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112 Questions To Ask Yourself In 2012

The beginning of each year is a great time to evaluate the direction of your life and to ask yourself some very important questions.  Often we get so busy just living life that we lose our perspective.  It is important for each of us to take time once in a while to reassess how our lives are going.

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The beginning of each year is a great time to evaluate the direction of your life and to ask yourself some very important questions.  Often we get so busy just living life that we lose our perspective.  It is important for each of us to take time once in a while to reassess how our lives are going.  It is also important for all of us to reassess the direction that our nation is heading in every so often.  The truth is that America has gotten badly off track.  We have abandoned the principles which once made this country great, and this country is literally falling apart all around us.  Hopefully the questions below will not just get you focused on our problems.  Hopefully they will also spur you to think about solutions.  Both individually and as a nation, we are in a lot of trouble.  We need to start asking better questions and we need to rediscover the things that once made America the greatest nation on earth.  If we are willing to humble ourselves and change course then there is hope for us.  If not, then the road that we are currently on will only lead to national disaster.

The following are 112 questions to ask yourself in 2012….

#1 Are Barack Obama and Mitt Romney really the best that America can come up with?

#2 Right now the nations of the world are 55 trillion dollars in debt.  How long will it be before this system of debt totally collapses?

#3 What things in life are you truly grateful for?  Do you ever take time to thank those that have been so good to you?

#4 In 2012, when you add the maturing debt that the Italian government must roll over to their projected budget deficit, it comes to 23.1 percent of Italy’s GDP.  How in the world is Italy going to be able to handle that in this economic environment?

#5 What do you feel like you are missing in life?  Are you actively looking for those things?

#6 According to a survey conducted by the National Geographic Society, only 37 percent of all Americans between the ages of 18 and 24 can find Iraq on a map of the world.  What does that say about our education system?

#7 Do you give more than you take?  Would you rather serve people or be served?

#8 Why were gun sales in the United States at record levels as we entered 2012?

#9 What are you afraid of? Are those fears rational or irrational?

#10 168 million emails are sent every single minute.  Are we rapidly getting to the point of information overload?

#11 Do you care enough about other people?  Do you spend more time thinking about yourself or thinking about others?

#12 Why are there 18.5 million vacant homes in America today?

#13 Did you spend enough time with your family last year?  Will you spend enough time with them this year?

#14 The number of Americans on food stamps has increased by 20 million over the past five years.  What does that say about the state of the U.S. economy?

#15 Is your family prepared for what is about to happen to this world?

#16 Why do the poor in America just keep getting poorer?

#17 After you are dead, what will people be saying about you?  Will they miss you or will they be glad that you are gone?

#18 Why have 10 million more Americans fallen below the poverty line since 2006?

#19 What do you need to change about yourself?

#20 Should we all be concerned that doctors in India say that “incurable” cases of tuberculosis are showing up in India?

#21 Who do you know that could use some more love?

#22 Why is the Department of Homeland Security scanning Facebook and Twitter for “sensitive words“?

#23 Is your country a better place because you live there?

#24 Why is the FBI building a massive new biometric database?

#25 What do you think your life will be like ten years from now?

#26 40,000 new laws went into effect across the United States as 2012 began.  What does that say about the culture in this nation?

#27 If you could have dinner with anyone in the world, who would that be and why?

#28 What did Mitt Romney mean when he stated that he wants to “eliminate some of the differences, repeal the bad, and keep the good” in Obamacare?

#29 What is the best piece of advice that you have ever gotten?  Are you still following it?

#30 Is it a good thing that the wealthiest 10 percent of all Americans have 56 percent of all the wealth?

#31 What books do you need to put on your reading list this year?

#32 About half of all Americans are now either living in poverty or are considered to be low income.  So are we still a “wealthy” nation?

#33 What are the things that you do that waste the most time?

#34 Why aren’t more Americans concerned that the trade deficit is increasing again?  This is one of the things that killed the Greek economy and it is most definitely sucking the life out of our own economy.  Could it be that most Americans have become so “dumbed down” that they don’t even know what a trade deficit is?

