Weighed average type of stock? Higher confidence that investing capital in us companies translates into earnings over time? Excess savings accumulated by boomers is making valuations frothy?
A few FT discussions about the Gold price. Gold is the new meme stock basically.
Gold is being driven largely by financial demand, and this shift is upending the traditional understanding of how to calculate its value. The models long used to explain the price of gold, which include real bond yields and inflation expectations, have all broken down.
Relative to inflation, for example, the price of gold is now five standard deviations above its historical norm; put plainly, this is freakishly unusual behaviour.
Meanwhile, a model developed by the World Gold Council attributes more than 80 per cent of gold’s latest gains to “risk and uncertainty” or “residuals”. That’s another way of saying scary stories and “we have no idea”.
The US government doesn’t seem to have an end in site for how much debt they intend to accumulate. In Canada, the Federal Government is trying to cut back on spending, but debt is still going up. Provinces are having massive budget blow outs. You post regularly about the UK’s issues. It sounds like Japan is having issues as well.
Add on Trump’s unhinged foreign policy and randomly picking wars and half-assed takeovers of countries.
I think it’s more than scary stories, there’s a fair amount of data to go with the stories.
Mostly agree. We are heading into a much more volatile, higher debt world.
What is happening is that countries are weaponising their economic power (when they have leverage), which then leads to economic fragmentation at the global level.
At the country level, this causes political polarisation (as the economic fragmentation damages industries) leading to increasing amounts of public money being spent (fiscal dominance so to speak) on areas that are more populist driven (vs say productivity driven). Demographic decline (which is linked to low economic growth and anti-immigrant sentiment) and the need for more defense spending (due to the fall of the old international rules-based order) is amplifying all of this.
Not a good time to be investing in equity indexes (you can still make a good single stock pick though) or developed country debt (because a lot more is going to be issued). My next investment rotation will be into EM debt as their debt dynamics look much more sustainable, plus they have younger populations.
Why would this be relevant? He’s already shown his lack of acknowledging constitutionality issues.
Just wondering where the S&P 500 would be at now if Trump had done nothing on the tariff front….
Because the courts might be compelled to prevent the breaking of laws? Like in the case of tariffs?
Yeah trump is totally done with tariffs now. How is SCOTUS planning on enforcing their ruling?
Based on what I’ve seen, I don’t think the current level of stock prices would be much different without tariffs, but the path taken would have been much different.
US outperformed the world by 20% in 2024, didn’t it?
The USA stock market was on a long winning streak vs. the rest of the world. That was not going to continue forever. The president’s policies have a role in the switch. I’d put as much blame on the immigration crackdown as tariffs for the USA slowdown.
The Great Rebalancing away from the US is happening at speed primarily due to Trump.
The main advantage of the US is that a huge % of retail investors put a % of their money automatically into US stocks every month (way more than any other country in the world)
All that capital going into the stock market basically makes it near impossible for the US market to really crash outside of a black swan event. Its effectively large capital inflows/outflows that boost stock markets and also cause stock market corrections over time.
But once those same people start putting a higher % of their money into non-US stocks (vs being 80% or more US stocks) that reduction in capital flows into the US market from retail investors will cause a drag on US equity growth as US stocks are also dangerously over-valued (and they can’t boost their profit margins further either to try to bump up the stock prices as the US market has also maxed out on affordability).
Different areas within the S&P have also seen different returns. Dividend stocks have had outsized returns in 2026 while the Mag7 are down ~5%. I believe if you pull out the Mag7, US returns from the last few years follow closer to the world index. US tech is the outlier more than the US broadly.
Ben from The Compound YouTube channel is fond of a chart of performance by sector. It’s just a bunch of color coded boxes annually stacked by sector performance. It shows fairly conclusively that given time every part of the market gets a turn at or near top of the chart.
Leverage seems to be addictive. My friend in the UK who’s building a small real estate empire wants to do an equity take out and buy another home on an interest only mortgage.
If you are going to be a landlord, you really need to go all in on this and keep buying until you have something like a 10-20M worth of properties you manage. Having a couple just for the sake of “producing some side income” is nothing but trouble. Exception might be keeping your starter home to rent out if you don’t need the cash to buy your next house, and you aren’t moving far away, as you know what problems you might have over time.