Own the System Instead of Succumbing to It
I spent a good portion of my 20s railing against the injustices of the system.
I made much more money in my 30s.
Because railing against things, whatever they are — corporatism, oligopoly, tech monopolies, wealth inequality, money printing by the fed, whatever it is — doesn't do you any good if you aren't taking action to transpose what's going on in the world to your bottom line.
And the best way I've found to do that over the years — and I think others are starting to figure it out a bit more — is to be independent and own things.
Those things can be businesses. Those things can be houses. Those things can be stocks. As long as you are owning assets, it's the path to success.
Here we are in early July. It's a good place to recap the first six months of 2021. Half the year is gone. Let's take a step back and see where we are.
Hottest Sectors of 2021 So Far
Energy was the best performing sector of the year. Energy stocks, as evidenced by that sector of the S&P, are up 44% year-to-date. If you're a student of the market, you'll take note of that, because 44% upside in six months is quite a lot. Average upside for the entire market over a 12 month term is something like 7% to 10%. And so there you are at four to five times an annual return of the entire market being expressed in the energy sector in just half a year. (There’s a reason I’ve been pounding the table on energy stocks for months.)
And why is that? Well, it's because of inflation that's being expressed across various commodities and can be seen in all sorts of sectors of the market.
We now have three companies with $2 trillion market caps (Apple, Microsoft, Saudi Aramco).
I remember when there were no companies with a $1 trillion market cap. And here we are with three companies at a $2 trillion market cap.
This speaks to the inflated number of dollars in the system and the way that they manifest in the stock market.
You've got an S&P that has basically been going straight up for 10 years because of the loose money policy pursued by the government and Federal Reserve on the back of the global financial crisis all the way back in 2008.
And all of the dollars that have been printed and handed out over that time are manifesting in all sorts of things. If you own those things, you own inflation. And that’s how to get and stay wealthy.
Stocks are at record highs with stretched valuations. Bitcoin went to $65,000. Oil at two-and-a-half year highs. Copper at 10 year highs. Gold hitting all time highs last year.
In a very real way, this inflation is manifesting all over.
You're seeing collectibles sell at record prices, whether that's paintings or sculptures, even sculptures of nothing, as we chronicled on these pages several weeks ago, where an empty box sold for $18 million.
And so the inflation is on in a very real way.
It is also being expressed in the housing market, as you see housing prices rise at their fastest rate in 17 years. And bidding wars emerge in multiple markets for housing across the world, with homes being sold above asking price, with inspections waived. First time home buyers seeking houses at the lower end of the pricing spectrum are being priced out.
That real estate price inflation is being driven by other things, not just the money in the system, but other fundamental shifts, like people being able to work from home and therefore living wherever they want. And you'll see places that reflect that, like Bozeman, Montana, for example, being one of the top five fastest growing real estate markets in the U.S. right now. And it ain’t because of the restaurants and shopping.
You know housing prices have been rising, but now real estate is coming on strong as a stock market sector as well. It's the third-worst performing sector over the past year. But if you look at the past three months, it's the second-best performer.
The wealth inequality that is a result of the loose money policy described earlier is also driving the real estate sector. As people are being priced out of the home buying market they're forced into a rental situation. You can be the landlord instead of the renter by owning assets like affording housing and income real estate investment trusts (REITs).
I have had premium readers positioned in energy since late last year. We have harnessed this inflation perfectly, and our bottom line is better off for it. Energy, particularly clean energy, still has much more room to grow.
And we’re now getting positioned in real estate as well.
If you want to start thinking about investing this way, managing your capital with the cycles of the market instead of being worried about the sky falling everyday, click here.
The sky is falling for many to be sure.
An inflated housing market with inadequate supply is bullish for street corners as well.
Own the system instead of succumbing to it.
Call it like you see it,
Publisher, Resource Stock Digest
Nick Hodge is the co-owner and publisher of Resource Stock Digest. He's also the founder and editor of Foundational Profits, Family Office Advantage, and Hodge Family Office . He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
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