A reader writes on the Markets and Money Facebook page, ‘You should change your name to The Daily Doom and Gloom.’
As you may know, we’ve started to become more active on Facebook. After shunning the medium for years, I’ve realised that many more of our readers use Facebook than I expected.
For that reason, each Monday I’ve committed to filming a short 2–3 minute video, containing topical market commentary. We’ll aim to post that video by around noon each Monday.
You can watch the latest video here (scroll down until you find it). And remember to ‘Like’ it and share it far and wide.
But let’s get back to the quote from the reader, suggesting we should change the name of Markets and Money to the ‘Daily Doom and Gloom’.
It’s funny, folks who don’t know us or what we do immediately assume we are ‘glass half empty’ people — that we’re cheering from the rooftops for a market crash — and that we see nothing but bad in the world.
In reality we’re opposite.
We aren’t ‘perma-bears’. But, by the same token, we aren’t ‘perma-bulls’, either.
Instead, we just know that neither bull markets nor bear markets can last forever.
We also know that the mainstream has a terrible record of predicting major, game-changing events.
That doesn’t mean we get everything right. We get plenty of things wrong. I know that I’ve certainly gotten plenty of things wrong over the past 10 years.
But to claim that we only focus on the negative isn’t just wrong — it’s darn wrong.
Take the subject line for one of the first emails I opened just after 6am today. It was from mainstream cable news channel, CNBC: ‘Sorry, but Grexit chance is still “significant”’
This is despite evidence showing a European Union deal with Greece is all but in the bag. And that despite the screeching from the mainstream, as I write, the Aussie stock market today is up 107 points. That’s a lofty 2% gain.
In fact, far from being ‘doomy and gloomy’ on the Greece issue, I’ve said all along that the EU and Greece will come to some sort of resolution.
Perhaps the only thing in this matter that I’m in danger of getting wrong is that the deal looks set to be heavily skewed in the EU’s favour.
For the past two weeks, the mainstream has jumped on every news story and event to claim that the problems in Greece (and China) will be the events to send world markets crashing.
Look, they could be right, and I could end up looking like a fool. Greece and the EU still haven’t signed anything on the dotted line.
But I still don’t buy the idea that Greece or even China will be the catalyst for a global stock market crash.
When the markets finally crash it will be for one reason. It’s the same reason why all markets crash. It will be a crisis of confidence in money. Specifically, a crisis of confidence in the US dollar.
Now, you may say that the current events in Greece are a crisis of confidence in the euro. But I don’t see it that way. Individuals aren’t lining up to ditch the euro, they’re lining up to get hold of as many euros as they can.
That doesn’t signal a crisis of confidence in the euro at all. Instead, the lack of confidence is in the Greek government.
So, we’ll keep saying it: this isn’t the crisis you’ve been waiting for. You can be sure that it will come one day. And when it does it will hit hard.
Until then, I’m personally using this period of volatility to buy stocks, and to recommend stocks. I recommend you do the same thing too.
I’m not the only one to think the so-called Greek crisis is a bunch of hooey.
My colleague, Jim Rickards, thinks so too. As he wrote on his Twitter feed yesterday evening:
Greece is but a tiny part of the global economy. Its GDP is US$242 billion, based on 2013 numbers. That’s smaller than the Aussie economy. Do you think anyone, anywhere in the world would care if Australia got into a financial mess?
Maybe they would. But I doubt it. The mainstream has simply amplified the situation in Greece because it’s part of the Eurozone and euro currency.
Jim’s right; as part of the bigger picture, Greece means nothing. Europe means nothing too. The big problem is the total financial system, something the mainstream believes central bankers and governments can solve simply by printing money and going further into debt.
Oh boy! Check out more from Jim Rickards here.
Editor, Microcap Trader and Tactical Wealth
Ed Note: This is an extract from an article first published in Port Phillip Insider