#35 What would happen to you and your family if you suddenly lost your job?

#36 How is Germany able to build twice as many cars every year as the United States does?

#37 Have you done anything worth remembering lately?

#38 Why is the average age of a vehicle in America now sitting at an all-time high?

#39 If you only had one day left to live, how would you spend that day?

#40 How stupid are the American people for piling up 700 billion dollars in credit card debt?

#41 Is there anything that is worth giving your life for?

#42 If Obamacare is so great for working people, then why are so many unions requesting (and getting) Obamacare waivers from the federal government?

#43 Do you believe that you can be a hero?

#44 Why is the government allowing genetically modified mosquitoes to be released in the United States?

#45 What is one great decision that you can make right now?

#46 Why is Mitt Romney taxed at a lower rate than most middle class Americans are?

#47 If someone gave you one million dollars today, how would you spend it?

#48 Who decided that it would be a good idea for TSA “VIPR Teams” to set up thousands of internal checkpoints across the United States every year?

#49 What is the number one thing on your Bucket List?  Why haven’t you done it already?

#50 Why is the federal government spending billions of dollars to militarize local police departments across the United States?

#51 If it was possible, would you want to live forever?

#52 Should we be concerned that 30% of all Americans get arrested by the age of 23?

#53 Where would you rather be than right here right now?

#54 Why did the D.C. government pass a new law that protects the rights of rats?

#55 Which is greater – the number of people that you love, or the number of people that you hate?

#56 Are CEOs really 243 times more valuable than the average worker is?

#57 What will your legacy be?

#58 Is the massive swarm of earthquakes that New Zealand is experiencing a sign that the “Ring of Fire” is becoming more active?

#59 What would your plan be if there was a major volcanic eruption on the west coast of the United States?

#60 If 63 percent of all mortgaged properties in the state of Nevada are still “underwater”, then how in the world can anyone claim that there is a light at the end of the tunnel for the housing crisis?

#61 Why is the federal government arresting people who produce raw milk?

#62 Is the world on the verge of an absolutely nightmarish water crisis?

#63 What are you really good at?  Are you using that skill to make a difference in the lives of others?

#64 Why is the U.S. government giving nearly half a billion dollars every 12 months to an organization that performs about 300,000 abortions a year?

#65 What is the meaning of life?

#66 Why are so many Planned Parenthood executives earning well over $100,000 a year?

#67 How can you make tomorrow better than today?

#68 While the TSA is groping millions of Americans at airports every year, rampant sex trafficking is going on in virtually every major American city.  Isn’t it time that we admitted that our allocation of law enforcement resources is very seriously flawed?

#69 How can you make next week better than this week?

#70 One recent survey found that only 29 percent of people would describe themselves as “very happy”.  So what does that say about the state of our country?

#71 Do you consider yourself to be good?  If so, how did you determine that?

#72 If we are on the verge of a global recession, then why is the stock market still so high?

#73 What would happen if government spending was cut by 50 percent?

#74 Is the euro going to eventually fall to parity with the U.S. dollar?

#75 If the euro fails, what will Europe do?  Would national currencies make a comeback or would a new “European currency” be created?

#76 Are we getting dangerously close to a war in the Middle East?

#77 What would happen to the price of gasoline if foreign oil supplies from the Middle East were suddenly cut off?

#78 Is Germany going to just stand by and watch Greece default?

#79 Is it likely that your eating habits will send you to an early grave?  If so, why not make this the year when they change?

#80 Why aren’t politicians from either major political party doing something to stop the massive flood of blue collar jobs that is pouring out of this country?  Don’t they care about average Americans?

#81 Why do we spend so much time on things that simply do not matter?

#82 Since 1971, consumer debt in the United States has increased by a whopping 1700%.  Is that a sign of a nation that is going to be prosperous in the long run?

#83 Does the U.S. need a new major political party?

#84 The U.S. debt problem continues to escalate.  During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.  Very few of our politicians seem alarmed by this.  Are we the stupidest generation in American history?

#85 Does the U.S. need a new Constitutional Convention?

