{"id":57528,"date":"2019-11-02T02:15:34","date_gmt":"2019-11-02T09:15:34","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=57528"},"modified":"2024-10-04T13:22:56","modified_gmt":"2024-10-04T20:22:56","slug":"black-coffee-2-nov-2019","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id57528-black-coffee-2-nov-2019.html","title":{"rendered":"Black Coffee: Lollipops and Rainbows"},"content":{"rendered":"

\"black<\/a>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

Well … another glorious weekend is upon us, so let’s get this party started, shall we?<\/p>\n

‘Prices are too high’ is far from synonymous with ‘The next move will be downward.’ Things can be overpriced and stay that way for a long time — or become far more so.<\/em><\/p><\/blockquote>\n

— Howard Marks<\/strong><\/p>\n

The four most dangerous words in investing are: this time it’s different.<\/em><\/p><\/blockquote>\n

— Sir John Templeton<\/strong><\/p>\n

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

Debit:<\/strong><\/span> First up … Lest anyone make the mistake of believing we somehow escaped our journey from deep within the proverbial rabbit hole, well … think again: Both the S&P 500 and Nasdaq finished the week at record highs<\/a> — while the Fed cut interest rates<\/a> yet again. Talk about cognitive dissonance; I was trying to figure out whether it’s coming from the central bank or Wall Street. Then I realized it’s actually both<\/strong><\/em>.<\/p>\n

Debit:<\/strong><\/span> Despite a soaring stock market and unemployment at an all-time low, the Fed claims that their latest rate cut was “insurance<\/a>” against “weakness in global growth and trade developments that have weighed on the economy and posed ongoing risks.” Even if true, the trouble is, with rates very close to zero, when the next recession hits the Fed will have even less<\/strong><\/em> room to help than they did before.<\/p>\n

Debit:<\/strong><\/span> On a somewhat related note, the most famous stock market crash of them all, Black Monday, occurred 90 years ago this week<\/a>. Thankfully, the kind of financial carnage experienced in 1929 across America can never happen again. At least as long as the Fed continues conjuring cash out of thin air with its so-called quantitative easing (QE) program and holding interest rates near the zero bound. Err … I think.<\/p>\n

Credit:<\/strong><\/span> Then again, overpriced stocks have some investors saying that today’s market is ripe for a similar plunge. As just one example, Simon Black points out that since 2010, Coca Cola’s annual revenue has fallen 10%, earnings per share have dropped 40%, and equity is down 40%. Oh, and Coke’s profits have fallen 70% since 2018 — yet its stock price<\/a> has nearly doubled<\/strong><\/em>. See? Thanks to the Fed, making money in the stock market is all but, um … guaranteed:<\/p>\n