Hey friends, hope you are doing great.

Went on a golf trip to Bandon Dunes this past week - it was picturesque:

Also my friend Willie recommended a book, The Wager, by David Grann. A harrowing story of naval life, search for glory, disease, mutiny, and death. It is so good. Been a long time since I’ve read 150 pages in two days. The quote included today comes from that story.

Have a nice weekend.

Eddie

Returns for United States S&P500 Index Total Return going back:

Many will look at the acceleration and recent period compound returns above 13-15% and suggest the market is ripe for a crash, and perhaps an extended downturn.

Maybe it is. Maybe not…

In 10 years we’ve had many 10% declines, at least three 20% declines, and one 35% decline.

Despite all that, the 10 year number still returned 15.55%. Not saying it will continue like that, but it’s just one arrow in the quiver to help ignore the constant negativity.

Furthermore, there is one important variable that alot of the doom folks often miss in their (emotional) analysis.

And that is the fact that being negative on stocks priced in dollars means you are bullish on fiat currency - which long time readers of this journal know has been a seriously losing bet.

How can you be bullish on fiat currency when the (M2) money supply chart looks like this:

Being bullish on paper dollars with infinite supply means you believe the freight train of money printing that devalues those dollars is for some reason going to change direction or stop.

The US government is running deficits of 6-7% of GDP for the foreseeable future. That negative cash flow means more borrowing to fund those expenditures, or increasing the money supply.

On the surface it obviously doesn’t sound good - if it was an individual person, they would quickly be broke - and if it was any other country than the United States it would be more alarming, to be sure. But it isn’t any other country. It is the dominant capitalistic system where the best companies and entrepreneurs in the world congregate, and where the worlds capital congregates too. Despite its flaws, it is far more reliable than “capitalism by permission” China, or basket case Europe.

Even the famous Warren Buffet said that the US can sustain massive debt balances because the US dollar is the global reserve currency without any close viable alternative.

Obviously stocks can go down in the short term against various reference points (currency, gold, other equities, bonds, etc), but a long term bet against US equities in general I think is a fallacy.

Want to invest yourself? If you want to start investing in the American and Global stock markets, ETFs are the way to go. If you’ve never done it before, or are an experienced investor looking to add some guardrails to your portfolio, everything I know about portfolios and DIY investing is included in my Simply Investing Masterclass. Lifetime money back guarantee.

“Whosoever commands the seas commands the trade of the world; whosoever commands the trade of the world commands the riches of the world.”

—Sir Walter Raleigh

Do you think the S&P500 will be lower, higher, or flat in 5 years?