Rise and Decline

Rise and Decline

You can't cut taxes and RAISE spending and expect the fiscal situation to improve. It will get worse much faster, which is maybe part of what gold is telling the US government right now.

China China China.

Fed Fed Fed.

Trump Trump Trump.

Blah blah blah.

Stock markets are almost exactly where they were on 'Liberation Day', April 2nd. The Dow is down 3% year-to-date, the S&P 500 is down 3.77%, and gold is up 26% year-to-date.

Disappointed by the lack of an interest rate cut from the Federal Reserve earlier in the week, investors now wait to see the result of this weekend's negotiation between Team Trump and Team Xi.

We're not going to wait for that. We're going to hit the five most important data points/stories that came across my research desk this week, beginning with the chart below.

This is Warren Buffett–celebrated as being the greatest American stock picker of the 20th century–marginally beating out gold in the first quarter of the 21st century. Active management versus pet rock. Berkshire Hathaway's B shares are the black line. Gold is gold. The S&P 500 is the red line, bringing up the rear. A couple of points on this.

Asset allocation is more important than stock picking. Stock pickers hate to hear this because it insults their ego, which is driven by the need to feel and look smarter than everyone else. But if you get the big call right, it will do most of the work for you. You can make gains at the margin with better research and risk management. But the big calls matter most.

Second, yes, the chart changes depending on your starting date. You probably didn't begin your investing career at exactly midnight on December 31st, 1999. But what we're measuring here are the ebbs and flows of the Primary Trend in markets. That currently favors gold over stocks.

Stocks peaked in late 1999. Gold bottomed in 2002. We use Dow/Gold as the measure of when the tide is coming in or going out for stocks and gold. It's still going out for stocks. It's still coming in for gold. Being the best stock-picker in the world is not going to help you if you're swimming against the tide. Get out of the water. ...