#86 When we finally see the U.S. economy collapse, who will be in better shape – those that have spent years preparing or those that have not prepared at all?

#87 Are you so afraid to fail that you simply do not even try anymore?

#88 We are facing the most horrific retirement crisis in U.S. history.  Right now, more than 10,000 Baby Boomers are turning 65 every single day.  So where in the world are we going to get all the money we need to pay them the retirement benefits that we have promised them?  Isn’t the Social Security system essentially one gigantic Ponzi scheme?

#89 If people started following your example, would that be a good thing?

#90 According to one Gallup survey, 7 out of every 10 Americans believe that religion is losing influence in the United States.  Is that good for America or bad for America?

#91 Do you ever do anything that is outside of your comfort zone?

#92 The U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was created and Federal Reserve Chairman Ben Bernanke has a track record of incompetence that is absolutely mind blowing.  So what possible justification is there for allowing the Federal Reserve to continue to issue our currency and run our economy?

#93 If you lost everything that you currently own, would your life be over?

#94 If the European financial system is going to be just fine, then why is the UK government preparing feverishly for the collapse of the euro?

#95 When you meet someone for the first time, do you tend to instantly love them or do you tend to instantly judge them?

#96 If the one thing that almost everyone in the Republican Party seems to agree on is that Obamacare is bad, then why is the candidate that created the plan that much of Obamacare was based upon about to run away with the race for the Republican nomination?

#97 Do you feel like you are truly alive?  If not, what can you do to change that?

#98 Why have we allowed the “too big to fail” banks to become even larger?

#99 Who are you living your life for?  Does the answer to that question excite you or depress you?

#100 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.  So where are all of the jobs for the “economic recovery” going to come from?

#101 As you have gotten older, have you also become more loving?

#102 Since 1964, the reelection rate for members of the U.S. House of Representatives has never fallen below 85 percent.  How stupid can the American people possibly be?  They keep sending the exact same Congress critters back to Washington D.C. over and over and over.

#103 Do you treat others the way that you would like to be treated?

#104 According to a recent Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married.  Back in 1960, 72 percent of all U.S. adults were married.  Without strong family units, can America survive?

#105 Do you prefer to forgive those that have hurt you or do your prefer to hold long grudges?

#106 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.  So why are so many young people so broke?

#107 Do you tell your family and your friends that you love them or do you just assume that they already know?

#108 According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.  How bad are things going to be when the economy gets even worse?

#109 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.    How in the world can we justify putting so much debt on to the backs of future generations?

#110 How do you want the story of your life to end?

#111 Will the years ahead find you cowering in fear or will they find you enjoying greater adventures than you ever dreamed of?

#112 If you had the opportunity to tell everyone in America one thing, what would it be?

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Today’s Market Looks Like It Did At The Peaks Before Last 13 Bear Markets

The US stock market today looks a lot like it did at the peak before all 13 previous price collapses. That doesn’t mean that a bear market is imminent, but it does amount to a stark warning against complacency.

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h/t ZeroHedge 

The US stock market today looks a lot like it did at the peak before all 13 previous price collapses. That doesn’t mean that a bear market is imminent, but it does amount to a stark warning against complacency.

The U.S. stock market today is characterized by a seemingly unusual combination of very high valuations, following a period of strong earnings growth, and very low volatility.

What do these ostensibly conflicting messages imply about the likelihood that the United States is headed toward a bear market in stocks?

To answer that question, we must look to past bear markets. And that requires us to define precisely what a bear market entails. The media nowadays delineate a “classic” or “traditional” bear market as a 20% decline in stock prices.

That definition does not appear in any media outlet before the 1990s, and there has been no indication of who established it. It may be rooted in the experience of Oct. 19, 1987, when the stock market dropped by just over 20% in a single day. Attempts to tie the term to the “Black Monday” story may have resulted in the 20% definition, which journalists and editors probably simply copied from one another.

Origin of the ‘20%’ figure

In any case, that 20% figure is now widely accepted as an indicator of a bear market. Where there seems to be less overt consensus is on the time period for that decline. Indeed, those past newspaper reports often didn’t mention any time period at all in their definitions of a bear market. Journalists writing on the subject apparently did not think it necessary to be precise.

