Explaining The Rich Man, Angry Man and Degenerate Man Economy- A Few Charts

Good afternoon everyone.

This might be the latest in the day I have ever posted to my blog/newsletter.

I was planning to take the day off and end my long streak of daily emails but saw a few charts that caught my eye and they got me thinking… so what the hell…

If you had told me late last year when Facebook (Meta) was below $100 and the Semiconductors and Nasdaq 100 were in freefall that Facebook would be back above $300 and the Semiconductors would be back at all-time highs (today) and the Nasdaq 100 really close to same, I would have laughed.

The joke is on me:

I do remember buying a little more Facebook in the 80’s and happily selling it at $150 a few months later. I do remember nibbling on the Nasdaq 100, but I was completely on the defensive. I could NOT imagine a world where rates were headed higher (they did) and a bubble so big had burst (ZIRP) would be good for stocks. It has not been good for stocks…it has been freaking great for stocks!

If I was running a hedge fund I would be demoralized and humiliated.

I know, because I did that to myself for 15 years. It gets old, not just tiring. The highs of beating an index do not nearly match the lows.

Today, I just invest my own money, have nobody to compete with and so I can just enjoy the public markets without the humiliation (mostly)!

I continue to call this economy the ‘Rich Man, Angry Man and Degenerate Man Economy’ because of the trends I see in tech and politics, media, healthcare, sports and finance and the economy.

This chart rang true to me with respect to how I see the economy/world right now and in years ahead:

This chart makes perfect sense to me right now because the really wealthy are not crushed by inflation and high interest rates. Sure they buy fewer homes and yachts, but in a modern world, they travel and buy silly things that make them happy. They wait out the inevitable next boom earning high interest on their cash, entertaining themselves with the growing degenerate economy (speculation as entertainment and gambling).

Meanwhile, the suffering intensifies at the bottom and and the angry man economy grows.

I don’t invest in the angry man economy (probably the easiest if I understood it better) and have no idea how to truly hedge myself if the angry man economy morphs into something that kills the rich man and degenerate man economy.

No strategy is perfect!

As for public markets?

I refer to this chart of the S&P which shows the peak to trough drawdowns for last 40 years. Bookmark it. Frame it. Pin it above your desk.

After a bad calendar year in stocks, it is probably a good idea to buy stocks.

After two bad calendar years in stocks, it is probably a good idea to buy stocks and pat yourself on the back for waiting an extra year.

After three bad calendar years…expect to be freaked out and buy some stocks.

If you see 4 plus year of positive market returns, you are not smart. In fact, channel that smart energy you have about yourself and sell 10 percent of everything you own that you legally can. Or do nothing and show some humility and be a little charitable.

As for which stocks, I continue to do so with $QQQ over $SPY.

Good night!