Best investment for the next 30 years and the Fed flood
Let’s do this week’s Live Q&A Chat Live Stream Conference Call at 11am ET today.
I’ll take questions over the phone on our conference call line (Dial-in: 641-715-0700 Access Code: 709981), in the Trading With Cody chat room or just email us your question to support@tradingwithcody.com.
Click here to download The IAm Cody Willard App where you’ll be able to ask me questions live in the video stream (iOS 11 users might have a problem registering, we have an update coming asap). You can also watch it live today on YouTube here.
Two not-so-random thoughts:
1. Here’s perhaps the most no-brainer investment for the next thirty years: “Want the new Tesla Roadster in 2020? Prepare to pay Tesla $250,000 now.” Buy the Tesla Roadster first edition, take delivery in 2020 straight at a storage facility, wrap it in plastic, cover with a tarp and don’t look at it for until 2050. Have a drone deliver it to an antique car auction, sell it for (including say 2% inflation for 30 years) like $20 million. And the odds that a pristine condition first edition Tesla Roadster doesn’t increase in value? Come on, ain’t gonna happen. So don’t buy Tesla stock. Buy a Tesla Roadster!
2. Do you ever listen to CNBC when they debate the stock markets? Or do you read/follow people who comment on the markets? I do and I typically find myself wondering what they are talking about and sometimes I wonder if they’ve ever had an original thought in their lives. Anyway, I heard someone say something about how the low interest rates around the globe have created “flood-like conditions for the economy” yesterday and I remembered this article I wrote three years ago:
The markets and the Fed, Fed, Fed
October 20, 2014
My analysis points to more economic improvement, even for employment and Main Street in months ahead and inflation at the grocery store accelerating — though I don’t think that means the Fed’s going to react to those realities anytime soon.
With continued cheap money for corporations, margin-enhancing policies from the government at all levels and 0% rates still forcing savers into risk assets etc, I expect we still have more bubble-blowing bull market ahead of us. By the time the Fed finally acts to “tighten,” the bubbles will likely be much bigger than they currently. Important to remember too, is that the bubbles will actually probably continue to inflate even after the Fed starts to tighten.
You can’t flood the corporate economy and force savers into risky assets like stocks for years on end and then contain the effects of those policies by cutting back on your pumping. Jawboning the end of excessive, emergency liquidity measures isn’t going to change anything, though it will likely give you a small-term market correction if and when the FED finally actually ends all forms of QE.
0% interest rates are going to inflate huge asset bubbles and especially stock market bubbles, as I’ve been saying for five years now. 1% will still cause bubbles. Maybe a 2-3% Federal Funds Rate might start to draw money out of the markets and shift inflation down to a lower gear. So until the 0% interest rate itself is actually being raised and from a higher base than it is right now, you want to keeping trying to ride the bubbles being blown all around you.
So keep fighting the Fed and stay the course, follow the playbook and be vigilant as well as disciplined in your approach. You’re not supposed to be trading for an adrenalin rush. Rather, keep the big picture and the long-run reasons for risking your hard-earned money in the markets in mind.
And in the meantime, I counted about 17 percentage points worth of moves in the SPY last week, as it ran from ups to downs. Absolutely crazy volatile lately. While today’s looking like a reprieve from the gyrations so far, it’s a long day ahead and an even longer 10,000 days ahead of that, so don’t rush in.
My point is that with all this as a context, if I didn’t own the stocks I wanted already, I’d still want to scale into some of the best most Revolutionary Investing stocks like my usual $GOOG, $FB, etc, nice and slowly as usual. Steady as she goes as the volatility gives you opportunities.
Cody back live in November 2017 now. Much of what I wrote above is still the case, but we must remain aware that we are another three years and many stock points higher now than we were when I wrote that. The Fed’s raised rates a bit since then, but rates are still far from the 2-3% target of concern I’d mentioned above in 2014.
Talk to you on the live stream chat in a bit!
