March 27, 2020

Nowhere To Hide

Wow, this week has been insane. Last week–and early this week–the market was getting its ass kicked, only to surge higher Thursday on the massive bailout package from the US Gov.

Today (Friday), we will see profit taking on the longs. Most investors do not want to be holding through the weekend.

If you're like me, you're trying to figure out where to go.

I don't like the stock market here. I say that with "Don't fight the FED" echoing in my ear. But, I see great companies that are still way overvalued. So, I don't see any reason to jump in at this point.

What I see is massive inflation:

Neel Kashkari: Your banks are safe, there's enough cash in the financial system and there is an infinite amount of cash at the Federal Reserve. We will do whatever we need to do to make sure that there's enough cash in the banking system. So, there's a range of things that the Federal Reserve could do, we're far from out of ammunition.
Scott Pelley: Far from out of ammunition. Can you characterize everything that the Fed has done this past week, as essentially flooding the system with money?
Neel Kashkari: Yes, exactly.
Scott Pelley: And there's no end to your ability to do that?
Neel Kashkari: There is no end to our ability to do that.
Scott Pelley: Is the Fed just going to print money?
Neel Kashkari: That's literally what Congress has told us to do. That's the authority that they've given us.

We have seen inflation over the last dozen years anyway. An economist will tell you there is no inflation... That's because they only measure certain portions of the economy.

Food inflation has been rampant over the years! Here are 2 examples of food inflation:

1) Food Packaging Changes

Look at the packaging sizes of all foods, compared to 2007. All food packaging is the same size, but the contents are much smaller!

2) Higher Food Prices

I love to eat at Carl's Jr. The Super Star with Cheese is my favorite!

In 2008, the Super Star with Cheese meal cost about $5 bucks. Today, that some meal will set you back $11.50. WTF!

So, when Neel Kashkari says the Fed is going to print money... AND, there's no end to their ability to do that... all I see is inflation. (My Super Star with Cheese is going to cost $20 very soon).

So What To Do

If you're like me, and agree that inflation is on the way... And, believe there is not many options in the stock market... What do you do?

Buy Bitcoin and/or Gold.

I like Bitcoin. It's a hedge against inflation because they can't make any more of it, there is a finite supply. And, most importantly, Bitcoin is not controlled by any government!

One would assume the price of Bitcoin would be going wild with investors piling in. But, that's not the case... thus far.

I think that changes soon.

Here is a very good article that will help you get your head around moves in Bitcoin: Understanding Bitcoin Market Participants – Vulnerabilities in the Price of Bitcoin Driven by Miners