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Strategies & Market Trends : The Art of Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (1860)	7/6/2021 9:43:02 PM
From: Sun Tzu	2 Recommendations Recommended By ekimaa robert b furman Read Replies (1) \| Respond to of 10550

For reasons that I'm sure you know, dividends can be very misleading. The most accurate apples-to-apples metric that works for growth and value stocks is the book value rate of growth (before dividends and buybacks). It is not a linear model, but it is possible to actually come up with a proper stock valuation model. Commodities move with supply and demand. But they also move in response to currency devaluation and interest rates. For example, the single biggest determinant of price of gold is the interest rates. Higher interest rates raise the value of USD which lowers the price of gold. And they also make for an attractive competition against gold as they actually pay out money and gold is just a store of value. This relationship is even more pronounced for other commodities because the interest rates also affect economic activity (and expectation). Again, the relationship is not exactly linear but it is clearly strong. The Fed doesn't like to surprise the markets. They signal their moves well ahead of time and everyone can get in line just fine. More money has been lost trying to 2nd guess Powell than just taking him at his word. But Powell is going to have a problem. When the time comes for him to raise rates, or even to taper the asset purchase, he may have little wiggle room due to China opening its own bond market. The supply and demand for the bonds may (or lack thereof) can push the interest rates higher than the Fed can tolerate. Which will force Powell to keep buying them. This will put pressure on USD and you will see the commodities boom simply b/c the dollar will be falling. As to the leveraged balance sheets, I have no doubt that should a solvency crisis hit the nation, fleets of helicopters will be dropping bags of money to save the day. We are near the end of the long debt cycle and the name of the game is inflate your way out of the debt.