This Is the Great Market Swindle

In 1980, Julien Temple directed a mockumentary on the Sex Pistols called “The Great Rock ‘n’ Roll Swindle.” I feel like we are in the midst of that in the markets in 2021, although, sadly, without much rock ‘n’ roll. Today is just another example of it: Fed Chief Jerome Powell says basically nothing and that makes the Fed-crazed markets rise in Pavlovian fashion.

This incompetent leader and his partner-in-crime have conned the American people into believing his sophistry is based in real world conditions that couldn’t possibly be more different than the way he describes them. Oh, no, that is Joe Biden, not Powell.

Seriously, I am really having difficulty — not enough to stop me from writing; nothing ever will — even composing this column, given the horrific events in Afghanistan on Thursday. My condolences to all the newly-minted Gold Star families and to all the families of Afghans killed in the barbaric attack, as well.

But that’s on Biden, not Powell. Military efforts have been used to stimulate the U.S. economy in the past, but these days wars are won with technology and competent leadership, not manpower and machine-power. Unfortunately this country only possesses one of those assets these days.

You want a guy dancing in a robot suit — Elon Musk’s got it! So, that’s where we stand. Big stocks are getting bigger, because they are big and most of the big stocks are classified as Big Tech.

What could go wrong? Well, when one only focuses on the macro at the expense of the micro, plenty. Look at Peloton (PTON) , for instance. It’s a name I have focused on in several columns, and a stock that is being taken to the woodshed after Thursday night’s brutal earnings report.

So, when one only focuses on the forest and not the trees, one can miss some pretty gnarly arboreal diseases growing in plain sight.

So, that’s what it will take to beat this market and to beat the cabal of Janet Yellen and Jerome Powell, who, as The Pistols would say, are pretty vacant. You have to do research and find individual names that have undiscovered, yet publicly-disclosed, flaws that this Powell-slurping market is not seeing.

Another great example is Lordstown Motors (RIDE) , down fractionally today to $6.46 after a wild ride yesterday. Lordstown announced a new CEO yesterday and the stock skyrocketed before giving up most of the gains in the afternoon. But context is always key. Look at a six-month chart of RIDE and you will see the chart line begins above $20 per share. Oof. It has been a brutal ride for Lordstown and more government scrutiny, just as Peloton announced it was facing yesterday, can only make things worse for RIDE.

So, that’s how to beat these markets that are being fueled by Powell and Yellen and their great Swindle. Non-financial companies see zero benefits from quantitative easing measures and low interest rates are meaningless when the company produces cash flow insufficient to repay–not just service — its debt.

It’s basic research and the kind that never gets featured on financial television. 

So, from a macro perspective, just ignore inflation, because that’s what Janet and Jerome are telling you to do. Arghhh. No, you should play inflation in your portfolio. There are many ways to do so. One of my favorites these days is to buy companies linked to surging natural gas prices. Antero Midstream (AM) is a great play and one of my long term holdings. Natural gas has had a chart breakout — to $4.40/mm BTU — which dwarfs the recent move in black oil and impacts a much wider swath of the global economy.

Also, get something that cannot be eroded by the constant money-printing of the world’s feckless central bankers. They don’t care that higher prices for food and energy make your life that much worse. So much so that they exclude prices for those two goods from their “core inflation” calculations.

Gold? Sure, although I prefer metals with industrial uses like platinum and palladium. Crypto? Why not? I certainly can’t argue against bitcoin in an environment in which fiat currencies are being devalued by the day.

In “God Save the Queen,” Johnny sang that “tourists are money.” Don’t be a tourist in your own portfolio. Manage it actively.

Get an email alert each time I write an article for Real Money. Click the “+Follow” next to my byline to this article.