Again, that puts stocks higher than in 1929. And many other measures put stocks way ahead, too, breaking all records – stocks/ EBITDA... stocks/PEG... stocks/sales and profits... stocks/corporate profit margins... Hussman’s margin-adjusted CAPE... stocks to disposable personal income... and Warren Buffett’s favorite – the Wilshire 5,000 to GDP... By almost any measure you choose, stocks are near the top of their trading range, a point rivaled only by 1929 and 1999. NEED GOLD In these circumstances, you don’t need a crystal ball. You need gold. If you stay in stocks, you could lose half of your money... or more... and then wait 20 years or more to get even. If you get out of stocks, you will only lose the potential upside, which doesn’t seem worth the risk. And so far this century, an investment in gold has beaten an investment in the S&P – even when accounting for dividends – but with much less risk or volatility. Most likely, stocks will rebound a little early in the year. Then, with the holidays over and the effect of the eggnog and cocktails wearing off, investors will go back to their desks and their laptops. They will rub their eyes and listen for another clanging bell. Suddenly, or gradually, it will become clear that the good-news economy of 2018 was mostly a fantasy.
If you stay in stocks, you could lose half of your money... or more... and then wait 20 years or more to get even.
Or he’ll look at gold. Late last year, while stocks were falling, gold was going up – nearly 8% over the last two months. “That doesn’t seem like much,” he will say to himself. “But it’s a damned sight better than losing money this year like I did last year.” Bill Bonner is the underground news mogul and founder of The Agora pub ishing company. He’ written th NewYork Times bestselling book Empire of Debt and most recently published Hormegeddon: HowToo Much Of A Good Thing Leads To Disaster . He is one of the gr at writers an i ds in America today and also publishes a free daily lett r, Bill Bonner’s Diary , which you can sign up for here: bonnerandpartners.com. Take away one-time mood boosters – the unfunded tax cut, the unfunded extra federal spending, the repatriated profits, buybacks, and extra debt – and the whole “growth” story disappears. And then, a tinkling sound in the background... barely audible at first... will grow louder... The tattered investor will shudder. And he’ll feel the shadow of 2018 creeping over him... the worst year since 2008. He’ll look across the hall to the bond traders. There, he will discover that he can earn 2.64% on a risk-free 10-year U.S. Treasury bond.
American Consequences 65
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