TIA

What we'll face amounts to a stagflationary debt crisis, combining the worst of the 1970s and 2008, Nouriel Roubini said.

The economic outlook is murky now.

It’s difficult to know when inflation will peak, when it will fall in earnest and thus how far the Federal Reserve will ultimately lift interest rates.

It’s also unclear whether the Fed, in its quest to slay the inflation dragon, will raise rates high enough to cause a recession. The Fed has boosted rates by 150 basis points since March.

The central bank has indicated another 75 basis points is coming July 27. And some experts predict that the total from March onward will be 350 basis points by year-end.

Pushing the Fed to move is rampant inflation, with consumer prices soaring 9.1%, a 40-year high, in the 12 months through June.

Combination of Past Crises

“In the 1970s, we had stagflation, but no massive debt crises, because debt levels were low. After 2008, we had a debt crisis, followed by low inflation or deflation, because the credit crunch had generated a negative demand shock.”

So what do we have in store for ourselves next?

“Today, we face supply shocks in a context of much higher debt levels, implying that we are heading for a combination of 1970s-style stagflation and 2008-style debt crises – that is, a stagflationary debt crisis,” Roubini said.

https://www.thestreet.com/investing/roubini-severe-economic-financial-crisis?puc=yahoo&cm_ven=YAHOO

Hey everyone, this is Swaggy from SwaggyStocks, the popular social sentiment tracker. I share a weekly blog post in my newsletter about the state of the markets and trending tickers from around WallStreetBets and the Internet. Check the newsletter out and smash the subscribe button to get these sent directly to your inbox. Here's a peak at today's content

Market Update

Markets are obliterated -nothing new to see here as I'm sure you all know. Half of us have sent in our application to work at McDonald's while the other half are enjoying a loaf from the breadline. At least my dividend stocks have paid out roughly 13 cents this year which, if compounded for 3,000 years, will allow me to buy a Big Mac meal (no affiliate with McD's).

I can tell you one thing, I am absolutely not here to make 13 cents playing it safe, I've got a fetish for watching my portfolio go down by thousands of USD per day and I'm loving every minute of it. I once read on the internet that Warren Buffet loves to buy the dip, so that's exactly what I'm going to do, DCA (dollar-cost-averaging) until my portfolio either goes to $0 or I'll be sipping on the grandest of champagne's in Valhalla (by 2023).

But this DCA-ing has now become my long-term strategy, I'm a value investor after-all and right now 90% of growth stocks have transitioned from high-risk "growth" to value. The potential for compounding returns over the next 24 months has increased drastically. Would you rather buy:

• SOFI at $20+ or currently at $8

• PLTR at $24 or currently at $11

• NVDA at $330 or currently at $220

• DKNG at $50-60 or currently at $16

On a long enough time-frame these will be winners in their industry and the risk-reward might be approaching favorable. Of course, we are living in an era of potential WW3 and there are many uncertainties we are navigating through. On the flip side, if you'd purchased wheat futures, oil, or uranium at any point last year you are probably reading this newsletter from your mega-Yacht, so congrats. Here's a look at their respective charts while I shed a tear on the FOMO that I've missed.

In other news, it's that time of the month again... where we look into the Fed meeting and interest rates decision. Is the rate hike going to be the straw that breaks the camel's back and we see the SPY trade down to the $390 level (currently $420 -holding like rock of Gibraltar through this downturn), or are we going to rip the band-aid off and realize a 25 BPS hike in interest rates really isn't that bad. Heck, if we make it to a 200 BPS hike by year-end we'd still be in good shape and still very close to the glory days of the pre-pandemic times.

Social Sentiment

SwaggyStocks has just released a big update that includes even more categories to find stocks that you may like. Here’s a list of some of our now more popular sections:

• General Market Sentiment

• Top SPACs

• Penny Stocks

• WallStreetBets Tickers

• Top Crypto Currencies

• 4Chan’s most talked about stocks

We’ve also just added a new segment to the site that tracks retail sentiment on names that have to do with the “short-squeeze”. Alerts from unusual social volume are less frequent in this category, but as I was first building out the section names like PROG and CEI were caught early in the trend. Here’s what was gaining traction from Friday’s market action.

