We Have Liftoff
2022 is shaping up to be a year of fixing many of the issues that the healthcare crisis and the governmental and monetary responses to it, birthed.
When, exactly two years ago today, on the 17th of March 2020, images from China and Italy caused such public panic that governments felt it would not be seen as authoritarian or dictatorial to impose strict lockdowns, self-isolation measures and quarantines (when I say the public wouldn’t view it as trampling on their liberties and rights, I mean by the majority… some viewed it as the end of freedom), the global economy transformed overnight.
Getting a haircut became impossible, because it entailed leaving the house. Basic services that we are accustomed to in the western world turned temporarily unlawful and to compensate for that, the consumer focused on products mostly.
Shipment of goods between countries was an ordeal, but that’s what people wanted, in the face of these colossal restrictions on their ability to move and enjoy their surroundings.
Powell rationale was that as the world’s population, at large, got vaccinated and governments started to relax and ease the restrictions and as more people felt safe going back to work, the balance between goods and services would tilt back to normalcy, ports would begin to enjoy less congestions and more smoothly-operating days and we’d see inflation coming back to its 2.00% long-term objective.
The FED waited, just like a person waits on a date, because admitting that the other party isn’t coming means closing the door on this chapter.
At first, the hope that vaccinations would make people rush back to work was alive. Next, it was the promise of a fat budget for the Build Back Better plan or the government coming up with proactive regulations and incentives, but just like it’s a joke to wait on a date for more than an hour, Powell can’t wait on the world.
Raising rates is a good thing and the responsible thing to do.
The FED raised rates by 0.25% or 25 bps and their forecast and assessment is that they’ll hike rates by an additional 1.50% this year, for a total of 7 rate hikes, contingent upon the labor market normalizing, economic conditions remaining solid and robust and on inflation remaining high, which they do expect.
As I write this, gold is already back above $1,950/ounce and I think that the main takeaway from yesterday’s meeting is that the FED wants to help to balance out the 1.7 job openings to each employee out there and to cool down the interest-sensitive parts of the real economy, which are borrowing and mortgages.
The recovery continues to hurt the lower classes most, because it has a clear inflationary tilt to it, but wages are rising and if you’re a valuable worker, this is exactly the type of recovery you’ve been waiting on for decades.
America continues to prove that innovation and creativeness are the true blessings of the human mind and are to be used for the benefit of the world, by building businesses and unleashing the power of the entrepreneurial machine of ingenuity.
In the past 50 years, the NASDAQ 100 has seen 66 corrections, out of which more than A THIRD ended up being bear markets!
My message to you is to BUY THE DIPS; buy them, when it looks easy, buy when it looks hard, buy when your friend is shorting and making a fortune in the short-term, buy when your “guru” is telling you to whether the storm in cash and buy on any other pretense.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
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I compiled a watch list of the highest-quality companies in the world (to be mistaken with turtle-speed blue chip companies) and I own of the below ones and will keep adding to my positions on every pullback, correction and bear market for the remainder of my life:
MSCI Inc. (MSCI), S&P Global Intelligence (SPGI), MarketAxess (MKTX), Blackrock (BLK), Nasdaq Inc. (NDAQ)
CBRE Group Inc. (CBRE), Blackstone (BX)
Cintas (CTAS), Roper Technologies (ROP), Rollins (ROL), Automatic Data Processing (ADP)
ServiceNow (NOW), Amazon (AMZN), Zebra Technologies (ZBRA)
Resmed (RMD), Abbott Labs (ABT)
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Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
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