One thing that doesn’t seem to add up to me is how the hordes of novice small investors can possibly push up stock prices so high. Do little guys like me actually have $trillions to throw into the market? I thought everyone was poor now from Covid? Can all those $1000 Covid checks add up to trillions? A $trillion in market cap divided by $1000 is 1 billion people throwing their Covid check into the stock market. Did that actually happen?
It’s institutional money pushing it up, which is hardly novice. I have another theory for TSLA. Maybe the real reason TSLA is so volatile and expensive is because it makes no money and it needs the funds injected from the stock market to sustain itself. Since the powers that be cannot let TSLA fail (at least not yet), they send the money in one way or another. This is why TSLA defies all logic yet all the other darling tech stocks are just trudging up higher and higher week by week, no blow-off top evident at all. It’s the most predictable, steady rise you can imagine. Until it isn’t. And I don’t think we’re there yet.
But I do expect a correction in TSLA like it’s had a few times over the last year, if you look back at its chart. None of these corrections affected the upward trajectory of the other darling stocks (except of course the CoronaCrash).
Gregory Mannarino points out that the reason the market turned today was because mid-day OPEC came out and said that they would not be curtailing production as much so oil price would not rise. Otherwise stocks would have been higher, which they were, until mid-day.
The money’s gotta go somewhere and it ain’t the shoe shine boy bidding up TSLA higher. That’s why this time it IS different. Never before in the history of the dollar has the bubble in stocks been funded by overt money printing. It is NOT a credit bubble (at least primarily)
Mark BC wrote: One thing that doesn't seem to add up to me is how the hordes of novice small investors can possibly push up stock prices so high. Do little guys like me actually have $trillions to throw into the market?Well, at least 457,000 Robin Hood investors are buying TSLA:
Ten Thousand Day Traders an Hour Are Buying Tesla Shares By Sarah Ponczek July 13, 2020, 12:20 PM PDT Updated on July 13, 2020, 1:34 PM PDT Almost 40,000 Robinhood accounts added shares of the automaker during a single four-hour span on Monday, according to website Robintrack.net, which compiles data on the investing platform that’s much beloved by day trading millennials. The frenzy in interest means that as of the end of Monday’s trading session, there are now roughly 457,000 users on the Robinhood app that hold shares of the company in some form. That makes it the 10th-most popular stock on the platform, ahead of even Amazon.com Inc., which is held by 358,000 users.
One word: Margin.
Wall Street is a harvesting operation. Robinhood platform pays for its “free trading” by selling order flow - intel on what their customers are trading - to the Wall Street harvesting operation, who then proceed to separate these people from their money.
https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-year-old-robinhood-customer-dies-by-suicide-after-seeing-a-730000-negative-balance/#1898d1416384 The note found on his computer by his parents on June 12, 2020, asked a simple question. “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?” The tragic message was written by Alexander E. Kearns, a 20-year-old student at the University of Nebraska, home from college and living with his parents in Naperville, Illinois. Earlier that day, Kearns took his own life.
Good point about margin.
I will concede that TSLA is in a bubble and as I said before, I expect a correction.
But where is the blow-off top in AAPL? It’s so straight, it’as almost as if it was being managed…
This was a great talk and I always enjoy what the three of you have to say, as well as the candor of John and Mike. Adam you are a gifted interviewer, and moderator when there is a larger group.
For some time I’ve been wondering why investment advisors suggest to hold only a small portion of one’s portfolio in precious metals (the recommendations are usually between 5 and 20% depending on the analyst) during these times? If the demand for gold and silver, as well as turbulence in the markets and in society, are expected to continue to grow, why wouldn’t the recommendation be to hold higher levels of precious metals, for example 75%, during these times?
I’ve been with New Harbor for about 11 months and I’ve seen a gain of ~12%. That’s fantastic in my mind because all I really wanted them to do is to keep me from losing money! That’s also good because they have me positioned to take advantage of a crash in the stock market and a corresponding gain in Precious Metals and mining stocks. With New Harbor I welcome every correction and crash.