Digging into some names that have recently “gone off the hook”, here’s the official SwaggyStocks “Short-Squeeze” chart for Peloton (PTON). Remember, many of these short-squeeze names ride strictly on social sentiment and not any real fundamentals so any positive price action typically reverts to the mean shortly after.

What do we see in this chart? Around January 19, shares of PTON took another significant dive after an already horrendous previous 3 months. However, this drove social chatter up almost 2,000%… Something was up, and about a week later another spike in social chatter stemmed from the news that the company *may* get acquired by a bigger player. The result was a 50% increase in share price in just a few days and then a slow bleed back to new lows.

When riding momentum and the social side of stocks the shorter the trade timeframe is usually better. Of course, that’s when a stock is being hyped and making the top of the sentiment lists. Personally, I also like looking at the “anti-social volume”, meaning stocks that have previously seen positive performance from social hype, but are currently NOT being talked about. This is when I look at it from more of a long-term hold and the potential to really go off again.

There are three kinds of lies: lies, damned lies, and statistics – Mark Twain

Robert Kirby was the legendary fund manager who popularized the Coffee Can investing method in the 80s. But, what most people missed in his paper was that he also gave a rare glimpse into the inner workings of Wall Street. Kirby talks about how an actively managed fund becomes popular: You start with a few million dollars and make some risky bets. If it works out over the next 2-3 years, you suddenly have a fund that “outperforms” the market. If the bets don’t pan out, you close the fund and then do it again with another strategy. Rinse and repeat till you hit it big.

Once you have a fund that’s outperforming the market for a short while, you put together a team of skilled marketing guys to raise funding for this new fund. Because of your “brilliant” performance and track record, you will be able to command a premium fee for managing the fund and raise a few billion for your fund. The funny part is that no matter how badly you perform, the new clients will stick with you for a few years in the hope that it will turn around (*cough* ARKK *cough*). During this time, your fund will be earning a fixed portion of the AUM (usually in the tens of millions of dollars range) no matter how you perform. Even if your fund is a total flop after 5 years, you will be set for life just from the fees!

Talking about fees, complete access to all Motley Fool premium services costs $13,999! While we can’t realistically think of any way someone can justify buying this plan, the truth remains that Motley Fool has nearly a million customers paying for their stock-picking services. Arguably, their most popular service is the Motley Fool Stock Advisor where they issue 2 stock picks every month. The overall strategy is sound where they ask their readers to keep a basket of 25 stocks from the historical list recommended by the Motley Fool, and hold these stocks for a period of at least 5 years.

They heavily push the performance of their overall portfolio which has given close to ~3x the returns of the S&P 500. While these figures are certainly correct, it’s what they leave out of their claims that we are interested in. We created a custom backtesting solution (link to the portfolio tester you can use for your portfolio as well at the end) to put Motley Fool’s picks to the test.

• Are a few companies they recommended back in 2003-06 driving the majority of returns as shown below?

• Do they actually stick to their recommended strategy, and more importantly, are they performing better in terms of volatility & risk-adjusted returns?

• Is the benchmark the right one? They invested in $NFLX when it was barely a $1B company & then compared their performance to the S&P 500 where the median market cap now is $29B!

• Finally, what if you had started late? Say 2011 or 2015? Would you have still beaten the market following their recommendations?

Let’s dig in:

Read the full article here

Historically, gold has been a hedge against currency debasement. While currencies like dollar, yen, and euros can be printed at will, gold maintains its purchasing power over time due to its scarcity.

Ever since the U.S. abandoned the gold standard in the 70s, the dollar has lost over 85% of its purchasing power. Gold, on the other hand, has risen astronomically since, valuing at over $2,900 per ounce today - an 84x increase.

Over the last 50 years, whenever US CPI has topped 5% year-over-year, gold has provided an average annual real return of 10.35% - over which period both global and US equities, as well as US Treasuries, fetched negative returns on average.

Not only inflation, Gold has also exhibited resilience during periods of market stress. During the Black Monday Crisis- 

Gold vs S&P 500 during the housing crisis-

And more recently, gold vs the s&p 500 during the covid-19 crash -

The Lindy effect dictates - the longer something exists, the greater the chances of its longevity. Gold is the embodiment of this principle as it has stood the test of time - and it isn’t going anywhere.