“It was the best of times, it was the worst of times…” You might remember that line from A Tale of Two Cities by Charles Dickens. We reference it now, in 2021, because never before has the line been more true. As the pandemic raged last spring, a debate raged alongside as to what kind of economic recovery the United States would have. This debate provided an alphabet soup of capital letters, each one describing a different “shape” of recovery.
Read nowThe U.S. dollar could start to lose its world reserve currency status in the 2020s. Not all at once, and not overnight, but steadily over a period of years. In fact, the process may have already begun, which would partly explain the dollar’s powerful downtrend from March 2020 onward. At the moment, the dollar is still a world reserve currency without peer. It has the largest share of global currency reserves by far, indicating central banks around the world have
Read nowEditor’s Note: When a mountain of debt builds up over the course of many decades — as we have seen over the past 40 years or so — you wind up with huge amounts of government spending to keep economies going, even as central banks conspire to inflate the debt away. In today’s “best of” series, we cover two must-know terms — financial repression and fiscal dominance — that explain how it works. –JCL There are two financial terms that explain
Read nowEditor’s Note: For Christmas day, a Christmas riddle: When does a weak hand beat a strong one? In today’s “best of” lookback, we compare investing to high stakes poker — two activities with a great deal of overlap — and explain why it is often the surrounding situation that matters most, with the shape of events sometimes making the weaker hand (or weaker company) the better play. –JCL Say you have an investment choice between two gold mining companies. They
Read nowWhen Pfizer, in conjunction with BioNTech, announced more than 90% effective vaccine results on Nov. 9, the entire investing world got reordered. Suddenly, there was a wholly different reconfiguration of what the world could look like in a years’ time. It doesn’t happen often, but the market does this every once in a while. An unanticipated event, or an unexpected piece of news, can force-feed a whole new scenario that needs to be “priced in” through value adjustments. The more
Read nowIf you own gold, you are likely satisfied with the yellow metal’s annual performance thus far. As of Oct. 29, the gold price was up more than 25% year-to-date, as determined by Comex gold futures. GLD, the popular gold ETF, was up a tad less at just under 23%. Bitcoin, however, has blown past gold like it was standing still. By the same Oct. 29 reference point, Bitcoin (as priced in U.S. dollars) was up nearly 84% year-to-date — more
Read nowIn a book written in 1942 titled Capitalism, Socialism and Democracy, the Austrian-born economist Joseph Schumpeter coined the term “creative destruction” and called it “the essential fact about capitalism.” Creative destruction “revolutionizes the economic structure from within,” Schumpeter wrote, “incessantly destroying the old one, incessantly creating a new one.” The creative destruction process is all too often painful. Entire industries can be downsized, radically restructured, or even swept away completely. Because of the global pandemic, a tsunami of creative destruction
Read nowFinancial conditions are tighter right now than they’ve been in years. That might sound surprising. After all, the Federal Reserve, and the U.S. government, have taken unprecedented measures in 2020. The Federal Reserve has expanded its balance sheet by trillions, made a promise to support the corporate bond market, and said interest rates will stay near zero until 2023. The U.S. government, meanwhile, has spent trillions of dollars on fiscal relief. And yet, financial conditions are still tight. We can
Read nowMicroStrategy, a Nasdaq-listed company with a roughly $1.5 billion market cap, is the first publicly traded entity to embrace Bitcoin as a corporate treasury asset. But it won’t be the last. As of Sept. 15, 2020, MicroStrategy (MSTR) revealed it had purchased 38,250 Bitcoins at an aggregate price of $425 million, including fees and expenses. MicroStrategy had originally purchased $250 million worth of Bitcoin in August 2020, and then added $175 million more. “This investment reflects our belief that Bitcoin,
Read nowWe’ve received some interesting questions about the election, and about TradeSmith Decoder as a service. We’ll answer a few of those today. As a quick note regarding questions, the mailbag is always open: You can reach us via [email protected]. We always enjoy hearing from readers — and if your question is a common one, we may answer it directly in a future TradeSmith Daily. Q. Some think “gridlock” is bullish for markets, as it has been in the past. Why
Read nowImagine a child’s favorite food is birthday cake. He loves it so much that his fondest wish is to eat birthday cake for every single meal. Then, in some Twilight Zone version of reality, his wish is granted. He gets nothing but birthday cake, for every single meal. Morning, noon, and night. At first this would be great. The kid would be ecstatic. Eventually though, he would get sick of it. After a long-enough period, he would be sick of
Read nowWe recently explained why stocks could retest the March lows before the year is out. This made some readers upset. Some of the feedback we received was along the lines of, “There is no way we could revisit the fear of the March lows.” The idea of replicating the fear conditions that existed in March seems impossible. To which we say, yes and no. It is a bit more complicated than that. First off, as we said when explaining the
Read now
