I would write more about the market, but not much going on. The S&P 500 is up 7% for 2014, but most of those gains are concentrated in a three-week period in May, with lots of churning before and after. It’s a weird, fickle market where sectors and stocks can be chopped to pieces in an instant, such as what has happened to emerging market and small caps. That’s why the ‘bigger is better’ theme has been such a good investment strategy since the market bottom of 2009, with huge gains in mega-cap, globalist stocks like Google, Apple, Amazon, 3M Company, Facebook, Jonson & Johnson and Disney. It’s so easy anyone can make money, but the the mistake a lot of investors make is taking on too much risk with high-volatility, speculative individual stocks when better returns with less risk can be attained by using in-the-money call options on large cap, low volatility stocks like the aforementioned companies or a large cap index fund such as the S&P 500. The idea behind the deep-in-the money call is you can capture 90-95% percent of the upside with only 10% of the capital of buying the stock outright. If the market tanks, which it did in 2011, you can deploy your large cash reserves and double down. It’s a very effective strategy.
Regarding the state of the economy, the entire middle class is getting demoted, and if you look at income relative to inflation, income has been going down four years in a row. Companies are firing middle management..look at the emails you get from friends, ‘I been laid off..what do I do?’ So what’s happening is companies are outsourcing their healthcare and worker’s compensation headaches to temp firms. We’re in an un-participatory wealth creation and economic boom. You have millions of people unable to to find work or working in low-paying jobs juxtaposed with stories of tech companies, most of which are less than five years old, being valued at hundreds of millions or even billions of dollars, making their founders and early employees obscenely and instantly wealthy – wealth that just a decade ago would have taken a lifetime to attain that now can be had in a year.
Bay Area real estate keeps making news highs:
Homes in 94705 are up 40% from the 2011 lows. So much for James Altucher insistence that real estate only gains 2% a year.
Uber will be worth $40 billion next year, guaranteed. TSLA will go to $350 a share. Facebook will go to $120. That’s the economy we live in, where the big and rich get bigger an richer.
From Matt Forney, he writes
flakes-posterAs the collective IQ of America slides every year, our discourse becomes increasingly juvenile and trivialized. The cultural Marxists of yesteryear at least had some intellectual chops: our modern overlords can’t discuss anything more complex then pop culture.
He’s right about the second part, but wrong about the first. Cultural Marxism is prevalent in popular culture, but I guess he didn’t see the Reddit AMA about the astronomer, which got over a thousand comments and three thousand votes because America is not dumbing down, as much as everyone says it is. The empirical evidence just doesn’t support a ‘dumbing down’ process. Taking into account the Flynn effect, more rigorous education and the internet, your average white, 20-30 year-old male would have an IQ of 115 fifty years ago. The beta male is also an archetype conservative, pragmatist and utilitarian because he puts logic, empiricism, and reason ahead of ideology and emotion.
Second, as evidenced by the backlash against the ‘check your privilege’ campaign, we’re seeing a repudiation of cultural Marxism by the smartest generation, in agreement with earlier posts about beta male conservatism and millennials being more conservative than popular belief dictates. Same on Reddit and 4chan – thousands of millennials were defending the action of the officers in the Michael Brown shooting and subsequent riots, and justly so. The smartist generation doesn’t take to pandering and vapid platitudes – and that’s exactly what those campaigns were. Obama’s plunging approval ratings and the rapid rise of internet libertarianism, pragmatism, utilitarianism, minarchism, neoconservatism, and neoliberalism doesn’t bode well for the already dwindling ranks of cultural Marxists, either.
The libs, in their war on success, exceptionalism and free markets, would rather have society regress than uphold the meritocracy. They want equality of outcomes instead of equal opportunity. They also seek economic failure and crisis so that the rich lose money, as a way to destroy the wealth of the top .1% when efforts to raise taxes and increase regulation fail. To them IQ is a meaningless number and individuals are exceptional at non-athletic tasks only through unfair environmental advantages, not because of superior genetics. Libs like Michael Lewis say the market is rigged and irrational, despite evidence to the contrary of hundreds or even thousands of people consistently beating the market while playing by the rules.
As an example of reason trumping ideology, a lot of republicans, including National Review, are now getting behind birth control because they realize that it’s a good way to control future entitlement spending and crime, as part of growing pubic and political support for eugenics. In 2000, John J. Donohue III and Steven D. Levitt. published a paper positing that abortions in the 70’s from Roe V. Wade could have been a major contributing factor to the reduction of crime in the 90’s and, now, decades later, policy makers are finally looking beyond the controversy and taking heed to the merits of the study and other similar findings.