Back in August and September during the stock market plunge, I recommended going long here and again here.
Sure enough, stocks have surged since then, with the S&P 500 up about 9% since my reiteration to buy the dip:
The portfolio I ‘manage’ is up 20% this year, vs. 2% for the S&P 500:
By ‘manage’, I tell the client which ETFs and stocks to buy in exchange for a cut of the profits. The historical returns are about 50% per year. This is better performance than probably any active management in existence on an absolute and probably risk-adjusted basis, too. AQR management, for example, a billion-dollar active management firm which is staffed by a team of PHD quants, cannot get these kind of returns. No one else can, and that’s why it’s proprietary. It’s not that my methods are sophisticated (they aren’t), it’s that almost everyone else is so bad.
A bet against the stock market is a bet against IQ, a bet against the best and the brightest who power capitalism and innovation, as well as a bet against the indefatigable American consumer. It means you’re betting against high-IQ tech companies like Google, Facebook, Apple, Visa, Mastercard, Cisco, Oracle, Netflix, Amazon, and Microsoft – that’s a bet no sober individual should ever make.
US stocks have outperformed pretty much all asset classes, going as far back as the 19th century:
(Graph courtesy of the Mega Foundation’s investing page)
Do the fools on Zerohedge think their alarmist nonsense can override 100+ years of gains, can override 100+ years of innovation and free market capitalism by America’s best and brightest? If you get your financial advice from losers, you will have loser returns, sulking under a cloud of self-pity and resentment waiting for the crisis that will never come, the black swan that will never arrive. Doom and gloom, conspiracy theories are a coping mechanism for the unsuccessful to reconcile mediocrity by shifting the blame unto nebulous entities instead of the ‘self’. If I fail, it’s because some shadow entity is keeping me down – not low-IQ, poor work ethic, or lack of talent.
Precious metals and bitcoin are fine for a diversified portfolio, but they should not be your entire portfolio.
Betting against the stock market and America means betting against companies like Home Depot, Target, Costco, Lowes, Nike, and Disney – all which are posting record profits & earnings quarter after quarter due to consumer spending and exports. Disney is a play on obesity and population growth, neither of which shows any signs of slowing. Disney makes billions of dollars a year exporting its intellectual property all over the world, in addition to billions of dollars from sedentary youths watching Disney programs and movies and parents buying merchandise. It’s not that I personally like this trend, as these obese kids will add to healthcare costs down the road, but it’s the way it is. Google is play on the propensity of the Left Side of the Bell Curve to click contextual ads. Facebook, which is run by high-IQ people, also makes its money from the left of the Bell Curve (to click the ads), as do most companies. As I said, there’s a lot of room on the bottom – a lot of money to be made from the Left Side. But you also have companies like Amazon, which is laying the infrastructure that is powering the trillion-dollar ecommerce economy. Investing in companies like Google, Amazon, and Facebook is like investing in the company built the Matrix in the eponymous movie, and I’m sure it would be a good investment considering that everyone is plugged into it. The aforementioned stocks are up 20-30% since August and, despite their $300+ billion dollar market caps, have much further upside. I been telling folks to buy these stocks (Amazon, Mastercard, Visa, and Google) since 2011 and Facebook since the IPO. But you have these doom and gloom liberals who want the economy to fail so that the rich lose money and there is less wealth inequality. At the same time, you have idiots like Peter Schiff and Karl Denninger that keep repeating this hyperinflation/end the fed nonsense. That’s why the populist movements of the left and right are stuck, they keep coming up empty handed as the status quo keeps prevailing. Subscribing to liberalism is like believing in man-made global warming. It’s like believing you can grow an economy by overtaxing its most productive members.
Will the market go lower? Yes, eventually it will. But if you heed these fear mongers, like those fools who say to always rent instead of buy a home, after many years you will have nothing to show for it.