저자: LifeWorthLiving · 외국인
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The market peaked out in November to January period and I wrote the report that Trump top on January 1 and my view was that markets would go down largely because the magnificent seven stocks were a very high percentage of the S&P 500 and those of the NASDAQ. In other words, the market after 2022 became very narrow and only a few stocks went up and made new highs and the majority of stocks wasn't doing anything.
So, I was quite negative about stocks going into the new year. But the tariffs are obviously not helpful. It's a catalyst because fund managers, they were mostly bullish about stocks. They told the clients go long and buy this and buy that and so forth. And suddenly the outlook for corporate profits is not particularly good and for economic growth is not very good either.
And so they use the tariff issue as an excuse to tell their clients you have to get out of the market. And so there was a significant selling pressure. But I have to point out that the market as a result of this tariff issue has become very oversold. We haven't had this oversold condition since the COVID crisis in 2020.
And so I think that we can have a rebound here. But by and large my view is that we are in a time where there are major changes like 198182 there were major changes in the sense that inflation began to abate and interest rates began to decline and commodity prices were beginning to decline and so forth and we went into a period of 40 years asset inflation.
I think the asset inflation is largely over. I think from here on financial assets, bonds will not do particularly well, although they may do better than stocks and stocks may not do particularly well for the simple reason that they're highly priced in the US. They're more expensive than ever compared to emerging markets.
They're more expensive than ever compared to European stocks. My sense is that money will flow out of the US into other assets. And these other assets, who knows? I mean I don't think that gold is particularly cheap but equally if I look at asset allocation by individuals by and large individuals don't own any gold or if they own gold they own a few coins but not anything meaningful like 20% or 30% of the assets their precedence and in some cases gold goes down with financial assets and in some cases like during the depression in the 1930s gold and gold shares performed well.
Also in 197374 during the bare market gold performed well but there are other periods when it didn't perform well. So my view is if you want to take advantage of fading opportunities, my view would be to look for stocks that go down the most and become the most oversold or stock markets overseas or so and then buy them for a rebound.
But longer term, as I said for the last 40 years, anyone who doesn't own any gold is plainly stupid because he's trusting central banks. How can anyone in the world trust the central banks? Traditionally, in a recession, commodity prices would go down and the inflationary pressures would abate and bonds would rally, interest rates are cut and the economy is bad.
Now, in the present situation, we don't know because the bond yield is not that high for me. If someone comes to me and says, "Mark, you must buy bonds." Now I have some bonds but I'm not very bullish about bonds because I can see the rate of inflation and I define the rate of inflation for the consumer as say his cost of living increases.
I rely on inflation figures that are different than what the government is publishing because the government is lying about everything. We've seen this with Mr. Trudeau. They're a bunch of liars and incompetent bureaucrats, interventionists who have no clue about anything, but they have to intervene.
In my view, the cost of living of people is going up at something like 7% peranom. I know people they say it's going up at about 10% peranom and I accept that view depending on the household, but by about 7% would be my view. So interest rates at 4% on the 10 years Treasury is not that attractive and we've seen there was a big sell off in stocks.
Normally during a selloff like we had yesterday, bonds should rally. It didn't happen yesterday. I would own gold simply because most people don't own it in a meaningful way. Now Canadians are maybe more likely to own some gold than other people because it's a big industry in Canada, gold mining. But even Canadians, the bulk of their wealth is in their homes.
And as you know in Canada, their homes are grossly overvalued compared to incomes. I think that the central banks will be forced to print money. Now whether that money will again go into stocks or not is a different story because as you know also in Canada the last bout of money printing over the last 5 years or so has not helped commercial properties.
Commercial properties are down everywhere. So that is say the vicious part of monetary inflation. You cannot predict with precision what will be pushed up and what will be neglected. If someone had all his money in commercial properties is lost 50% by today. My view is that oil is likely to go up significantly partly because a reasonable bet is that America and Israel will attack Iran and then we don't know what will happen.
