Market Perspective

Understanding How “This Time is Different” to Make Great Investment Decisions – Week 1

Posted by on Oct 4, 2018 in Ned Massie, Perspective | 0 comments

Introduction: Repeated so often that “This time, it’s different”, that phrase is completely worn out. But folks, the world has never seen what is evolving in the global economy. This time is amazingly different. Do not misunderstand me, what has been called Quantitative Easing (QE) is a game that central banks of individual countries have played over the centuries. Without fail, each time those central banks attempted to stop the “funny money” of QE, the result has been consistent. The result was the complete economic collapse in that particular country. How many times as a young man did I listen to laughter and derogatory comments made about Central and South American countries whose Tin Dictator practiced QE and then pretended that there was not going to be a problem weaning their financial markets off the funny money? Therefore, it was appalling to watch the United States of America play the funny money game. Even worse, we watched the whole world participate in QE. Now we have a front row seat on a truly unique event in the economic history of the world. The entire global economy, after practicing QE now has two of the largest economies in the world (USA and European) reducing QE. My mind, which normally looks for and identifies patterns and trends, has been full of so many questions: Is any intelligent being on this earth planning how to make this transition or are we just launching on a hope and prayer? Is there really a benefit to being the Hegemon? How does one plan for a total, global, economic meltdown? Regardless of our politics, based upon several patterns I believe I have identified from my research and analysis this year, if the trends I have identified are accurate this is the point in the movie when we all should get ready to CHEER! I am overcome with awe and admiration at the decisions that have been made by the Trump Administration regarding the economy and this transition away from QE. Based on my analysis, the economic decisions and the implementation of the Administration and Congress (proving even a blind pig finds an occasional pecan) will be recognized in history as totally BRILLIANT. My goal with this series of blogs is to share with you some insight so that regardless of your politics you can make the right investment decisions. There are risks and there will be some pain, but this is so awesome I can hardly wait to share it with...

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It Is The Interest Rates! Week 6

Posted by on Sep 26, 2018 in Ned Massie, Perspective | 0 comments

China: You are tired of me commenting about China. However, as the second largest economy in the global economy, what happens in China has enormous ripple effects. Similar to Turkey, China’s currency, the Yuan, has also fallen in value during 2018. Some think that it is the intention of the Chinese government to have their currency devalue to combat the tariffs being posed by the Trump administration. Since China is a dictatorship, I am confident that the President of the Central Bank of China is doing whatever he is told to do because he enjoys having his head firmly attached to his shoulders. China is not a free market nor do the Chinese enjoy our liberties. The enormous risk of China is that it parallels Enron in many ways. Perhaps the most significant question that would need to be answered is whether a Balance Sheet for China would show it to be Enron in huge capital letters? 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. As these conflicting economic forces play out over the next several years, interest rates will fluctuate. Watch the trend to understand what is...

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It Is The Interest Rates! Week 5

Posted by on Sep 19, 2018 in Ned Massie, Perspective | 0 comments

Demographics and the Residential Market: What is unique in the residential market today is the stark differences between the three generations that are active in the residential market. The Boomers are looking to downsize and control an enormous amount of the nation’s wealth. Gen Y is the generation which has been hammered by the Obama economy. They are now beginning to acquire full-time jobs and entering into the housing market as buyers. They are the largest generation of Americans that are active in the economy. That is a significant fact. Just as significant but less understood is that the generation in between the Boomers and Gen Y, called Generation X, is the smallest of the three generations. Their small size will also significantly impact and distort the new housing market as interest rates go up. Literally demographics will win. 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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It Is The Interest Rates! Week 4

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

Housing/Residential Market: As interest rates increase, the impact on the residential market is predictable. The average household has a certain number of dollars that they can afford to spend on housing each month. As mortgage rates increase, the amount of mortgage bought by that monthly payment is reduced. Given the fact that households also have a certain amount of equity that they can put into buying a new home, the result of that combination is that the price that they can pay for a home (resale or newly constructed) is reduced. Residential sales are a leading indicator of the economy. While less than 2% of the GDP of the USA, residential sales ripple through almost 30% of the GDP of the USA. 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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It Is The Interest Rates! Week 3

Posted by on Sep 5, 2018 in Ned Massie, Perspective | 0 comments

Stock Market: The formula that establishes the market value of publicly traded stocks includes a number of inputs and two key fulcrums. Obviously, the driving force is corporate profits. Because of the 2017 Tax Law, profits are increasing and will continue to do so. But the fulcrums that leverage profits into stock valuations are interest rates (the cost of money) and the anticipated rate of inflation. With both of those rising, the impact of profits  is reduced relative to the pricing of the corporate stocks. We have seen that over the course of 2018. The interplay between profits versus interest rates/inflation will continue to play out over the next several years. This does not mean stock prices will universally decline. It does mean that stock prices will not increase as rapidly as they would if interest rates and inflation both were stable. 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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It Is The Interest Rates! Week 2

Posted by on Aug 29, 2018 in Ned Massie, Perspective | 0 comments

Turkey: Since January of 2018, the Turkey currency (Lira) has lost more than 40% of its value. Allow me to restate that, prices in Turkey have almost doubled since the first of this year. Now that sounds bad because it is horrible. But it is not as bad as the inflation in Zimbabwe which is 98% per day or Venezuela where the rate of inflation is now 1,000,000% annually. Because of Socialism in Venezuela, there are no goods to be bought and last year the average Venezuelan lost 24 lbs. They are starving to death. So what is the significance of Turkey? Turkey demonstrates what happens to a country when its economic house of cards begins to fail. In many ways, it is a forecast of the risk that the world faces in China. The risk is that Turkey’s problem does not stay in Turkey. In our inter-connected global economy, my opinion is the problem will spread. 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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