One of my all time favorite trades is a cash burning story stock, pre-revenue. Wall Street loves a good story and hates to deal with reality, when it comes to concept stocks. You can apply this logic to the entire market during period of duress. Take for example right now: we have Chinese balloons traversing the country and a war raging in Ukraine, fully funded by the United States in what seems to be a quagmire for all parties. One must ask oneself from time to time: what exactly do we gain from siding with Ukraine, a nation of 30 million against an ancient power in Russia — whose resources are needed to fuel the global economy?
ANSWER: Nothing at all, unless you’re thinking about toppling the Russian govt in order to steal it from them.
This is simply yet another neocon failure. They are evil and smart people, but wholly incompetent and unable to operate without spite. They, as well as many in the west, have fallen from grace and now operate under a system of malevolence.
Back to the market.
The markets are going up now because there are several assumptions at play here.
1. The war will not be resolved any time soon.
2. Inflation is at bay.
3. Soft landing prospects are rising.
4. Housing market is down, but not so bad.
5. The Fed will pause and possibly ease in 2023.
These are the five pillars the market is operating under and because none of these things need to be resolved now — markets are free and pretend they are all true — bid stocks up to levels that correlate with growth and not recession.
Understand these things can change in an instant. All we need is an earnings warning, a missile fired into an aircraft carrier in the Pacific, rising rates crushing the proles, the Fed resurgent after a hot CPI print.
We have all taken for granted the specter of, seemingly so, WORLD FUCKING WAR. Since nukes aren’t real, you’re not gonna get off so easy and many of you will be mobilized and fighting inside two years. Under any news of world war, markets will be shattered into the tiniest of pieces.
So understand the risks associated with your debauchery and your wanton disregard for common sense, in this brave new world we find ourselves spilling into, sloppily and with the fattest intentions ever attempted by civil societies.
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Not if…when.
My 2 cents; I think the first premise is exact opposite; in fact that the war will be resolved soon. There is this magical unicorn view seeping out of certain MSM outlets (ie Russia/Ukraine will negotiate, Russia can’t sustain a war, the US is advising Europe to stop agitating, etc etc).
I think the recent market activity is founded on the severely mistaken premise that the oil and gas will flow, slave labour in China can deflate the world economy again and inflation will magically disappear.
As Mandelbrot illustrated, markets have memory that can last decades. That observation is underpinned by human psychology; especially irrational, magical thinking.
Oliver Stone (Platoon): “Hell is the impossibility of reason. That’s what this place feels like. Hell.”