Market Perspective

How to Recognize the Peak of the Market – Week 5

Posted by on Jun 20, 2018 in Ned Massie, Perspective | 0 comments

Tesla: In the first week of May, Tesla reported its first quarter financial report, which was exceptionally disappointing to the market. It appears that perhaps the irrational exuberance for Tesla stock and bonds may have peaked. Let’s look at the three worst numbers: The Current Accounts (combination of cash equivalents on-hand and short-term liabilities) was a negative $2B (a very bad indication of the health of the company). The reported loss of $1B in the first quarter of 2018 leaves them with perhaps one year’s worth of cash on-hand. Of the cash on-hand, one-third of it is refundable customer deposits. This further reduces the liquidity available to operate Tesla. Because Tesla has been such a darling of the stock market, if it has an Enron moment, confidence could evaporate in other unprofitable or marginally profitable high-flying companies. A loss of confidence could ripple through the stock market and global economy. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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How to Recognize the Peak of the Market – Week 4

Posted by on Jun 13, 2018 in Ned Massie, Perspective | 0 comments

Turkey: Prime Minister Erdogan of Turkey believes he is the next Caliphate of the Muslim world. He has been busy over the last several years, consolidating his power by a combination of persecuting his opponents and buying votes funded by massive debt. This year, the International Monetary Fund (IMF) warned that Turkey’s rate of growth was so high as to be unsustainable. In the month of April: Standard and Poor’s downgraded Turkey’s debt to BB- which is a junk bond rating; The manufacturing index was less than 50, which means that the manufacturing sector of their economy is contracting; It was announced that inflation in April hit 10.8%; The Turkey currency in the first week of May dropped 5% (remarkable for a one year change, much less a one week change); The current account deficit hit 5.5% of the GDP trade. This illustrates the difficulty of a country fueling its growth with debt to the point of it being out of control, now being impacted by the Federal Reserve raising interest rates and reducing global liquidity. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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How to Recognize the Peak of the Market – Week 3

Posted by on Jun 6, 2018 in Ned Massie, Perspective | 0 comments

Argentina: Despite electing a business person as President in 2017, the Argentine legislature has been unwilling to pass the new President’s pro-business agenda. You will recall that in the early 2000s under a socialist President and government, Argentina defaulted on its loans. That made them quite unwelcome in the global bond markets, as you can imagine. In early 2018, Argentina’s central bank was able to go back into the bond market and sell $4.3B worth of bonds that they needed in order to support their currency, which was weakening. In the first week of May, the following things happened in Argentina: The Argentine peso lost 5% of its value, a truly remarkable change for a year, much less a week. Interest rates surged to 40% per annum, and the Argentine peso dropped 50% in value since January of 2017. All this reflects a government whose finances are out of control, probably in reaction to the American dollar strengthening, which is a result of the Federal Reserve raising interest rates. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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How to Recognize the Peak of the Market – Week 2

Posted by on May 30, 2018 in Ned Massie, Perspective | 0 comments

Oil at $75 a Barrel: You don’t have to be very old to remember all the hysteria about “peak oil”. That bit of hysteria was that the maximum amount of oil in the world had been discovered and was being consumed. Therefore, the oil supply had peaked and the prices were going to skyrocket. Since that time an enormous amount of oil has been identified, to the point that the world is literally awash to oil today. There is no reason for oil prices to be going up anywhere close to $70 a barrel other than the fact that the oil market is relatively small and easily manipulated. On Friday, May the 4th, 2018, crude closed at a cost of $74.87 a barrel. This was well above the forecast earlier in 2018 that value of a barrel of oil would peak somewhere around $60. This price is a strong indication of the ability of some to manipulate the price of oil. The only oil producing country in the world that can produce oil at $60 a barrel profitably is the United States of America. All the rest lose money for each barrel. All the oil-producing countries other than the United States are losing money because they have too much debt and have obligated themselves to too much socialistic programs for their nationalized oil producing businesses to carry today. Increased oil costs will impact the cost of every good and service we American consumers purchase. These increased costs will be reflected in increased prices we pay for everything, a nice way of saying that the rate of inflation will increase. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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How to Recognize the Peak of the Market – Week 1

Posted by on May 23, 2018 in Ned Massie, Perspective | 0 comments

Introduction: No one ever knows for sure that the market has peaked until they can see the peak in the rearview mirror. However, there are signs that one can look for when you are trying to just simply identify whether one is close to a market peak. As we go through the unwinding of economic stimulus known as Quantitative Easing (QE) on a scale that has never been seen before in the economic history of the world, one of the signs that the economic cycle has peaked and therefore, land value are peaking would be the emergence of cracks in the foundation of the global economy. In this series, we are going to explore several events that occurred in May of 2018. We hope that making you aware of this information will help you make decisions about your land portfolio. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land....

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The Three Horse Economy – Week 5

Posted by on May 16, 2018 in Ned Massie, Perspective | 0 comments

Which Horse Will Win? Short of a Black Swan event, the winner will be the American consumer. The 2017 tax law will combine with Gen Y buying houses resulting in strong economic growth. There may be some bumpy years but American economic growth will propel our economy and the world economy. Both 2018 and 2019 will be stellar years in economic history. What is difficult is forecasting beyond 2020 and beyond. At some point in the future there will be inflation followed by a recession as these three forces collide. But careful investing will preserve and create wealth. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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