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Believing The Impossible
silenceofmind.com
Believing The Impossible
“Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
~ Lewis Carroll, Through The Looking Glass
To borrow from Lewis Carroll: To have confidence in today’s central bank-created bubble markets, we have to believe in six impossible things.
Thing 1: Fundamentals Don’t Matter.
In our brave new world of money printing to infinity, we’re supposed to buy into a “new paradigm” story. You know, that It’s different this time.
Spoiler alert: It never is.
Companies either make money or they don’t. They’re either good investments or they aren’t. They’ll either return risk-adjusted cash to you over time, or they won’t.
Here’s a simple exercise. Using a publicly available stock screener at Finviz.com, a favorite site of mine, I set two filter parameters to obtain a list of companies that have::
- A market cap of over $2B
- A P/E ratio in excess of 50x
These are the biggest companies that, in theory at least, require investors to wait 50 years (or more) to be paid back in profits for each dollar invested.
236 companies fit this description right now. 236!
Here’s a screenshot of page 11 of the results. Every company listed here has a P/E multiple of over 190(!).
(Source – here’s the exact screen I used, so you can troll the results for yourself)
Again, these sky-high ratios mean that investors are willing to wait more than 190 years for these companies to earn back their principal at current stock earnings prices.
…click on the above link to read the rest of the article…
It’s Bubble Time!
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It’s Bubble Time!
It’s impossible to predict with certainty how much more insane our financial markets will get before an inevitable correction. But my personal bet is: A lot!
For my reasons why, take a few minutes to watch the chapter on bubbles below from The Crash Course. For those who haven’t seen it before, the takeaway is this: bubbles pop only when greed in the market has been exhausted:
Bubbles make no sense economically. Or rationally. But they happen all the time as a part of the human condition.
Even while financial bubbles are enabled by dumb monetary and banking decisions, their actual genesis is rooted in primal human emotions. Greed on the way up, and fear on the way down.
The hardest part about these bubbles is not being swept up in them. As the above video shows, history is chock full of asset bubbles. We humans just never seem to learn. Like Charlie Brown’s endless attempts to kick Lucy’s football, we get suckered in by the promise of easy riches, only to end up flat on our back when the market suddenly yanks that promise away.
Wash, rinse, repeat.
Most of you reading this might be thinking “Hey, I’m a reasonable intelligent person. I won’t fall victim to the next bubble.” Perhaps, but maybe not. The numbers say that the majority of you will. Unfortunately, being smart — even a genius — is no protection against being ruined by a bubble.
Remember from the video that even Sir Isaac Newton, easily one of the most brilliant humans ever to live, got his clock cleaned by the South Sea Bubble:
(Source)
…click on the above link to read the rest of the article…
Toby Hemenway: Scaling Permaculture Principles To Other Systems
Toby Hemenway: Scaling Permaculture Principles To Other Systems
When Chris was out for our event with Robb Wolf in northern California last month, we paid a visit to Singing Frogs Farm along with a group of Peak Prosperity members. Adding to the outing’s embarrassment of riches, permaculture expert Toby Hemenway joined in.
We saw much that day that inspired us about the regenerative and productive impact humans can have on their farmland when using wise soil management techniques and leveraging natural systems.
Now, of course, not everyone has an 8-acre farm in the country to apply these practices to. Does that mean that permaculture is only relevant to rural farmers?
Not all all, says Hemenway. He has just released a new book, The Permaculture City: Regenerative Design for Urban, Suburban, and Town Resilience which explains how individuals, as well as society as a whole, can apply the same principles underlying permaculture to improve most if not all of the systems our way of life depends on:
There have been advances on several fronts, and one is that we are starting to get good data now. There were a lot of claims made in permaculture that were based on more theory in the early days, 20, 25 years ago. We thought this should work it is a great idea and people would sometimes talk as if it had worked when we really didn’t have good data. Now we know a lot more about what does work. We have toned down some of the rhetoric and are trying to be more fact based.
But another one of the huge developments is the big understanding that what we have learned in the garden: When you design ecologically sound systems for food you learn the same principals and the same guidelines for designing pretty much anything else using ‘all systems’ thinking.
…click on the above link to read the rest of the article…
