hold only what we need. We don’t need any particular stock. After all, they’re not our children. What we need as an investor or trader is Growth, Value or Income, as our circumstances apply.
For example, do I need Time&Space, the boat I listed for sale a week ago or do I need the boating lifestyle? Is the boat my child? No. But while I love it on a superficial basis, I really do love and need the lifestyle. It’s just that, like markets always change in terms of Trends and Cycles, our life has changed now that tomorrow our daughter, my boat captain in training, is on a plane to Victoria BC, 3000 miles away, moving there with her husband who was born and raised in that great city.
I love my daughter, but I don’t deeply love the boat that I wanted her to assume command. So, my requirement is a smaller boat here in Toronto and a second one in Victoria.
I think you understand the point I’m making. We live in the real world where there are needs and then there are wants. There are also situations outside our control where, in these cases, all we can do is lobby.
As investors and traders, we need Growth, Value or Income. To earn it, we need prices to grow or at least remain stable. Regrettably, there are market players who have different needs. Take the Federal Reserve Bank of the United States for instance. While they state their mission is one of managing policy “to provide the nation with a safer, more flexible, and more stable monetary and financial system,” they also add the dubious statement, “Over the years, its role in banking and the economy has expanded.”
History has shown that the Fed repeatedly makes the wrong decision. Why do they do that? As acknowledged in their mission statement, the Fed is an interventionist in our affairs, but I believe they do so in order to satisfy their controllers and most powerful lobbyists, not in the inference that they are doing it for us.
The fact is the Fed was set up by Congress, which is the monetary and fiscal agent of the people. But we do not really know who owns the Fed except that it matters only who controls the Fed, and we know that JP Morgan has always played the major controlling role, doing so along with Goldman Sachs in the past 20 years. General Electric (and its GE Capital group) is also a player there.
The Fed, and its aligned controllers and lobbyist groups, need control. Nothing else matters. At times in the past 100 years, Fed policy and actions have devastated the people’s economy and capital markets; but it does not hurt them. We the People are not their children. They have their own to love and protect.
While the people of the nation are sinking financially, their people are growing their wealth at an incredible pace, at our cost. Of course, it’s at our cost. The economy is only so big, and what some groups (as in the 1%) win, they take from the rest (the 99%).
In time there will be a reaction in America not unlike most nations. In the interim, however, America, which leads by reason it has the world’s strongest military backed up by the strongest central bank and the strongest financial services industry, is using its power to control its own people, and the people are starting to react.
For every action by the people, there will be a reaction by those in control. Our civic police are now armed with military weapons, including armored vehicles and machine guns. As a boater, I can attest to the fact that the once super-friendly and helpful Coast Guard are now bullies, also armed with machine guns and armored boats, and given the authority to blow any American (or Canadian boat) out of the water, killing the pleasure boaters if they “sense” a problem. They do this for reasons, they say, of “homeland security”. But let’s be honest. They do this because they too are now agents of the power elite of the country that has a need to maintain control. To hell with democracy.
[Addendum: Time&Space was following ER, another Canadian boat, into the Fernandina Beach FL inlet as a US nuclear sub was exiting. We stopped to take photos. ER was out of the channel on the Florida side, up close to the rocks, but still being screamed at over the VHF by the US authorities. ER’s captain responded: “Sir, we are well out of the channel.” He then, in mocking tone, said to me over the public VHF channel, “I guess they think two pleasure boats under Canadian flags represents an invading armada”. Then, from a distance of about 300 meters, a coast guard boat charged directly at my boat, which was across on the Georgia side, pulled up alongside with the forward deck tripod mounted machine gun pointed at my head from a distance of maybe 25 meters. Not a word said to me, just your basic intimidation tactic. I have it on film, time-stamped.]
This is not the nation I grew up loving. Many Americans agree. They call me to say they no longer love their country or even need it. What they need is democracy in the form of Congress to produce a “stable monetary and financial system,” not one that is manufactured by a very few people for purposes of control. They are sick of what is going on today. They know that the latest choices for leading the Republic, just like the previous ones, are, or will be, controlled by a tiny minority, or else, and so it matters not to the powers that be who is, on the surface, in charge.
It should not matter to us because it’s out of our control. What should matter is that We the People continue to make a mockery of the Fed and the most powerful Financial Services companies that are the agents of their power. Enough ridicule will, over time, damage and eventually eliminate their power. So, when the Fed chair or one of her assistants makes innocuous remarks at a public affair, over time, the gravitas will disappear and those remarks and the histrionics of their supplicants in mainstream media and at Humongous Bank & Broker will be ignored.
Following a statement on Friday by the Fed chairman that would put anybody to sleep, the media got to work and, once it had been organized, there was a hammering of capital market prices for half an hour just to show us who is in control. Sickening.
When I hear that Fed rates are going to be lifted because the economy is so strong, I blink in disbelieve that serious people can continue to spew such nonsense.
The so-called “strong” US economy is growing at a death-spiralling annual rate of +1.1%, which is zero when using the Bureau of Labor Statistics (BLS) deflator (+3.42%) versus the one from the Bureau of Economic Analysis (BEA) (+2.32%).
As noted, a few groups are winning and the huge majority are sinking. Negative yields in the world say it all. Those in power are trying to force savings into the market to stem the onset of deflation and the need for more quantitative easing, which will only destroy the currency. America is in the same boat as almost all the major economies. In other words, the powers that be are demanding that We the People solve the problems they created with their insane interventionist policies.
The US economy is based on a few major components:
+68.9% Private Consumption
+16.1% Gross Private Investment in Capital Investment and Inventory
+17.7% Government Spending
-2.7% Exports – Imports
In the US today, spending on consumer goods and consumer services is holding up the economy. This growth in expenditures is coming from savings, which is not healthy. In fact, the growth in Recreational and Leisure spending is enormous, which is a sign of despair, of over-borrowing or spending inherited wealth, none of which is a good thing. Government spending continues to drop because governments are having serious budget shortages despite major attempts to collect monies from offshore accounts and other non-payers. Overall, fixed investment has dropped for three straight quarters and of inventories for five consecutive quarters. The residential construction industry has been growing only because of offshore buyers and because the Fed continues to threaten Americans with higher rates.
As Rick Davis concluded this week in the latest report from his Consumer Metrics Institute:
— All things not consumer either weakened or remained in contraction.
— Consumer spending growth improved yet again, with most of that coming from savings.
— All of the reported growth disappears when a third party deflator (the BLS CPI-U) is applied to the data.
Once again a mildly positive report masked considerable commercial weakness.
I have on the whole a bullish mind-set today; but I feel the interventionists are lying to the people, and setting up the capital markets for a severe fall that would enable them to, in their minds, come to our rescue once again. It’s all strategy and tactics. I am concerned because risk management is Job #1 in our business.
My mind-set is only bullish because I understand what central bankers and government finance ministers are thinking. They need to ultimately push market prices much higher to combat deflation, which if their history remains intact will then bring inflation, all of which they want to put the onus and the blame on We the People in our so-called democratic Republic.
It makes me sick, but we all have a job to do. Ours is to trade prices in capital markets that will increase our wealth at a faster rate than real economic growth. So we ought to continue to ridicule the power elite but stick to the task of meeting our needs.
