This Tuesday: A Happy Thought and a Debate

IMPORTANT MARKET ACTION UPDATE:

Market headwinds appear to be growing.

The benchmark S&P 500 Index shed 5% of its value from early September to early October.

That’s a drop in the bucket in this massive bull market. And at Money Morning, we tend to look on the bright side of the investing spectrum.

But on Friday, The Rum Rebellion guys release something even bigger.

Right now, investors the world over — big and small, rich and not-so-rich — are in deep.

Stock markets and real estate are off the charts. Leverage is tipping record levels for households, corporations, banks, and governments.

If a true fire sale takes off…

Is there enough left of central bank balance sheets to put it out?

There has perhaps never been a more important, or timelier, question to ask as an investor.

If you realise that…and if you’re worried or wondering what the best course of action is…then you should see what they’re putting out, for free, for Rum Rebellion readers this Friday.

It’s called Four Code Red Investments to Sell Now.

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In today’s Money Morning…Vern is a crypto pessimist, and I am a crypto optimist…correspondence with a reader finishes with this happy thought…keep your eyes peeled for this in the coming week…and more…

If you subscribe to both Money Morning and The Rum Rebellion, you would have noticed over the last few months that the headlines are almost diametrically opposed every Tuesday and Wednesday.

That’s because on those days, I write for Money Morning, and Vern Gowdie writes for The Rum Rebellion.

Vern is a crypto pessimist, and I am a crypto optimist.

And it’s completely fine to have diversity of opinion within the business.

In fact, it’s more than that — it’s a good thing.

So when I responded to an email from a subscriber of Exponential Stock Investor recently, I had to put on my thinking cap and give it a proper reply.

The main thrust of the subscriber’s email was that he couldn’t understand why James ‘Woody’ Woodburn can publish such contrasting views.

Anyway, here’s what I said to this particular subscriber (emphasis added)…

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Correspondence with a reader finishes with this happy thought

Dear (…),

First of all, thanks a bunch for writing in. Trust us, we feel you. Vern has his opinion, we have ours.

Vern’s been around the traps a long time and we respect him a lot for that. That being said, we have a fundamental disagreement about the value of crypto to the world. Let’s just say we have to bite our tongues a bit in our internal meetings haha! Anyway, here’s how it goes in our eyes. Vern’s view is premised on the [idea] that Western governments won’t allow crypto to become what we think it will become.

I (Lachy) recently wrote an article on the choice that Western governments are facing: https://www.moneymorning.com.au/20211013/dimon-the-banker-says-us55k-bitcoin-is-worthless.html

On the fundamentals of crypto — they do exist.

Check out Glassnode and Woobull for great data.

Here’s an interesting meta-level thought on investing as well. Supposed investing isn’t really about “value” but rather a bit of social psychology mixed up with game theory and public perceptions of how much influence a company will have in a likely future. Markets are amoral (not entirely true, see ESG influence). But are markets rational? Traditional value investing says you can benefit from rationalising the mechanics of a business model.

We prefer bounded-rationality. People try to be rational, but they have limitations. There are a few layers of reason to economics and markets, but there is also the complexifying feature of human nature being defined by its limitations more often than not.

Governments, and by extension humans, are inherently fallible beasts.

So it’s not entirely out of the question that Western governments will cave and throw their values in the bin. In an intriguing twist of fate, Vern’s pessimism on Western governments’ ability to uphold their values translates into a pessimism on crypto. Meanwhile, Vern’s principles on cash and its value would in our eyes actually be aligned with a cautious crypto optimism.

We think Western governments won’t use the nuclear option and opt for total societal control. The regulators and the government know this. So they are trying to navigate this techno-monetary competitive landscape as best they can. Believe us when we say that we have diametrically opposed views on crypto to Vern.

But Vern’s views cannot be entirely discounted because the gentle slide towards authoritarianism in the West is happening. Eventually people will need to make a choice on what counts as money. And when that choice or series of choices are made, there could be immense disruption in terms of economics, technology, and politics.

Personally, if Vern is right about the future of the West, we think how much cash savings you have will become irrelevant and it’s best to think about a remote location and personal security! But if you don’t think he’s right, well the path forward as an investor should be clear.

As a final note, we’d just say our business is committed to publishing outlier views. And Vern just happens to be on the far reaches of a spectrum of opinions with his extreme crypto pessimism. Alternative views are valuable, even when you fundamentally reject them. By considering Vern’s views and their implications, it can help you think more deeply about the future trajectory of the world. It may even reveal to you a newfound outlook on the world.

Crypto’s time in the sun will come in our eyes over the next 5–20 years. And we believe that gives us some hope for a restructuring of human affairs for the better.

Isn’t that a nice, happy thought?

Anyway, thanks again for writing in.

Good investing,

Ryan Dinse & Lachlann Tierney

Keep your eyes peeled for this in the coming week

You might be able to guess where we’re going with this.

A debate!

That’s right, Vern and I are going to go toe to toe and have a gentleman’s debate.

It should be an absolute cracker of a conversation and I promise you’ll learn a heap.

And maybe I’ve misrepresented Vern’s views in my response, but we’ll find out what he really thinks in a bit.

Stay tuned.

Regards,

Lachlann Tierney Signature

Lachlann Tierney,
For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here


Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:


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