In assessing America’s past experience with bear markets, I used that traditional 20% figure, and added my own timing rubric. The peak before a bear market, per my definition, was the most recent 12-month high, and there should be some month in the subsequent year that is 20% lower. Whenever there was a contiguous sequence of peak months, I took the last one.

Referring to my compilation of monthly S&P Composite and related data, I found that there have been just 13 bear markets in the U.S. since 1871. The peak months before the bear markets occurred in 1892, 1895, 1902, 1906, 1916, 1929, 1934, 1937, 1946, 1961, 1987, 2000 and 2007. A couple of notorious stock-market collapses — in 1968-70 and in 1973-74 — are not on the list, because they were more protracted and gradual.

CAPE ratio

Once the past bear markets were identified, it was time to assess stock valuations prior to them, using an indicator that my Harvard colleague John Y. Campbell and I developed in 1988 to predict long-term stock-market returns. The cyclically adjusted price-to-earnings (CAPE) ratio is found by dividing the real (inflation-adjusted) stock index by the average of 10 years of earnings, with higher-than-average ratios implying lower-than-average returns. Our research showed that the CAPE ratio is somewhat effective at predicting real returns over a 10-year period, though we did not report how well that ratio predicts bear markets.

This month, the CAPE ratio in the U.S. is just above 30. That is a high ratio. Indeed, between 1881 and today, the average CAPE ratio has stood at just 16.8. Moreover, it has exceeded 30 only twice during that period: in 1929 and in 1997-2002.

But that does not mean that high CAPE ratios aren’t associated with bear markets. On the contrary, in the peak months before past bear markets, the average CAPE ratio was higher than average, at 22.1, suggesting that the CAPE does tend to rise before a bear market.

Moreover, the three times when there was a bear market with a below-average CAPE ratio were after 1916 (during World War I), 1934 (during the Great Depression) and 1946 (during the post-World War II recession). A high CAPE ratio thus implies potential vulnerability to a bear market, though it is by no means a perfect predictor.

Earnings to the rescue?

To be sure, there does seem to be some promising news. According to my data, real S&P Composite stock earnings have grown 1.8% per year, on average, since 1881. From the second quarter of 2016 to the second quarter of 2017, by contrast, real earnings growth was 13.2%, well above the historical annual rate.

But this high growth does not reduce the likelihood of a bear market. In fact, peak months before past bear markets also tended to show high real earnings growth: 13.3% per year, on average, for all 13 episodes. Moreover, at the market peak just before the biggest ever stock-market drop, in 1929-32, 12-month real earnings growth stood at 18.3%.

Another piece of ostensibly good news is that average stock-price volatility — measured by finding the standard deviation of monthly percentage changes in real stock prices for the preceding year — is an extremely low 1.2%. Between 1872 and 2017, volatility was nearly three times as high, at 3.5%.

Low volatility

Yet, again, this does not mean that a bear market isn’t approaching. In fact, stock-price volatility was lower than average in the year leading up to the peak month preceding the 13 previous U.S. bear markets, though today’s level is lower than the 3.1% average for those periods. At the peak month for the stock market before the 1929 crash, volatility was only 2.8%.

In short, the U.S. stock market today looks a lot like it did at the peaks before most of the country’s 13 previous bear markets. This is not to say that a bear market is guaranteed: Such episodes are difficult to anticipate, and the next one may still be a long way off. And even if a bear market does arrive, for anyone who does not buy at the market’s peak and sell at the trough, losses tend to be less than 20%.

But my analysis should serve as a warning against complacency. Investors who allow faulty impressions of history to lead them to assume too much stock-market risk today may be inviting considerable losses.

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You don’t want to miss this new trend

Over the past six years, U.S. stocks have screamed higher…

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Original Link | The Crux


From Ben Morris, Editor, DailyWealth Trader:

Over the past six years, U.S. stocks have screamed higher…

They’ve doubled the performance of stocks around the rest of the world — a 116% gain compared with a 57% gain (*all numbers in this essay are as of Sept. 12).

