Update - October 19, 2021

Scary News for the Old-School Investors

I’m traveling this week, so I’ll need to keep this short.

But I wanted to update you on a couple of important things I’m watching.

The first is this inflation mess. It’s going to get worse and even more complicated from here.

The bottom line is that the policies of the past decade are doing what so many folks said they would. We can’t have rock-bottom interest rates for more than a decade without major ramifications. And we certainly can’t have negative real yields for more than a year now without some “unexpected” pain.

This forget-tomorrow policy is what has gotten us to where we are today.

For instance, The Wall Street Journal ran an article this morning discussing how used car prices are on the rise. Just like houses, it says, they’re appreciating in price.

That’s not supposed to happen.

But when a slug of free money shoves its way through the economy, the effects show up in all the wrong places. In this case, demand is far outstripping supply.

The folks in charge blame one-off issues. It’s because of COVID-19, they say. Or they blame the supply chain. Or it’s because some mine in some far-off country caught on fire.

Those are the symptoms… but not the illness.

Digging Deeper

The illness is massive strong-handed policies that distort the natural markets. In particular, as you know, it’s been the hugely detrimental effects of ultra-dovish monetary policy.

One administration after the next has “solved” today’s problems by pushing them onto the next fella in office. The results of such selfish leadership (actually, we shouldn’t even call it leadership) are all around us.

That’s why I’ve pounded the table so hard about doing things differently.

The “traditionalists” were aghast when I recommended a huge 10% allocation to crypto in our Modern Asset Portfolio.

Where are they now, though? With Bitcoin the feature of a new exchange-traded fund and sitting near record highs, our plan has paid off handsomely.

Anybody who took our advice is having a wonderful year.

Gold’s next. I’ve written about it a lot.

Banks will do well, too. Default rates are plunging now that asset prices are rising and folks are no longer underwater on their homes and cars.

And, of course, just about anybody in the supply chain can name their price these days. Shipping companies are sitting on floating gold mines.

I’ve got a play combining several of these themes ready for you in the next monthly issue. It’s an income generator that’s an ideal tool to help ensure you get ahead in this mess.

But there’s something else on my mind… and I’m not sure how it will turn out. It’s something that has the chance to get messy, if the politicians let it.

One More Variable

There is a growing legion of folks quitting their jobs over vaccine mandates. Many are simply moving to companies that are small enough not to have to force a jab. But plenty are dropping entirely out of the workforce.

Just over the past few days, I’ve heard of at least half a dozen cases of folks (some were doctors and nurses) leaving their jobs or taking early retirement.

It threatens to make a tough situation even worse.

It’s a scary idea that could supercharge the sort of stagflation that is dancing around on the horizon.

There’s no need to take action on it yet. After all, just one more move of the goalpost could fix the problem. And even if it continues, I’m confident our portfolio and our strategy will not just keep us protected but ensure we continue to run ahead of the pack.

For now, keep doing what I’ve been barking about for so long.

Think differently. Track interest rates. And follow the money.

There’s a lot of it out there these days.

Be well,

Andy