Are they joking with us?
Everyone is talking, but nothing is changing! Real inflation is running at around 10%, and we are debating whether interest rates should move 0.25% one way or the other.
What we need to do is reduce taxation, reduce legislation, and let the private sector do what it does best: make money!
Government spending got us into this mess, and giving pay raises to government employees is hardly going to solve the dire straits that our economies are suffering.
I can appreciate that the investment world is full of experts who like to be acknowledged for their ability to discuss the meanings of small adjustments and what they might mean for the future. But we are well past the time when tinkering with the economy worked. What we need is a root and branch return to common-sense economic policies that reward private workers and innovators.
It’s all well and good for public employees to complain about their wages and, like Oliver Twist, stick out their bowl and ask for more, but who the hell do they think is paying for these increases? It can’t be a government in unsustainable debt, so it can only be from the productive worker in the private sector.
Foreign aid, foreign wars, unsustainable levels of immigration, and incredibly high levels of waste in our health, education, and social services are a real problem for indebted countries, and throwing more money out of the window is not solving anything.
Most of our career politicians are lawyers, social workers, school teachers, and trade unionists. Honourable professions, but not exactly the kind of background any investor would trust to manage his/her money.
If we look at what has happened in socialist Europe over the past 30 years or in the USA over just the past 3 years, we don’t have to be rocket scientists to know we are going down the road to ruin. And we know that we need a lot more than small changes to interest rates to get us out of it.
We have just gone through a reporting week when company profits were far from ideal. And while many CEOs and Company Chairmen could make positive noises about the future of their own employer, few would suggest that the overall economic outlook was encouraging.
We are in that Catch-22 situation where we need to invest overseas if we want to enjoy reasonable returns, but all this does is starve our domestic industries of much-needed capital, damaging jobs in our own countries and limiting our government’s ability to pay down our monstrous debts. We can consider investing in commodities, but if the prices of raw materials increase, we are simply adding to our inflation woes. We can invest in cryptocurrencies and make ourselves a few bucks, but that is hardly going to dent what is happening in the real world.
Stock pickers can make positive or negative comments on the companies they like, but when I listen to their favourite companies, most are those that use IT solutions to reduce employee costs or AI companies that are causing mass unemployment within their IT and computer departments.
And as if all this is not bad enough, we are wasting so much money fighting climate change, instigating ESG and DEI, which are luxuries none of our economies can afford. It seems our leaders have no intention of solving our financial problems.
These real problems are now deep-rooted, and we need a shake-up of seismic proportions, which is hardly on anyone’s radar.
A few weeks ago, I suggested that we could see a rally in the markets ahead of the year-end because it doesn’t rain every day, and the stock market looked a little oversold. I was really hoping for a larger move than we have seen and wanted to use a sizeable rally to go short on indices and, at the same time, add to my gold position, which I might still try if values slip further.
As it currently stands, I cannot discount another rally in equity prices, but my optimism is fading.
Despite the drop in overall household consumption, I am going against the current trend and looking to use the current dip to increase my exposure to fossil fuels and other commodities. The geopolitical picture is very messy, and it wouldn’t surprise me if oil is used as a political weapon between conflicting giants.
I feel reasonably positive towards commodities because global consumption is relatively stable. Some countries will consume less, while other countries may consume more. In a similar vein, while the old world may see a decline in industrial growth, when I look at other parts of the world, there are signs that some developing countries are still on a growth path.
I have readjusted my own portfolio, reducing my exposure to the tourist industry, and increasing my exposure to food and beverages, especially those smaller companies that can offer groceries and household products at reduced prices.
We are now well into November, and what happens over the coming weeks is very unclear.
I remain cautious about anything that could move against me if a government or central bank makes an unexpected move.
And living in a country whose Prime Minister resigned this week due to allegations of corruption, caution appears to be the way to play it.
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