It’s the season to be jolly, and let’s face it, whilst it’s been a very challenging year for yours truly from a personal perspective, as far as the markets go, opportunities have been abundant, especially with equity markets holding on far better than most people’s expectations.
Many markets – equity, gold, bitcoin, etc. – have reached historic highs this year, and this has been superb for the trend followers, as well as the swing traders. And with lower energy costs (even though most Europeans haven’t benefited from the weak price of oil) we should all be pretty happy with how things have gone this year.
However, whilst we, as an industry, will be having a very Merry Christmas, once the turkey has been eaten, we might well be facing a period when the chickens come home to roost, and that will not be pretty.
We live in very polarised times. We have the markets, we have politics and we have the rest, and it depends on where you sit as to how happy you will be.
Equity markets have been incredibly strong over the past few years, and we have seen gains of over 100% since the China virus hit the world. This is an incredible gain, especially when you consider how much damage and debt those frightening years caused.
Joe Biden pumped trillions into the economy, AI monster companies were able to suck in more money than anyone would have believed, and for many, Trump re-entering the White House was considered a major positive for the American economy, albeit we did see a massive, but short-lived panic when the tariffs shook everyone and everything up.
As I said before, buy-only funds and trend followers have had a field day, and there has been enough volatility for every speculator to bolster their portfolios.
That’s all the good stuff, the “we wish you a Merry Christmas” stuff.
However, what we have also seen are political moves which many are worried about. Moves which we are not happy about, but which have yet to hit us. Especially in Europe.
Whilst we are all being led to focus on illegal immigration and the war in Ukraine, the real problem in Europe is its failing political policies. Or the success our European political leaders are having in making us all poorer and hence more malleable for our political elite.
Growth in most of Europe is almost non-existent, and whilst the Euro has held its own against the dollar, and many European equity markets have held up well – many due to the international listings on their exchanges – the continent is in a mess.
The cost of the Ukraine war, the decline in manufacturing due to high energy and labour costs, overly generous benefit systems, and the spending of ridiculous amounts of money on non-profitable pet projects is causing mayhem in Europe. And with our politicians continuing to spend money like drunken sailors, supporting their political aims and the bank accounts of politicians and their cronies around the world, we simply do not have enough money in Europe to turn things around!
And if you think things are bad now, wait until those evil CBDCs are introduced. The ECB is much closer to introducing these controlling digital currencies than most people realise, and when they are introduced, they will kill jobs and the economy in general. Make no mistake, cash money is the oil that keeps our economies moving.
Sure, I realize that the digital age is maturing and we all have to get used to how blockchain technology is going to change the way we live, but few can convince me that with CBDCs coming quick, and our governments employing the benefits of AI to gain more control over the general public, these hi-tech developments are not going to do a lot of damage to many parts of our economies.
In saying that, should we continue to throw money at the AI sector?
I’m of the belief that the AI bubble will burst next year, and that spells disaster for equity markets, which owe much of their growth to AI monster companies, whose valuations have gone through the roof, even those companies who haven’t released a product yet! Those who lived through the .com bubble will know exactly what I mean. The technology is here to stay, but which companies will still be about after a crash is anyone’s guess.
Not everything is miserable for the “techie” community. I have a bit of bitcoin on my books, and whilst I can see values possibly easing further, we are going to see a resurgence in interest in major cryptocurrencies, as well as the “original money”, gold, when people see CBDCs getting more media time. I will buy more on any sizable dips.
Next year is going to be a good year for commodities, because tangible products are vastly more interesting than most paper and digital assets, but that could all change when our politicians find ways of penalising our business and us even more.
That’s what I think we have to look forward to next year, and although it is not pretty – and to some extent I feel like the little boy who cried wolf when it comes to equity markets – we will have some great opportunities if we remain flexible.
I am looking forward to next year, because whatever is thrown at us, those of us in our business always have the opportunity to make a few bucks…
So that said, I will take this opportunity to wish you all a Very Happy Christmas, and a truly profitable, healthy and wealthy New Year!
Please note the political opinions expressed above are those of the author himself, and do not necessarily reflect the opinions of JP Fund Services AS.
The post It’s Been Another Great Year, But Can It Really Continue? first appeared on JP Fund Services.
The post It’s Been Another Great Year, But Can It Really Continue? appeared first on JP Fund Services.
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