JWhite said: Adam you are a gifted interviewer, and moderator when there is a larger group(...) (...)why wouldn't the recommendation be to hold higher levels of precious metals, for example 75%, during these times?Thank you for the kind praise, JWhite. I'm glad to hear your enjoy these interviews and will keep trying hard to earn your appreciation. As for whether financial advisors should be recommending a substantially higher % of one's portfolio be held in PMs given current conditions, the answer is complicated. I suppose the short answer is that it's rare that an advisor will recommend you be that concentrated (75%) in ANY one asset class, except perhaps cash. Most will want you to have diversification. Also, gold and silver are very volatile (especially silver), and it's important investors realize that before buying them. You have to be prepared and willing to endure prices swings of 20%+ on a monthly basis. Many folks just can't handle that. Moreover, most PM holders come to believe that The Powers That Be conspire to keep gold and silver from appreciating to their true potential; often "monkeyhammering" the price down in orchestrated raids. For most people, it's not appropriate to suggest they hold the majority of their capital in an asset class vulnerable to such manipulation. That said, Chris and I hold a substantially higher percentage of our financial wealth in PMs than the 5-20% percent you mention. But that's because we're well-experienced with their dynamics and very intellectually bought-in to their role as a preserver of purchasing power. Mike Maloney of GoldSilver.com famously holds pretty much 100% of his financial wealth in PMs. So our general advice is: hold as much in PMs as makes sense to you AND let's you still sleep at night without worrying too much about what the price may do tomorrow.
Great question JWhite… one I’ve been asking myself for a long time too. And great answer Adam. You nailed it.
For me, 5-10% always seemed way too low, and I now sleep happily with around 25-30% of my investibile capital in PMs. Now that the bull market in gold seems to have good momentum, I’d like to increase the %, but must remember this will happen naturally as the price increases.
Thank you Adam for taking time to consider my question - your points make sense. The 75% was simply a number I threw out to contrast with the typical recommendations – the idea being ‘some number much higher than 10%’.
In looking at the price history of gold over the last 20 years, even with manipulation it has gone up over time. But I’m specifically looking at 2007 - 2012, and expecting that a similar situation is taking place now, so I’ve been wondering why the recommendations for holdings of gold are still on the low side at the moment. If we are expecting inflation, or hyper-inflation, then I’m not sure if cash is safer than gold at present. Also if a significant amount of cash is in a bank, then there is the possibility of bail-ins.
It makes sense that if an investor is worried about what will happen to the price tomorrow, then significant PM holdings may be too stressful. I suppose it depends on what one believes will happen, with all the sectors.
Another member also made a point that there is the possibility that governments could dictate that it is illegal to hold gold, at some point in the future.
In any case, while we also have a ‘higher than 5-20%’ investment in PMs, I don’t have a strong opinion about this, I was just curious about the current recommendations and thoughts on this. Thanks for clarifying….
Goldman Sachs shares rise as earnings blow past the Street on the best trading results in years
“Goldman’s earnings this quarter were too good — almost indecent, in fact,” said Octavio Marenzi, CEO of capital markets consultancy Opimas. “The Fed has been able to engineer a huge bounce-back in the markets by injecting trillions of dollars, benefiting investment banks primarily.”
I am shocked I tell ya. It is Indecent and it’s exposed. Can they get arrested for indecent exposure?
I once heard it said that diversification is the investment strategy you use if you don’t know what’s going to happen. ?
But I “know” what’s going to happen: we’re going to start down a devastating deflation vortex that would destroy the big banks and other big holders of debt (bonds). That’s what is mathematically required. BUT those who would be devastated by deflation have the power to prevent it (by printing “currency” in huge amounts at frightening speed). That’s what “they’ve” always done and is what is in their best interest. So we’ll get a huge inflation, probably hyperinflation unless a monetary reset can be agreed upon. I just don’t know when and the crucial particulars.
So I’m ready for the deflationary nightmare to get started, and it has already. I can cope with it and might even benefit in some ways. I’m also ready for the massive currency creation and think I’ll survive it and perhaps even thrive/profit. The timing is a complete opacity. The details of my life during all this are also unknown and will probably even threaten my life. No one wants to live in a world in which gold is $10,000/oz or more and silver is $500/oz, and I certainly don’t. But if something like that happens, I have strong reasons to think I have a shot at survival.
“Happy Hunger Games. And may the odds be ever in your favor.”