But recently, that situation reversed…

Over the past four months, non-U.S. stocks have more than doubled the gains in U.S. stocks (8.5% compared with 4.1%). And yesterday, the market gave us a sign that big gains are likely still to come.

If you’ve been reading DailyWealth Trader (DWT), you know we’ve encouraged readers to own foreign stocks for years…

Mostly, this has been because investors around the world suffer from something called “home-country bias.” Nearly all the businesses they buy are based in their home countries… And they either ignore or fear opportunities outside their countries’ borders.

This hasn’t been a problem for U.S.-based investors lately… But now that foreign stocks are outperforming – and now that U.S. stocks are no longer cheap – it’s an even better idea to put some of your money to work in other markets.

Plus, as I noted above, the market just gave us a sign that the gains in non-U.S. stocks will likely continue…

Yesterday, the MSCI World ex USA Index hit a new one-year high. The index is made up of more than 1,000 businesses based in 22 countries. And in the past, new one-year highs were a great sign.

The table below shows how the index has performed after hitting a one-year high. Over the past 33 years, it has happened more than 600 times.

One year later, the index was higher 76.9% of the time… And the median return was 11.5%. (That means you would have made 11.5% or more exactly half of the occurrences.) You can also see the rate of 10%-plus gains and 5%-plus losses…

dwttable919

These are great odds. Based on history, if you were to buy a basket of non-U.S. stocks today, you would have a 54% chance of making 10% or more over the next year… and just a 14% chance of losing 5% or more.

Compare that with the index’s returns after all periods (essentially, buying the index at random). The average and median returns were lower across all time frames. The chances of a positive return were seven to 10 percentage points lower. The frequency of 10%-plus gains after one year was much lower… And the frequency of 5%-plus losses was much higher.

dwttable2919

History presents a clear picture… Buying non-U.S. stocks after new one-year highs is a good idea.

You can see how a handful of foreign stock funds have performed relative to the U.S. benchmark S&P 500 Index over the past year in the chart below…

0912_spx_globalstocks

All but Greek stocks are at or just shy of new highs.

If you prefer to keep it simple, you can also consider buying a fund like the Vanguard FTSE All-World ex-US Fund (VEU). It is the largest exchange-traded fund dedicated to diversified non-U.S. stocks. It holds stocks from 54 different countries, with larger weightings in developed markets and smaller weightings in emerging markets.

VEU just hit a new high, too.

If you’ve been dragging your feet on buying foreign stocks, you’ve missed out on great gains lately… But you haven’t “missed the boat.”

Non-U.S. stocks have underperformed U.S. stocks for years. And that situation has started to change only recently. Now that these stocks are hitting new highs, it’s even more likely than before that we’ll see double-digit gains in the year to come.

I strongly recommend you participate.

Regards,

Ben Morris

Crux note: Ben has recommended a few great ways to safely invest in foreign stocks today. So far, his readers are up on all of them – 19%, 31%, 16%, and 1%, respectively. And his top open recommendation just hit 150% since February. For a limited time, you can access all of Ben’s top ideas with a risk-free trial subscription. Get the details right here.

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Today the music stops

After months of preparing financial markets for this news, the Federal Reserve is widely expected to announce that it will finally begin shrinking its $4.5 trillion balance sheet.

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Today’s the day.

After months of preparing financial markets for this news, the Federal Reserve is widely expected to announce that it will finally begin shrinking its $4.5 trillion balance sheet.

I know, that probably sound reeeeally boring. A bunch of central bankers talking about their balance sheet.

But it’s phenomenally important. And I’ll explain why-

When the Global Financial Crisis started in 2008, the Federal Reserve (along with just about every central bank in the world) took the unprecedented step of conjuring trillions of dollars out of thin air.

In the Fed’s case, it was roughly $3.5 trillion, about 25% of the size of the entire US economy at the time.

That’s a lot of money.

And after nearly a decade of this free money policy, there is more money in the financial system than ever before.

Economists have a measure for money supply called “M2”. And M2 is at a record high — nearly $9 trillion higher than at the start of the 2008 crisis.

