Is Any Of It Real?

Is Any Of It Real?

Equities are having a good run. Perhaps you noticed. Thank the now ubiquitous reflation narrative. Or, relatedly, thank vaccine optimism. Or thank central banks for ensuring that there really is "no alternative" and that it's possible to justify virtually any multiple, no matter how ostensibly absurd, by reference to low bond yields. The MSCI World was on track to start the new week with an eleventh consecutive gain. Not too shabby, right? By now, most market participants have heard it all
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8 thoughts on “Is Any Of It Real?

  1. I’m not sure if anyone has noticed this yet, but Mother Nature has finally accomplished something that Tony Fauci, countless health wags, and a heard of politicians were unable to achieve in a year. From last Friday to this coming Friday, virtually the entire country is in complete lockdown. Political bias and carelessness all trumped by 10 degree temperatures and a foot of snow outside your door.

    Covid was already on the ropes (rather mysteriously, to me). Five to seven days of coast-to-coast winter storm quarantine will, I suspect, noticeably accelerate its demise. It will be interesting to see if this gets picked up in markets. Perhaps I’m just overprojecting my own experience.

  2. I hate having so much in cash – about 3 years expenses – but bonds just aren’t that attractive. What fixed income are you in? I’m in the basic aggregate fund, plus some tips, plus a little long term munis. But the safest bonds I have seem to be I Bonds and EE bonds. But there’s a limit on how much you can buy.

    1. I have a question–why not something like Altria which has a robust divvy payout as opposed to bonds? Or some type of corporate with a low P/E and a dividend? Are you worried it just gets swept up like all the overpriced stuff in a massive correction? Too correlated with whatever else you own?

    2. It is never a bad idea to have 3 years expenses in cash. If something ever goes seriously wrong in your life (and I hope all of my readers stay healthy, happy and prosperous), that allocation will seem like the best investment decision you ever made.

  3. If present value is the sum of discounted cash flows, the variables are: How much cash? When? What’s the discount rate? With low discount rates (I don’t know how to handle negative rates!) future cash flows are worth much more today. Ultimately, you have to ask yourself, ” Compared to what?” We have some VERY low bond rates out there to compare to/use as discount rates.

  4. What happens when central banks and the SEC experience regulatory capture? Is Bitcoin as crazy as it seems in that scenario? Heck even Doge could comparatively have utility at that point. Sometimes even a joke is better than the alternative. Not saying we’re there but are we headed there? Are we close?

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