Blake Hampton

“And why does a man who is gloomy about stocks own so much stock? "Partly, it's habit," he admits. "Partly, it's just that stocks mean business, and owning businesses is much more interesting than owning gold or farmland. Besides, stocks are probably still the best of all the poor alternatives in an era of inflation - at least they are if you buy in at appropriate prices."” - Buffett in 1970

The economic circumstances surrounding 2020 were so bad that it gave Jamie Dimon a heart attack that nearly killed him. Most people don't understand just how close to the edge we got. JPMorgan’s Jamie Dimon and His Brush With Death - WSJ

I agree, they do seem very similar

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

I think 529s are incredible. People would probably say I’m a 529 salesman if there were such a thing.

I’ll start off by saying I’m not a parent. But if I do end up having kids, one of the biggest things I’d do earlier on would be to start and contribute to a 529. I would also go on to ask friends and family for contributions during birthdays, Christmas, etc. A young child can be enthralled with a spoon, so it’s the perfect time to try and put money aside for their future. It also gives the money time to compound, plus the new rules enacted from the SECURE Act make them very attractive. Congratulations.

China's new currency is unfinished apartments

This is literally just humanity

Since 2007, just currency in circulation has expanded nearly threefold. All of the Fed's liabilities are essentially "money," even if they are in the form of bank reserves. This is on top of an unsustainable fiscal situation where the government is creating new assets every day that must find buyers. When they don’t, they have to be monetized, further increasing this "money." The latter already occurred once in 2020 when Treasury markets failed, and the Fed had to step in to provide liquidity.

I’m not saying that the Federal Reserve is some all-powerful entity. It’s like how Jerome Powell said it at the NYT DealBook Summit, “We’re a creature of congress.” The FED doesn’t create the problems, they’re simply supposed to respond to them. Whether they can do so adequately in the future, I’m not sure whether anyone knows. Here’s that interview with Powell for anyone interested, I thought it was pretty good. I also really like Andrew Ross Sorkin.

"Democracy Capitalism is the worst form of government economic system, except for all those other forms that have been tried from time to time." - Winston Churchill Me

My above post excludes some important variables, such as the dollar being the reserve currency and how the Fed has bought assets to increase bank reserves. However, at its base, inflation is about the amount of money relative to goods, and the Fed's job is to respond to it.

Inflation itself is simple: it's an equation. It's when too many dollars are chasing too few goods. On one side, you have the supply of money, and on the other, goods and services. Consider the Federal Reserve. They come into the inflation game by operating under a dual mandate: Promoting price stability Promoting maximum employment There's always a tension between these two variables because when you raise interest rates, you promote price stability but impede employment. Vice versa. The equation of money to goods is the root of inflation, and the purpose of raising interest rates is to keep inflation from getting so out of hand that it becomes devastating. When you print a dollar, it has to lower the value of the other dollars in the system unless growth in goods and services can mitigate its creation. However, exactly when it ends up being reflected in the value of those other dollars is still in question.

Probably not but it is their main tool for dealing with it. If inflation does manifest, expect rates to go up. If they don’t, people might just lose faith in the currency.

“Bitcoin is worthless artificial gold.” - Charlie Munger

This is an interesting train of thought and I do think it’s a possible future scenario, especially under someone like Trump. The entire purpose of raising rates is to offset inflation. If central banks can’t raise rates to do their job, the result is simply hyper-inflation. This is when you want to own assets and not cash. Bitcoin is worthless and if you wanted to do something along the lines of currency, I think gold would be a far better bet. I would personally stick to productive assets such as oil and real estate. A mortgage can be inflated away.

In essence, the huge fiscal deficit we're currently seeing is a huge transfer of purchasing power through entitlement spending. The vast majority of government expenditures in Social Security, Medicare, VA benefits, all going to older generations through debt issuance. I think that if all this debt somehow transfers into inflation, that will be when some big questions are answered.

Should I go day two on mindlessly arguing about Macro? Seems pointless, and a lot of you are right in many respects. But if you really believe that there aren't deep, systemic issues within the U.S. economy—and the global economy too, for that matter—you must be reading different materials than I am. The same goes for general valuations across major asset classes. The current adjusted Shiller P/E would be around 50x, and the median home sales price to median household income is about 5.2x. Both of these are greater than at the peak of the Dot-com and pre-housing bubbles, respectively. I won't even go into the massive amount of chicanery I constantly see going on, none of which can be any good. This is not normal. I will listen to Bitcoin fanatics and investors 3x my age tell me all day that it is, but I will never believe it. Once again, arguing is pointless, and the ones here advising to just go and find 4-6 ideas are probably correct. But I'm personally wary about the future. Maybe I'm not smart enough to properly convey it, but something inside me feels amiss. Thanks for the input everyone.

Thanks for the post. I don’t believe that all stocks are overvalued. However, I firmly believe the general market is extremely overvalued. I find it interesting because people don’t have investing options in a 401(k). They simply get the choice between large caps, bonds, or cash, sometimes international equities, but that’s normally it. This dynamic, where people are almost forced into buying the market seems incredibly dangerous. This is especially true considering how it’s recently performed. I’m curious on what your thoughts are.

Nothing is more important to the U.S. then the sanctity of the dollar, and interfering with FED independence is not an option. My PFP is Volcker for Christ's sake. Edit: Though I don't like it, you unfortunately do have a point.

And you're still pushing Bitcoin and MicroStrategy. The world has lost its mind.

Thanks for the great post @Jaygo

"There’s usually a grain of truth that underlies every mania and bubble. It just gets taken too far."

I'm sorry you had to experience that by the way. I think the GFC was disproportionately harder on younger people such as yourself. Probably made it worse that older people didn't and still don't understand.