Free eLetters

November 2020

The Mechanics of Negative Interest Rates

November 27, 2020John Banks

Editor’s Note: One of the strangest things about the modern financial era is the dawn of negative interest rates. Who knew such a thing was even possible? And why do they exist in the first place? In today’s “best of” piece, originally published in May, we revisit the mechanics of negative interest rates and explain how they work. — JCL Earlier this week we discussed the bond market’s ominous message, while emphasizing a forecast for negative U.S. interest rates. Scott

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Bitcoin is the Purest Form of ‘Hard Money’ Ever Created

November 26, 2020John Banks

Bitcoin could be one of the greatest public investment opportunities in all of recorded history. That’s not hyperbole. We are serious about this — and we come to that view having studied Bitcoin intently for more than two years, and global markets overall for more than 20. There are venture-capital opportunities and private-investment opportunities that can deliver multi-thousand-percent returns. But these opportunities are not public in the sense of being widely available and easily accessible for any investor at any

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Why Mental Capital is Just as Important as Financial Capital

November 25, 2020John Banks

Editor’s Note: When the end-of-year holidays roll around, we like to revisit an assortment of “best of” pieces taken from throughout the year. And what a year it has been. Given the degree to which 2020 has been mentally taxing for almost everyone, it seems fitting to revisit the topic of mental versus financial capital, and the reasons why both are equally important. — JCL Investment success depends on two types of capital, financial and mental. We are all familiar

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When Will Bitcoin Have a Meaningful Correction? (Don’t Hold Your Breath)

November 24, 2020John Banks

Bitcoin’s performance in recent weeks has quietly shocked Wall Street. At the time of this writing, Bitcoin is up more than 41% for the month of November alone — with a week of 24-hours-per-day trading left to go — and less than $500 from its all-time high set in 2017. The drumbeat of Bitcoin endorsements from financial heavy hitters is starting to feel relentless. In these pages we have talked about MicroStrategy, Square, Paul Tudor Jones, Stan Druckenmiller, and even

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Britain’s Green Industrial Revolution is a Sign of the Investing Times

November 23, 2020John Banks

“Imagine Britain when a Green Industrial Revolution has helped to level up the country,” wrote U.K. Prime Minister Boris Johnson in a Financial Times opinion piece on Nov. 17. “You cook breakfast using hydrogen power before getting in your electric car, having charged it overnight from batteries made in the Midlands,” Johnson went on. “Around you the air is cleaner; trucks, trains, ships, and planes run on hydrogen or synthetic fuel.” Johnson’s imagery of a Green Industrial Revolution was the

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What Ray Dalio is Missing About Bitcoin

November 19, 2020John Banks

Paul Tudor Jones and Stanley Druckenmiller have at least three things in common. They are both multi-billionaires. They are both hedge fund legends in the global macro space. And they have both publicly endorsed Bitcoin and confirmed they are long. Ray Dalio is another global macro hedge fund legend, with a net worth in the vicinity of $15 to $20 billion. Dalio is the founder of Bridgewater Associates, the largest hedge fund in the world and one of the most

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Tesla Will Be Added to the S&P 500 (and May Soon be a Sell, or Even a Short)

November 18, 2020John Banks

Congratulations are in order for Tesla bulls: The S&P 500 Index Committee announced this week Tesla will be added to the S&P 500 in December. Tesla shares (TSLA) jumped 13% on the news, sending Tesla’s market cap to nearly $420 billion. The Tesla chart is intriguing. If Tesla breaks down from here, it is definitely a sell and could even be an attractive short sale. There is a history of wildly overhyped growth stocks reaching their valuation pinnacle, and then

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The Largest Trade Agreement in History Just Got Signed — With China at the Center

November 17, 2020John Banks

If you thought globalization was dead, think again. In some ways, it is stronger than ever. There are certainly factors that favor protectionism, and trade wars, and a withdrawal from partnerships and agreements. But there are also powerful forces pushing in the other direction. These counterforces have the potential to produce more globalization over time, not less, with greater cooperation between nations. One important factor is the growing rift between the United States and China. With each passing day, it

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The European Union Goes After Amazon

November 16, 2020John Banks

A day will come when it makes sense to short the juggernauts: Amazon, Apple, Facebook, and Google. That day is not today, and it may not be here for a while yet. But it will come. As we explained on Aug. 3, the tech juggernauts are trading like a zero-coupon U.S. Treasury substitute. Investors have been reflexively trained to buy Amazon, Apple, Facebook, and Google when little else is working, because the tech giants are seen as impervious to downturns

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Covid Winter is Coming

November 13, 2020John Banks

On March 6, 2020, we wrote in these pages that 80 million Americans were likely to be infected by COVID-19, and that more than 400,000 Americans could die as a result. At that early date, many did not believe it. Many thought it impossible. And yet, here we are. At the time of this writing, more than 242,000 Americans have died since February by official estimates, and the 400,000 threshold looks well within reach. Scientists at the Institute for Health

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Brilliant Billionaires Keep Buying Bitcoin

November 12, 2020John Banks

When smart people look at Bitcoin, they wind up buying it. This seems to be happening with clockwork-like regularity now. It feels like every other week or two, if not every other day or two, some new individual or entity, known for excellence in their domain of expertise, is buying BTC. The latest example of this is Stan Druckenmiller, a retired multi-billionaire hedge fund manager known for having one of the greatest money management track records of all time. While

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A ‘Rogue Wave’ of Vaccine-Related Optimism Up-Ends Prior Winners and Creates New Ones

November 11, 2020John Banks

When 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

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