I recently received this unsolicited and extremely nice email from Warren Buffett. I feel really privileged to have received it and I felt quite lucky after reading its contents. This is an exact copy of that email:
Q2 2021 hedge fund letters, conferences and more
“Hi, my name is Warren E. Buffett an American business magnate investor and philanthropist am the most successful investor in the world. I believe strongly in giving while living’ I had one idea that never changed in my mind? that you should use your wealth to help people and i have decided to give {$2,500,000.00} Two Million Five Hundred Thousand United Dollars, to randomly selected individual worldwide. On receipt of this email, you should count yourself as the lucky individual.
Your email address was chosen online while searching at random. Kindly get back to me at your earliest convenience before i travel to japan for my treatment ,so I know your email address is valid.Email me.
Thank you for excepting our offer, we are indeed grateful You can Google my name for more information: Warren Buffet OR You visit my website at Wikipedia.
God bless you and Best Regard. Mr. Warren E. Buffett Billionaire investor”
Obviously we all know that this wasn’t written by the real Warren Buffett, it was some slob in a coffee shop in some place far off the beaten path searching for a gullible American to exploit. But that doesn’t mean that I don’t want it to be true. Buffett would tell us that our brain latches onto what we want to be true, we anchor to it, and then we proceed onward from that point by searching out confirming information. We do this in all aspects of our life. In investing, we latch onto ideas that seem like they should be true and accurate but they are not. As an example, I had a lot of people tell me that Covid would crash the economy. The opposite happened. Our absolute certainty about what is or is not true is always coupled with our uncontrollable emotions. It can cripple us.
Because we ask the wrong questions, we always get the wrong answers. Entire respected professions are built on asking the wrong questions. This applies to relationships, religions, spiritual beliefs, healthcare, dietary choices, our stewardship over the environment, etc. It baffles me. This is at the root of all of our problems, only we can’t see that we always ask the wrong questions. If you think that the world is a mess, this is why.
Markets are counter-intuitive so sometimes even asking the right question is problematic. Most of our investing ideas (even for professionals) will be wrong and this is why so few stock pickers can beat the S&P-500. None can do it over any length of time. Most macro-traders look at global conditions to predict what will happen. They are usually wrong. They might ask if we are experiencing inflation concomitant with a panicked Federal Reserve? If yes, then gold should absolutely go to the moon because it always does under these conditions… only it didn’t.
It took me several decades to put together MarketCycle’s system of indicators. Indicators can remove emotion from the equation and they can show what is actually happening rather than what we believe should be happening. Much of that time spent testing was used to eliminate those things that everyone else had falsely found to be true. MarketCycle’s total system was tested and tested and tested and I repeatedly tried to kill everything in the system. But like Frankenstein, it lives!
As an example, back in late March of 2020 with the globe still in the pits of deflationary despair over Covid, our inflation indicators said that inflation was about to show up in the economy in a big way. About a year later, everyone else started to pick up on it. Now it is the only thing that anyone is talking about.
MarketCycle’s indicators eliminate emotion and guesswork and only show us what is factually and actually happening. It works. It allows me to sleep at night.
U.S. taxpayer MONEY continues to flow toward investment MARKETS. The same applies globally; the world is awash with money.
$5-trillion from the federal government
$4-trillion from the Federal Reserve in direct investment asset purchases
$50-billion to airlines
$1-trillion in PPP gifts to small businesses
Taxpayer rent forgiveness and a moratorium against eviction with taxpayers now footing the past-due payment to landlords
$600 per week ‘non-work’ allowance to just about anyone that wanted it
$300 per child per week
Increased unemployment benefits
Many people got free health insurance via Obamacare
5-million home buyers froze their mortgage payments and used the savings to buy stocks & bonds
Student loan forbearance and forgiveness
All of these many $-trillions listed above did and will rotate toward the markets and the economy. It will have a lagging effect that will prop up the economy for quite some time to come… perhaps even another 2 full years?
Market Summary
Very early last week I sent out a private client Brief Market Update and stated that we were in for some volatility and we certainly got that all week. Not too bad since the market gyrated up and down rather than just down. Any new clients were only partially entered into account positions so that if the market dropped in a meaningful way, certain protective assets would eventually kick in. We are still in a bull market for stocks and commodities and gold and select bonds. Volatility never lasts forever, although in the near-term it might persist a bit. Volatility and pullbacks and corrections are a normal part of all advancing bull markets. We finally reached our repeatedly stated S&P-500 target of 4500 to 4600 and I now expect that the stock market will likely (eventually) slowly march up the top line of its trend channel, perhaps for another two years before any meaningful correction occurs. I am actually looking forward to a bigger drop since that is where our client accounts usually make their quickest profits.
Thank you for reading!
Consider becoming a client. It doesn’t cost, it pays… and time’s a wastin’.
Article by Stephen Aust, MarketCycle Wealth Management
