Things Happen Fast in the Financial World

03 Feb

Things Happen Fast in the Financial World

We’re writing this post on Thursday (2/3/22), the day Facebook, or more properly its parent company Meta Platforms, lost more than $230 billion in market value.

In one day.

The Dow Jones Industrial Average fell 518 points, while the Nasdaq market was down 538 points, or 3.7 percent. 

This isn’t the first time we’ve seen a jumbo-size train wreck like this. Here’s a Wall Street Journal graphic detailing similar collapses over the last two years.

As you can see, Apple, Amazon, Microsoft, and Tesla have been slammed this way before.  

These things happen because the markets have been in a speculative fury while the Federal Reserve has been pumping trillions of dollars to Wall Street.  Think about this.  Last time we saw the numbers broken out, just a few months ago, 21 percent of the capitalization of the S&P500 was concentrated in these five high-flyers: Facebook, Apple, Amazon, Netflix, and Google.  

It has driven those stocks to the moon, but all that Fed money sloshing around still must spill over elsewhere, and because it is cheap and easy-to-come-by for the Fed’s cronies, it has funded all kinds of things at levels that have no rational economic underpinnings.  Things like crazy crypto currencies (have you ever heard of Fonziecoin, PotCoin, or Pizzacoin?).  And equally crazy NFTs, non-fungible tokens.  Like the recordings of rude body sounds.

This is the age of stupid money.  But it is not the first time.  In his play Pericles, Shakespeare holds up a famine in Tarsus, which had been proceeded by an inflation characterized by rank excesses.

One former Federal Reserve official, Richard Fisher, asked a couple of years ago what the markets will do when the Fed stops giving them “monetary cocaine.”

For some reason we think about Rudyard Kipling’s line, “If you can keep your head while all about you are losing theirs…”

We’ll adapt it and finish it for our age of wanton currency destruction.

If you can keep your head while all about you are losing theirs, and during some of the most ridiculous financial behavior ever seen, then surely you will invest in gold… And keep not just your head, but your wealth, too.