The Buck Stops Here

After the past twelve months we suppose it is not surprising that market participants are paying more attention to the markets and their investments....in the middle of the summer when "things" tend to be a bit slower and lackadaisical. But not this summer. Investors, analysts, traders, media and global political leaders are all bantering about calling for the next decline in everything......after one of the biggest inclines in almost everything.....

We believe we are now entering a game changer that of the likes 99% of the market participants have not invested in before. The what ifs that have to be asked are: a) What happens when the US Dollar heads much lower? b) What happens when interest rates head much higher? c) What happens when real estate stops going down and starts going up? d) What happens when there is a loss of confidence in WDC, LLC and all it's perceived leadership? e) What happens when volatility returns to the capital markets after a multi month reprieve? f) What happens when inflation is recognized as a result of all the above? g) What happens when the markets realize the Fed is behind the curve?

Most of the nations endowments and pension funds are under performing, sitting in cash, bonds, private equity, hedge funds and short the equity market (in hedge funds). Remarkably Mutual funds (owned by the public) were almost net sellers the past few weeks.....

As hard as the bears try to spin their stories..... the equity market for now continues to inflict severe pain.....especially internationally and with creditor nations....exploding higher.

As the Chinese and others are as quickly as possible converting their US Dollars into hard assets....away from supporting America's deficits....the window is narrowing.... for the every other week... WDC, LLC road show... raising over $110 billion dollars....it is not even in the news any more...

There is one primary beneficiary of all the above. Super blue chip equity firms benefiting from new pricing power and the declining dollar......almost everything else loses...other than hard assets in park place locations that throw off tax advantaged income or shelter....from inflation.
Farm land too.

This theme is of course almost entirely contrarian....which as value investors we tend to lean after years/ decades of a certain trend.

The fiscal deficits are being hidden by the Media in a coordinated effort....the health care "debate" is no different than Hillary's.... of course without facts or leadership.....always the ingredients for failure.

The Speaker of the House should be asked to resign...record low approval ratings and nothing being accomplished under this leadership has become unacceptable to the country.

Smart money is saying the equity market is no longer cheap (true) and calling for a material correction (possible) but if we are right....as everyone looks backward... we see the future differently and thus have a different conclusion. As we have said time after time.....we know what we don't want to own.....and maybe (if allowed) to follow the smart money.....like the Chinese....who by the way most people are poo pooing their recent stimulus efforts....

Danny Boy seen here thinking about the Dog Days of Summer.