Now, one might expect that, over time, as the population and economy grow, the amount of money in the system would increase.

But even on a per-capita basis, and relative to the size of US GDP, there is more money in the system than there has ever been, at least in the history of modern central banking.

And that has consequences.

One of those consequences is that asset prices have exploded.

Stocks are at all-time highs. Bonds are at all-time highs. Many property markets are at all-time highs. Even the prices of alternative assets like private equity and artwork are at all-time highs.

But isn’t that a good thing?

Well, let’s look at stocks as an example.

As investors, we trade our hard-earned savings for shares of a [hopefully] successful, well-managed business.

That’s what stocks represent– ownership interests in businesses. So investors are ultimately buying a share of a company’s net assets, profits, and free cash flow.

Here’s where it gets interesting.

Let’s look at Exxon Mobil…

In 2006, the last full year before the Federal Reserve started any monetary shenanigans, Exxon reported $365 billion in revenue, profit (net income) of nearly $40 billion and free cash flow (i.e. the money that’s available to pay out to shareholders) of $33.8 billion.

At the time, the company had $6.6 billion in debt.

Ten years later, Exxon’s full-year 2016 revenue was $226 billion, net income was $7.8 billion, free cash flow was $5.9 billion and the company had an unbelievable debt level of $28.9 billion.

In other words, compared to its performance in 2006, Exxon’s 2016 revenue dropped nearly 40%, due to the decline in oil prices.

Plus its profits and free cash flow collapsed by more than 80%. And debt skyrocketed by over 4x.

So what do you think happened to the stock price over this period?

It must have gone down, right? I mean… if investors are essentially paying for a share of the business’ profits, and those profits are 80% less, then the share of the business should also decline.

Except — that’s not what happened. Exxon’s stock price at the end of 2006 was around $75. By the end of 2016 it was around $90, 20% higher.

And it’s not just Exxon. This same curiosity fits to many of the largest companies in the world.

General Electric reported $13.9 billion in free cash flow in 2006. Last year’s free cash flow was NEGATIVE.

Plus, the company’s book value, i.e. its ‘net worth’, plummeted from $122 billion in 2006 to $77 billion in 2016.

So investors’ share of the free cash flow is essentially worthless, while their share of the net assets has also fallen dramatically.

GE’s stock was actually down slightly in 2016 compared to 2006. But the minor stock decline is nothing compared to the train wreck in the company’s financial statements.

Between 2006 and 2016, McDonalds reported only a tiny increase in revenue. And in terms of bottom line, McDonalds 2016’s profit was about 30% higher than it was in 2006.

McDonalds’ debt soared from $8.4 billion to $25.8. And the company’s book value, according to its own financial statements, dropped from $15.8 billion to NEGATIVE $2 billion.

So over ten years, McDonald’s saw a 30% increase in profits, but took on so much debt that they wiped out shareholders’ book value.

And yet the company’s stock price has TRIPLED.

Coca Cola. IBM. Johnson & Johnson.

Company after company, we can see businesses that are performing marginally better (or in some cases WORSE). They’ve taken on FAR more debt than ever before.

Yet their stock prices are insanely higher.

How is that even possible? Why are investors paying more money for shares of a business that isn’t much better than before?

There’s really only one explanation: there’s way too much money in the system.

All that money the Fed printed over the years has created an enormous bubble, pushing up the prices of assets to record highs even though their fundamental values haven’t really improved.

As the Wall Street Journal reported yesterday, “Financial assets across developed economies are more overvalued than at any other time in recent centuries,” i.e. at least since 1800.

Investors are paying far more than ever for their investments, but receiving only marginally more value in return. And they’re actually excited about it.

This doesn’t make sense. We don’t get excited to pay more and receive less at the grocery store.

But when underperforming assets fetch top dollar, people feel like they’re wealthier. Crazy.

Today the Fed should formally announce that after nearly a decade, it’s going to start vacuuming up a lot of that money it printed in 2008.

Bottom line: they’re going to start cutting the lights and turning off the music.

And given the enormous impact that this policy had on asset prices, it would be foolish to think its reversal will be consequence-free.

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