“Wall Street and the economy are two different things.” — Milton Friedman
I just returned from the Orlando MoneyShow, where investors were optimistic and dismissed the fear of a health epidemic.
Yet, the coronavirus is taking its toll. The Chinese economy is tanking, commodity prices are plunging and interest rates are hitting new lows.
At one point, the 30-year Treasury yield fell below 2%. (It’s now back up to 2.09%.)
Gold, the ultimate hedge against chaos, is moving back up.
Yet, Wall Street and American investors at the MoneyShow seem to be oblivious to the bad news. Yesterday, the Dow Jones Industrial Average hit an all-time high.
What’s going on?
It’s easy to forget that stock prices are always forward looking. When the head of the World Health Organization’s (WHO) emergency program reported that the epidemic was slowing down, investors found it “very reassuring” and bought stocks.
Their decision may be premature — we aren’t out of the woods yet.
China is also injecting massive liquidity to keep the economy going, and the Federal Reserve is stimulating the economy in the United States. While the Fed isn’t cutting short-term rates, the broad-based money supply is now increasing at a rate of 7.5%.
Moreover, the majority of quarterly corporate earnings reports have beaten Street estimates.
This is all good news on Wall Street and why I remain 100% invested at this time.
Gold vs. Stocks: The Big Debate at the Orlando MoneyShow
One of the most popular events at the Orlando MoneyShow was the debate between the Wall Street bulls and the golden bears. I moderated the debate between Jeffrey Saut and Louis Navellier (the bulls) and Peter Schiff and Rick Rule (the gold bugs).
I began the debate by saying that, in the long run, there is no debate — stocks have won handily over gold. As Warren Buffett recently declared, “In the past 77 years, gold rose about 37 times its value. Not bad. But if you had invested in the U.S. stock market over the same period, your investment would have grown 5,288 times!”
But what about now? In the short run, gold and gold stocks can sometimes outperform stocks. That could happen in 2020, given that the stock market has enjoyed a monstrous bull market for the past 10 years, while gold is still getting started and remains far away from its highs ($2,000 an ounce in 2011).
With the Fed adopting easy money and the Trump administration spending money like there is no tomorrow, the case for gold moving higher is pretty strong.
So far, both stocks and gold have rallied, and that’s why we have both in our ideal portfolio.
Another Hot Seller at the Orlando MoneyShow
Kim Githler, the president and the founder of the MoneyShow, is a big fan of my work and loves my book, “The Maxims of Wall Street.” She held up my book and told the audience, “It’s my favorite financial book ever!” She then selected quotes from it and put them up on the screen.
We sold more than 100 copies in Orlando. The 7th edition is numbered, and attendees loved the idea that they could choose their favorite number. You can, too!
Go to www.skousenbooks.com, or call Harold at 1-866-254-2057. You pay only $20 for the first copy, and all additional copies are $10 each. If you buy a whole box of 32 copies, you pay only $300. I’ll inscribe the book with your favorite number (anyone except 1 or 2) and mail it to you at no extra charge if mailed inside the United States.
EconoSummit, Feb. 29-March 1, Las Vegas: The Investment Club of America will be holding its annual conference at the Orleans Hotel & Casino. I always look forward to this event, and a chance to invest in some really successful businesses. I’ve made a lot of money investing in California gyms. Mike Lathigee, the president, tells me the club has a new oil & gas deal that is going to be incredibly profitable. See you there! For more information, go to http://investmentclubofamerica.com/.
Hollywood Is Deplorable
Some films should never be made, but that doesn’t stop Hollywood. While the distribution of “The Hunt,” a dark satire/horror film, was postponed last August after the mass shootings in El Paso and Dayton, now Universal Studios is shamefully promoting it as the “most talked about movie that nobody has seen.”
The movie, which I have neither seen nor intend to, is apparently about a group of privileged vacationers who hunt human beings for sport. An original draft of the script depicted them as hunting gun owners and individuals who oppose abortion — that is, Trump supporters. R-rated indeed.
Don’t Hollywood Democratic elites say they are the party of peace, tolerance and gun control? Talk about irresponsible hypocrites.
Snopes.com, the fact-finding website, says, “Notwithstanding the context of a fictional horror movie, it should be unnecessary to point out that hunting human beings for sport has never been a tenet of Enlightenment liberalism or modern-day American progressivism.”
Apparently Universal Studies is not one of them.