It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
Let’s dive right in this week …
A nickel ain’t worth a dime anymore.
— Yogi Berra
Art is what you can get away with.
— Andy Warhol
How many millionaires do you know who have become wealthy by investing in savings accounts?
— Robert G. Allen
Credits and Debits
Credit: Bitcoin’s journey to the sun continues: On Friday the cryptocurrency darling surpassed $1990 — which means it has almost doubled in price since the beginning of the year. I know. The speculators better hope bitcoin isn’t wearing wax wings.
Credit: Speaking of inflation, a portrait by Jean-Michel Basquiat that sold for $19,000 in 1984, fetched almost $111 million during a Sotheby’s auction on Thursday. That represents a 33-year return of approximately 581,500%. The sale set a new record for an American artist, and is one of only ten paintings in the so-called “$100 Million Club.”
Credit: In other news, the stock markets have been in the longest period of market calm since 1969 — that is, until Wednesday came around and socked them in the jaw.
Debit: So … just how bad were the markets on Wednesday? Well … It wasn’t the end of the world, by any stretch but, after 15 consecutive trading days with no market moves of 0.5% or more, it was a reality check, as the S&P 500 and Dow saw their biggest drop since September, and the Nasdaq and small caps suffered their biggest fall since Brexit.
Credit: Of course, on Thursday the market brushed itself off and began clawing back those losses — with indices once again hovering near their all-time highs. Did you really expect any other result?
Credit: Frankly, the current stock market is eerily reminiscent of the 1999 bubble; it even has people wondering if Snapchat is the next Pets.com. For example, on its first trading day in March, SNAP surged 44% — despite the company never turning a profit and its shares conferring no voting rights. This week, SNAP plunged 25% after it reported a quarterly loss of $2 billion dollars. Imagine that.
Debit: Let’s face it: The stock market is wildly overvalued no matter how it’s analyzed. As Jim Rickards notes, perhaps the best indicator of market bubbles, the Shiller CAPE ratio equity measure, is at the same extreme-high valuation reached in 1929. Yes, that’s the same year of the infamous stock market crash that started the Great Depression.
Debit: Aside from the FAANG stocks — Facebook, Amazon, Apple, Netflix and Google — the market has been silently collapsing since March 1st. For proof, David Stockman says one only has to look at the dirty details behind the rising market during the last 70 days: $260 billion of new “value” was from the FAANGs — but the other 495 companies in the S&P 500 lost $260 billion. Oops.
Debit: In fact, less than 4% of all stocks account for all the stock market’s gains since 1926. Out of the 25,782 companies that have been publicly traded since then, only 30 made fortune-making returns in the long run. Now that’s something you won’t hear from the folks on Wall Street.
Credit: In case you’re wondering, Amazon has provided the biggest gain of any stock since 1926; investors who bought and held its shares since the company went public in 1997 have earned a 49,000% return. That’s impressive by any measure, market bubbles notwithstanding.
Credit: Then again, when it comes to the pretty picture painted by Amazon’s stellar long-term market return, you can bet there are at least a few art “aficionados” out there who aren’t impressed.
Last Week’s Poll Result
Are cryptocurrencies a legitimate wealth preservation asset?
- No (61%)
- What’s a “cryptocurrency”? (24%)
- I’m not sure (10%)
- Yes (5%)
Almost one in four of the more than 1200 people who answered this week’s survey question admitted to being completely in the dark about cryptocurrencies. Of the rest, three in five say they’re not a credible wealth-storage strategy, while another one in ten were on the fence. Only 5% consider them to be on par with the ultimate stores of value: gold and silver. I’m with the fence-sitters because, unlike precious metals, which have a 5000-year track record as money par excellence, the oldest cryptocurrency, Bitcoin, is less than a decade old. Until we see how cryptos perform during — and after — a monetary collapse, I say the jury is still out.
The Question of the Week
By the Numbers
Ninety years ago this month, two Utah newlyweds moved to Washington, DC, and opened the Hot Shoppe, a family restaurant serving coffee and tamales. Their names were J. Willard and Alice Marriott. Yes, those Marriotts. Here’s a look at how the Marriott empire has grown since then:
1937 Year the Marriotts started providing boxed lunches to Eastern Airlines.
$570,000,000 Price for which Mr. Marriott sold his In-Flite Services catering division in 1989.
19 Number of businesses, besides lodging, that the Marriott family has had a hand in, including home security, travel agencies, and theme parks.
1957 Year the first Marriott Company hotel opened. (The Twin Bridges Motor Hotel, in Arlington, Virginia.)
3000+ Number of Marriott hotels worldwide today.
2 Number of Marriott hotels that will open per day this year.
1166 Height, in feet, of the JW Marriott Marquis Hotel Dubai. It’s the tallest hotel in the world. (And, yes, the hotel takes up the entire tower.)
Other Useless News
Here are the top — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Alberta (1.91 pages/visit)
2. Ontario (1.85)
3. British Columbia (1.78)
4. Manitoba (1.66)
5. New Brunswick (1.60)
9. Yukon Territory (1.50)
10. Quebec (1.41)
11. New Brunswick (1.33)
12. Northwest Territories (1.25)
13. Nunavut (1.00)
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Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach me at: Len@LenPenzo.com
After reading my piece explaining why whirlpool tubs are for suckers, bjbeetlebabe had the following question for me:
Oh, my gosh! When were you in my bathroom to take this picture??
Last week. Hey … When you got to go, you got to go!
I’m Len Penzo and I approved this message.
Photo Credits: (coffee) brendan-c; (painting) Sotheby’s