Inflation or deflation?
Recession or Expansion?
Disclaimer: This is just a jester's journal—don't take financial advice from a fool! This is my personal diary to keep me focused on my own plans. Do your own research and consult a pro before making any moves.
The consensus now is "sticky inflation." Initially, there were predictions of 6-7 rate cuts, but now there's only one expected for 2024. The truth might lie somewhere in between.
Inflation Drivers
🔥 Excessive “money printing”
🔥 Government spending
🔥 Supply chain disruptions
🔥 Geopolitical tensions
🔥 Speculation and bubbles
🔥 High demand
Deflation Drivers
❄️ Low demand (recession)
❄️ Overproduction
❄️ New technologies and innovations
❄️ Debt defaults
❄️ Tight monetary policies
During COVID, many people had excess money. Spending on unnecessary items without caring about prices became common. Now, money matters again.
Each rate hike brought false hope, a glimmer of optimism that rates would eventually return to their former lows. Relying solely on interest rate changes for economic salvation often ends in disappointment.
Here in Finland, during our midsummer parties, I lost count of how many times I heard, "But when will interest rates go lower?" I didn't want to ruin the parties, but it was unbelievable how even ordinary people started to think like the so-called experts who had predicted everything wrong.
Will they ever learn? Or will they forever be lured by the siren song of lower rates, oblivious to the chaos that ensues?
Prices drop when there are no buyers. In a recession, buying a dream house becomes challenging if your spouse is out of a job and you're uncertain about your employment in six months. Your credit cards are maxed out, and your emergency fund is running dry.
Real estate experts in Finland claim this is the market bottom. Prices usually go lower, and demand is questionable. Smaller banks, like OmaSP, are facing unusual issues.
The Whole Point is to be Immune to Policymakers:
Ignore them.
Avoid leverage. (You want to be a buyer when the market is down, not a seller.)
People are betting on big tech, believing "AI is the future" and "Tech is the future." Rates, inflation, or other factors don't seem to matter. The issue is they want quick 2-3x returns on their money.
The stock market is not the economy. Historically, high concentration in specific sectors often ends in tears.
What is “Normal” Nowadays?
Maybe the future will feature a few massive companies while the rest of us struggle. Everyone is desperate for a "boom." Do you feel the economy is booming? Can you buy more things?
Playbook:
Search for good businesses. (Now is the time to find them)
Discover commodities.
Learn Bitcoin.
Bitcoin
This is a great example of how everybody wants the “boom,” or should I say, be a “rug puller.” Sell their bags and drive to the sunset. NVIDIA employers seem to be the only ones who can do that (record insider selling, can’t blame for that).
It is in all asset classes.
The detachment level in Bitcoin and copium is hard, and now some are giving up. “Billionaires coming to Bitcoin” when the Dell dude retweeted something. Utterly stupid and idiotic. This idiotic nonsense is everywhere. Bitcoin encapsulates the current madness, exemplifying the irrational exuberance of the whole market.
Another anecdote I overheard at midsummer parties is, “I sell my real estate when the interest rates go lower, and the value goes to the same level it used to be.” Yeah, good luck with that.
The “crypto market” is currently realizing this, oh shit it was just meme coins and nonsense bullshit.
Bitcoin has been good at sniffing bullshit, and I think the inevitable rug pull is coming faster than I anticipate? Remember that Bitcoin started to run fastest from the bottom of 2022/2023, the first to take a good breather here?
Look at YEN. Smaller banks.
Bitcoin remains the best long-term bet. There are no get-rich-quick shortcuts.
No leverage? Yes/No
6-12 emergency fund in place? Yes/No
Can you hold over 5 years minimum? Yes/No
You are not retiring in the next 5 years? Yes/No
I’m also looking for solid businesses for my portfolio, currently exploring Metso. I'm cutting through the noise, reading more books, and enjoying slower days. This is my first holiday in 12 years! Have a great summer, stay strong!
