Markets Are 'Melting Up'

As the fed prints more money, the dollar loses value and markets grow (in dollar terms). With this, and the increased liquidity pumped into the markets, the Wall Street Journal has described markets as "melting up". In this video, I explore what this means and how we can take lessons from this.

No information on this channel is financial advice. I am not a financial advisor - I'm just an individual doing my own research, making my own investments and sharing my research with you. For you to consider any investment, you must do your own research. You also must not invest more than you can afford to lose as investing is inherently risky and you could lose all your money.

All information in this video was up to date as per my research at the time of recording but may now be outdated by the time you're watching this video so please especially remember this.

[krnz]

thanks for not having a 5 minute intro like several other youtubers. you jump right into it. love it

[Witnessmoo]

Guys - it’s this simple... would you rather hold cash (which can be printed as infinitum) or would you rather hold assets (stocks, property, precious metals, commodities etc)? Most people have common sense and know they’d rather hold assets than cash.

It’s that simple.

[blackkittens.]

6 to 12 months of emergency funds should come first - finally someone is saying this. Thank you

[tonybegg]

Very good points Tom. Basically, when everybody is simply buying because things are going up in price whatever diversification we have tried to achieve is nullified. In mid March there was a liquidity crisis (shortage of dollars internationally as markets fell) and everything crashed together. So there is the recent memory of that and you can see its signature in the markets (gold, silver, bitcoin) whenever the stock markets start to slide. I totted up my IRA investments the other day on a cost basis (i.e. before my gold, silver, bitcoin bets started to pay off). I had 20% in gold ETF/silver ETF/junior miner stocks, 3% in non-miner dividend stocks and ETFs, 2% in a special inflation protected and yield curve hedged bond ETF, 37% in Grayscale bitcoin trust shares, and 38% in cash (treasury bill based money market fund). Outside of my IRA I have no debt, income of about $65K per annum from my pensions, am maintaining a cash reserve of $50K (here in the States medical coverage even with Medicare is flaky and that is probably the biggest unknown), have about $2K each of gold and silver bullion in a safety deposit box in the bank, and hold 2.1 BTC, 4 ETH and small amounts (~ $100) of a 6 DeFi coins. Am saving like crazy and intend to use surplus for more precious metals and crypto, and when allowed annual trip to the UK to visit my brothers. So clearly I agree about the cash and realize it is the only non-correlated asset in the event of a market crash. I had a bad experience with the 1987 crash buying at the top and selling at the bottom so I have been expecting another one ever since.

[scottstolnitz]

FED has typically shorted gold to protect the dollar. Recently, they've wanted it to go lower so gold is up

[formulaic]

For those holding gold and silver now and expecting a second crash, do you think it's best to hold these now, given that they'll likely fall with a second market crash leaving less cash to buy depreciated stocks, or is it better to hold cash and then buy gold and silver along with stocks after the second crash?

[RonNewmanPiano]

Simple question that no one seems to answer head on: does Ray Dalio's All Seasons diversification plan still apply in 2020? He says himself that this predicted downturn is not your usual downturn. Specifically, what about the bonds part of his plan when interest rates are zero? Maybe certain alternative types of bonds are still ok, for example inflation-index bonds?

[rensp]

Totally true. I was looking up the business cycle articles I saved from during the gfc, trying to find out where we're at, what comes next. Completely worthless. We're in all 4 cycles at once. Except bonds they won't come back I think. Rates will have to stay low or it becomes the spark to set the whole market on fire. We're being forced into one direction, dopamine fed. What goes up...

[structuralengineering]

The inflation is not reflected in whole econ yet, mostly in stocks like amzn, tsla... tech sectors. House sale is another inflation due to 0 interest rate. The rest of commodity isn't price up yet because velocity of money is so slow during pandemic.

[Just_An_Idea_For_Consideration]

Could you post links to any stock market charts that display the value of any stock as valued in gold at that time - it can also show the value of the stock as valued in dollars - but i want to see it as valued in gold - so i can see if it is actually rising or if it is merely a devaluation of the fiat currency that makes it appear to be rising?

[glen]

The rise in silver and gold is mostly attributable to the falling dollar. Without Fed intervention, many highly leveraged companies would have been on the verge of bankruptcy. So from an asset preservation POV it makes sense to be happy with nominal gains and stay underweighted in stocks.

[randystreetman]

I can't believe how brilliant you are for your age. Don't let that go to your it is true. :-) I am impressed. I am 66 years old: It's not my first rodeo.

[ShadYclub]

Exceptional insight and breakdown in my opinion. Hit the nail on the head for me

[AmericanPatriot-bpcu]

I totally agree that GLD is worth more than stocks. I'm loaded up and feel good about it.

[dingdong]

Is it safe to buy bitcoin on Coinbase?

[businessguide]

Keep posting interesting contents like this!

[glen]

... and thanks Tom for the excellent information provided.

[beastirick]

Cash is not trash, dollar is. Dollar is taking so much beating right now vs other currencies that you could just hold something like euros (I'm doing that) and due to euro getting stronger and dollar losing value you are making money once you convert it back to dollars. Dollar has been losing 0.5% a day vs euro in previous weeks so what that means is that what ever you invest in (that uses dollars to determine value) has to go up more than 0.5% a day for it to be worth to invest in. Gold and other metals are also measured in dollars so even those have to go up at least with that rate to keep up. I don't really feel like euro can crash the same way as other assets since if markets crash then dollar is likely gonna do the same and euro might survive with just a scratch. Sometime to make money you just have to hold cash and be patient. I'm holding couple of ETFs that have US equities but those ETFs have hedged their currency exchange rate so I should not be affected but the dollar losing value while I can still be in the market.

[franktaber]

Great content as always Tom. This is the strangest market I’ve witnessed. Do you have much of your portfolio is cash?

[jadejc]

stock trading seems to be really difficult, i have studied and made good analysis on the market, i've also used trading bots and yet i still make loses, it's really frustrating but i'm gonna keep my head up on it cos i see alot of people winning from the Stock market.