I'm Not Saying Bears Are Children
Updated
If you showed this chart to a 1st grader, and said, "What happens next?" I wonder what their response would be...
My guess is, they'll say, "It goes down from here, for a long time." In my opinion guys, if you're not bearish right now on risk assets, you may have bought chips at the casino because you saw Trump, the FED, the Treasury, and the Media, sitting at the tables playing fun games. I don't blame you.
But, I'm looking at multiples alone right now, and calculating the length of time it would take some of these companies to pay me an ROI, based on current earnings. 30 years, 100 years, 1000 years in some cases. TSLA is a prime example. These valuations are a joke.
- Will there be less or more growth in the next 25 years?
We'll see. But, looking back, I'm skeptical we can replicate this level of growth.
- Will interest rates fall further, stay flat, or rise over the next 25 years?
We'll see. Anyone remember double digit interest rates in the 80's at the onset of this secular credit cycle? Cycles are waves, and this wave is about to start rising, putting downward pressure on risk assets. Perhaps COVID will be the fall guy for inflation, and inflation will be the fall guy for raising rates. The FED has already relinquished responsibility for raising rates by putting that responsibility on an opaque average inflation targeting metric. Hopefully soon we find out how, and over what period they will calculate this average. Insights are welcome.
- Will there ever be a reversion to the mean on multiples for risk assets?
The logical answer is yes.
- Will the FED soon begin to buy stocks outright, and be the only player left at the casino in the near future?
Only if they stay the current course.
Only you can decide where to put your hard earned money guys. If you're bullish, just make sure and do your research, control your leverage, think like an investor first, and trade smart. If you're bearish, just remember the immortal words of Bob Marley, "You can fool some of the people, some of the time, but you can't fool all the people, all the time."
Thanks for your time today guys. Cheers, Michael.
My guess is, they'll say, "It goes down from here, for a long time." In my opinion guys, if you're not bearish right now on risk assets, you may have bought chips at the casino because you saw Trump, the FED, the Treasury, and the Media, sitting at the tables playing fun games. I don't blame you.
But, I'm looking at multiples alone right now, and calculating the length of time it would take some of these companies to pay me an ROI, based on current earnings. 30 years, 100 years, 1000 years in some cases. TSLA is a prime example. These valuations are a joke.
- Will there be less or more growth in the next 25 years?
We'll see. But, looking back, I'm skeptical we can replicate this level of growth.
- Will interest rates fall further, stay flat, or rise over the next 25 years?
We'll see. Anyone remember double digit interest rates in the 80's at the onset of this secular credit cycle? Cycles are waves, and this wave is about to start rising, putting downward pressure on risk assets. Perhaps COVID will be the fall guy for inflation, and inflation will be the fall guy for raising rates. The FED has already relinquished responsibility for raising rates by putting that responsibility on an opaque average inflation targeting metric. Hopefully soon we find out how, and over what period they will calculate this average. Insights are welcome.
- Will there ever be a reversion to the mean on multiples for risk assets?
The logical answer is yes.
- Will the FED soon begin to buy stocks outright, and be the only player left at the casino in the near future?
Only if they stay the current course.
Only you can decide where to put your hard earned money guys. If you're bullish, just make sure and do your research, control your leverage, think like an investor first, and trade smart. If you're bearish, just remember the immortal words of Bob Marley, "You can fool some of the people, some of the time, but you can't fool all the people, all the time."
Thanks for your time today guys. Cheers, Michael.
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