{"id":42919,"date":"2017-05-20T05:15:58","date_gmt":"2017-05-20T12:15:58","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=42919"},"modified":"2024-01-27T11:16:24","modified_gmt":"2024-01-27T19:16:24","slug":"black-coffee-20-may-2017","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id42919-black-coffee-20-may-2017.html","title":{"rendered":"Black Coffee: Amazon and the Art of Making Money"},"content":{"rendered":"

\"\"It’s time to sit back, relax and enjoy a little joe<\/em> …<\/p>\n

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.<\/p>\n

Let’s dive right in this week …<\/p>\n

A nickel ain’t worth a dime anymore.<\/em><\/p><\/blockquote>\n

— Yogi Berra<\/strong><\/p>\n

Art is what you can get away with.<\/em><\/p><\/blockquote>\n

— Andy Warhol<\/strong><\/p>\n

How many millionaires do you know who have become wealthy by investing in savings accounts?<\/em><\/p><\/blockquote>\n

— Robert G. Allen<\/strong><\/p>\n

Credits and Debits<\/strong><\/p>\n

Credit:<\/strong><\/span> Bitcoin’s journey to the sun continues: On Friday the cryptocurrency darling surpassed $1990 — which means it has almost doubled in price<\/a> since the beginning of the year. I know. The speculators better hope bitcoin isn’t wearing wax wings.<\/p>\n

Credit:<\/strong><\/span> Speaking of inflation, a portrait by Jean-Michel Basquiat that sold for $19,000 in 1984, fetched almost $111 million<\/a> 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.”<\/p>\n

Debit:<\/strong><\/span> Hmm. Maybe I’m missing something … but does this<\/em> look like a $111-million painting to you?\"\"<\/a><\/p>\n

Credit:<\/strong><\/span> In other news, the stock markets have been in the longest period of market calm since 1969<\/a> — that is, until Wednesday came around and socked them in the jaw.<\/p>\n

Debit:<\/strong><\/span> 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<\/em> a reality check<\/a>, 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.<\/p>\n

Credit:<\/strong><\/span> Of course, on Thursday the market brushed itself off and began clawing back those losses<\/a> — with indices once again hovering near their all-time highs. Did you really expect any other result?<\/p>\n

Credit:<\/strong><\/span> Frankly, the current stock market is eerily reminiscent of the 1999 bubble; it even has people wondering if Snapchat is the next Pets.com<\/a>. 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<\/em> dollars. Imagine that.<\/p>\n

Debit:<\/strong><\/span> Let’s face it: The stock market is wildly overvalued<\/a> 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.<\/p>\n

Debit:<\/strong><\/span> Aside from the FAANG stocks — Facebook, Amazon, Apple, Netflix and Google — the market has been silently collapsing<\/a> 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<\/em> $260 billion. Oops.<\/p>\n

Debit:<\/strong><\/span> In fact, less than 4% of all stocks account for all the stock market’s gains since 1926<\/a>. 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<\/em> something you won’t hear from the folks on Wall Street.<\/p>\n

Credit:<\/strong><\/span> In case you’re wondering, Amazon has provided the biggest gain of any<\/em> stock since 1926; investors who bought and held its shares since the company went public in 1997 have earned a 49,000% return<\/a>. That’s impressive by any measure, market bubbles notwithstanding.<\/p>\n

Credit:<\/strong><\/span> 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.<\/p>\n

Last Week’s Poll Result<\/strong><\/p>\n

Are cryptocurrencies a legitimate wealth preservation asset?<\/p>\n