Friday
We are at a major turning point in markets. Many of the 20 to 50 y.o. traders will learn an important and painful lesson – the one that recommends being more concerned about the return of the money than the return on the money. That pithy aphorism is becoming relevant again.
Buying sexy stocks and going with the flows and trends, following the herd in general, has been a successful strategy over many decades for many traders.
No more; the age of ‘being a genius by buying the dip’ is over.
The future will be about value – recognising it, finding it and taking advantage of it. What return is this company going to show in the future? Is it a business with a real product that will be needed and wanted? Can it produce and supply the product in time and in the right place and at a price that matches or betters marketplace expectations and ability and willingness to pay? Can it guarantee sources for the necessary ingredients in a world of broken supply chains? Does it have managerial competence with a proven track record of making money for stockholders? Does it have the director I.Q. to surmount the financial and monetary storm?
The world where there was an ocean of credit frantically chasing the latest gee-whiz idea – any idea – is over. Credit is tightening; standards for lending are rising. Both trends will continue.
The fabled zombie corporations will start collapsing in 2023. More and more will move into insolvency as interest rates rise – until the Fed reverses course. By then, the zombie capital will have been destroyed and new capital, real capital, will be far more cautious.
Honest money will return to centre stage. Remember well: ‘He who has the Gold makes the rules’.
The transition will be painful in the extreme; at an individual level, not just corporate. Societies will convulse and break down, then gradually readjust and reform into more pro-survival entities.
The further that a society has moved away from reality, the harsher the conditions for readmittance.
The switchover from the old mindset to the new will be almost overnight. Brash confidence will be replaced by fear and uncertainty. Due diligence will return to meaning what it states.
Trust and honour will become vital marketplace attributes again.
It will be a better world, but it will come at a high cost in terms of shattered hopes and dreams and lives – not to mention the easy come, easy go fortunes.