Tao Economics

Navigating Economics Cycles for Preservation and Survival

The VIX which measures volatility in the stock market is at extreme lows going into June.

With the lawfare and conviction on Trump, the economy cooling and war drums continuing to beat, it is easy to see an increase in volatility over the coming month(s).

Markets hate uncertainty.

I’m buying Ticker VXX as a short/midterm hedge today. This is not a long term hold, and if there are any rapid gains (share prices in the $14 - $17+ range) I will likely take profits.

https://finviz.com/quote.ashx?t=VXX&p=d

I’m expecting a one to two month holding period. Have to see it as it comes.

For something more for a larger position size I’m thinking something more like SGOV for a wait in see: https://finviz.com/quote.ashx?t=SGOV&p=d It pays 5% and its treasures that expire within 0 to 3 months.

I also do not believe government bonds are a long term hold though. We are in a wave where assets move from public (government) to private assets (stocks, real estate, PM’s, crypto, collectibles).

Including an interesting chart of % of stock dividends above treasury yields which could be signaling some pain coming up.

Capital may be confused on what to do short term, we could see a short term correction in tbill yields while markets correct.

We will be entering a war economy. We are at the end of the monetary cycle and the politicians and those in power believe they need war in order to remain in power as they can use war as an excuse for monetary problems that they have caused.

I asked Brave's AI what assets do well under a war economy and it spit out the following:

Under a war economy, certain assets tend to perform well due to the increased demand for defense-related goods and services, as well as the government’s focus on national security and infrastructure development. Some of these assets include:

Defense contractors:

Companies that produce military equipment, weapons, and services tend to thrive during times of war or heightened military activity. These companies may include those involved in the production of aircraft, ships, tanks, and other military hardware, as well as those providing services such as logistics, maintenance, and training.

Technology and innovation:

The rapid development of new technologies is often driven by the need for military superiority, leading to investments in research and development, particularly in areas such as artificial intelligence, cybersecurity, and advanced materials.

Infrastructure development:

War economies often prioritize infrastructure development, including the construction of roads, bridges, and other critical infrastructure, which can lead to growth opportunities for companies involved in construction, engineering, and related services.

Energy and resources:

Wars often require significant energy resources, leading to increased demand for fossil fuels, alternative energy sources, and related infrastructure. Companies involved in the extraction, production, and transportation of energy resources may benefit from increased demand.

Healthcare and medical services:

Wars often result in increased demand for medical services, including emergency care, rehabilitation, and treatment of injuries and illnesses. Healthcare providers, medical equipment manufacturers, and pharmaceutical companies may experience growth during times of war.

Government bonds:

Government bonds, particularly those issued to finance war efforts, can be a safe-haven asset during times of conflict, as investors seek stable and secure investments. Precious metals: Precious metals such as gold and silver often serve as a store of value during times of economic uncertainty, including during wars, and can provide a hedge against inflation and currency fluctuations.

Cybersecurity:

As wars increasingly involve cyber warfare, companies and governments invest in cybersecurity measures to protect against cyber threats, creating opportunities for cybersecurity companies and professionals.

It is essential to note that these assets may not always perform well during times of war, and their performance can be influenced by various factors, including the specific nature of the conflict, the effectiveness of military strategies, and the overall economic conditions.

The only one I do not agree with is government bonds. The is no plan to pay these back and countries that find themselves at odds with the U.S. are selling long term treasuries.

Under energy and resources, I believe it should have elaborated more on the inclusion of base metals and soft commodities as war is highly inflationary.

I have started a portfolio in my stop loss tracker google sheet. I will be making access to it shortly. It is going to get really tough. The WW3 portfolio should help.

Great interview with George Gammon. One note I wanted to call out around the 50 minute mark. George talks about what the pros do versus retail investing.

Watch the interview here:

..most retail investors I would argue spend 99% of their time trying to figure out what to buy or what not to buy and they spend 1% of their time on the portfolio management the money management or the risk management and from what I can tell the pros do the exact opposite

It's worth watching the entire interview.

If you need help on risk management, you can use google sheets to track your stop losses. For more details check out: https://taoeconomics.com/products/dynamic-trailing-stop-losses-using-google-sheets

Or get started right away here: https://stoploss.productdyno.com/pay/YZQJE2TY

Silver Hitting Extremes

- Posted in Precious Metals by

The silver/gold ratio is hitting 90 and above again. As you can see from the long term gold/silver ratio chart these are extreme levels where silver is cheap compared to gold.

The large spike from covid can be somewhat misleading as even though the spot price tanked, premiums over spot sky rocketed.

While the silver chart looks messy, buying today is a good deal for the long term. Right now it's in the $22 range: https://finviz.com/futures_charts.ashx?t=SI&p=d

The move is from public (gov debt) to private assets. So any private asset that looks cheap buy it.

For online buying just go to APMEX's deal page: https://www.apmex.com/deals

Cheers

Rebooting TaoEconomics

- Posted in Announcements by

I have been running the site TaoEconomics under the handle StingingNettle for quite some time.

Previously TaoEconomics was both a wordpress site where I posted market thoughts and commentary. There was also a message board with regular folks that have been around for quite some time. Originally the message board users came from the Daily Reckoning message board and Da Bears message board.

Due to my regular full time job which became very demanding as promotions and more responsibilities happened I had let the site go into a unusable state.

While, I am not clear if I will be bringing back the message board yet (I may use a different medium for a message board group), I have re-launched the site for providing market commentary and survival type posts as we approach the end of what many call the 4th turning.

Stay tuned for more further updates!

-StingingNettle