I have a difficult time going with the crowd. I was once asked; would I jump off a bridge if my friends did. It’s one of those Zen Koans like, “if a tree falls in the woods, would it make a sound” or “what’s the sound of one hand clapping” or “if nobody showed up to a politician’s speech, would they still lie”? It is supposed to snap your brain into thinking for itself instead of going with the crowd.
As I’ve grown older, I’m less interested in the news and
more interested in their sources. I’ve
found that the news is more infotainment and less data (and I’m a data
nerd). Maybe this is why I’ve had a hard
time with masks (they
don’t work), lockdowns (they
really don’t work), and hydroxychloroquine (Fauci, the definitive paper was
written by the National Institute of Health that it works, right here!), but I
digress.
The first book I read on investing was Benjamin Graham’s
“Intelligent Investor”. He is considered
the father of value investing and had a very contrarian view on investing. His goal was to find businesses that other investors
weren’t paying attention to and which were trading at a discount. He shaped many investors after him including
Warren Buffett and Seth Klarman.
I say all this because I’m having a hard time as the
mainstream press is getting involved in the inflation story. Usually when the mainstream press gets on the
boat, it’s time to get off. It’s not
just the mainstream press either, it is also some big hedge fund names, big-wig
economists, and bank CEOs/CFOs. It seems
everyone is of the belief that inflation is going to be running higher.
So, what’s a contrarian to do? There’s a popular idiom in the investing
world, “don’t fight the Fed”. When the
Fed wants something to go a certain way, you can be contrarian but you’ll lose
your portfolio betting against them.
They have more money than anyone in the market (heck they print it) and
it gives them the ability to force things in a certain direction.
Over the weekend Michael Shedlock of mishtalk.com put out an
important graph.
He’s of the mind that inflation is transitory but is a big
believer in holding gold. His theory is
that negative real interest rates (in this case 3-mo treasury bills minus y/y
CPI) lead to gains in gold.
I’m still a believer in the gold, silver, and oil
story. I’m nervous about the mainstream
press and I’m of the mind that inflation is here, but can it be transitory,
only time will tell.
If you want to see the source give
Mish’s work a good look at his blog mishtalks.com.
Important and Potential Market Moving Events This Week
5.30am Retail Sales (May)
5.30am Producer Price Index (May)
6.15am Industrial & Manufacturing Production (May)
5.30am Housing Starts and Building Permits (May)
7.30am Gas, Distillates and Crude Oil Stocks/Production Changes
11am FOMC Economic Projects & Interest Rate Decision
11.30am Fed Press Conference
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