Is Russia going to be stepping up on behalf of Iran? Is China going to be stepping up? We don't know. But Iran is a member of bricks and bricks is to some extent a political organization. Not as political as NATO, but it is to some extent a political organization. And then if America and Israel attack Iran, we really don't know.
But I would imagine that on the news of an attack on Iran, oil would rally at least 10 20%. This is the first bull market in gold and precious metals where equities have actually not grossly outperformed the precious metals, the bullion. Same case for silver. But I think that wealthy people say a billionaire, he looks at the financial system, he must know that something is not right.
I mean anyone who looks at the financial system, the derivatives, the leverage, the money printing must conclude that something is not right and it will come to an end. So if you're wealthy, you have $100 million, then maybe you say to yourself, I want to own something in physical form, not as you say a counterparty risk.
That is a very good expression. And then you buy most likely physical ton of gold or the ton of silver or platinum. But many financial institutions they can't do that. The pension funds and so forth. And so the trustees they go to the fund manager and tell him by the way I mean what is your exposure to gold?
What is your exposure to precious metals? The fund manager says no we don't have that. We think that Nvidia is a better bet of Tesla. And then the trustees one day they say well everybody's buying gold why don't you allocate say at least 3 or 5% of the portfolio to gold but for the fund manager it will be easier for him to buy stocks than to buy the physical because he may not be equipped to buy the physical.
he may be equipped to buy ETFs that I concede and lately the money flows into ETFs has been high after being disappointing for 2 years but recently it's picked up. I'd be interested and you can ask your viewers one day how many of you own more than 5% of the assets in gold. I'd be surprised if the number was high even though you are well known as a precious metals advocate.
Now the question is of course someone may say is gold cheap? No. Compared to oil it's actually expensive but for most people to store oil is very cumbersome. But for them to that they can own oil stocks which are very depressed but to store oil is difficult whereas to store silver, gold, platinum is very easy.
This has been my view for the last say 12 months that emerging markets and Europe are relatively inexpensive. I mean I find the magnificent seven stocks in America to be grossly overvalued but other people have different views. You understand? I remember I was at an interview in the year 2000 and there was a portfolio manager who disagreed with me because I said that Cisco was vulnerable to additional competition and so forth and he gave me a lecture why Cisco would be the stock to own for the next 10 15 years and the super polls about tech stocks they will tell you why you should own Nvidia and Tesla and so forth.
I look at the valuations. I think the likelihood that they will perform well is very small and we have various analysis. When stocks sell at the current BES high price to earnings, the subsequent return for the next 10 years is between minus 2% and plus 2%. If you buy emerging markets, you can buy them at say seven times earnings, then the subsequent return is probably reasonably good.
I doubt that the conflict will come to an end anytime soon because too many people make too much money out of the conflict. Westerners, politicians, eventually people grow tired of wars and they kind of conclude a peace. But the difficulty is that Ukraine is supported by western countries not to give up any territory.
And Russia in my view to a large extent is right to claim that some territories in the east of Ukraine are majority Russian ethnically including Crim Island and the Crim Island for Russia strategically a very important point and I would understand that this is something that is not negotiable. They will keep it under any circumstance.
The peace must include the seizing of Ukraine to Russia. Well, in Switzerland, I went to the army. I had to go to the army. There was conscription. In America, the same. It's just in recent times that they've given it up. But I think it's possible that it will be reintroduced. Now whether the population will like it a lot that have some reservations and whether it will be successful but I think the trend is definitely to have a more larger military presence in Western Europe than we have at the present time.
And I think what has happened with the tariffs the Europeans now really don't trust America anymore. that America has to realize. They kind of alineated a lot of countries and people around the world with this tariff issue and also in America when the prices of goods will go up because the corporations will tend to increase prices due to the tariffs and I think the population will not welcome it.
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