A lot of factors in the market, and especially in it’s relation to politics, suggest to me that this time inflation will be the next big problem to hit. Not a unique view, I know, but hear me out

Internal to the market we have all been pushed out along a risk curve either explicitly through yield suppression I need 7%) or implicitly through vol suppression (growth stocks as a safe haven). We all get this.

What’s new in 2020 is nothing to do with the Fed. Stop that ‘don’t fight’ nonsense. Fighting the Fed is buying puts. Try selling them? Ok go backtest that and get back to me

Stop talking about the Fed and do some decent scenario analysis. Elect either choice. Doesn’t matter. Nobody will be fighting for a strong currency now

4% inflation now in western economies would suit just about everyone. If we start down that route nobody’s raising rates, nobody’s restricting supply. There will be no policy shift.

Every time there’s a crisis the central bank and government will coordinate to throw more money, because it worked in 2020. It’s a new paradigm. Politicians have a taste for direct intervention now and they won’t cede control back to a CB

So we just ratchet money supply higher every time. You don’t need bitcoin or QQQ right now, that’s a liquid risk asset that can go down overnight, what you need is a fucking big house with a fucking big mortgage.

Illiquidity is your friend there, you don’t take a MTM hit in a fast crash, and govt support will bounce assets before you need to worry. Just dont get fired, keep up the payments

Politicians are running scared from new media they are incapable of telling unpopular truths. They aren’t going to take back a stimulus check through taxes. There are no strong money voices left and even if you can’t see the trigger you have to admit it’s an unstable equilibrium

Everyone thinks bonds have to be a chunk of your portfolio as they are safe. This is dogma. It’s written in stone. 60/40 etc. But in 2020 I think that bond piece has saved the portfolio for maybe the last time. Dump it, go to cash. You going to miss the 1% yield?

With that cash you can buy stuff. Yes some gold but not a lot. Buy new wine, buy 1960s watches and 1970s electronics, buy antiques. Not bitcoin yet, govt will shut that own once they realise they can’t ban it copy it or tax it.

You don’t buy the stuff that millions of boomers have already bid up. 1960s cars, old wine, whatever other shit they think is cool. They’re getting older more scared and they’re going to sell. Buy the stuff they think is awful.

Buy the precious metals that will go into the batteries that will go into the cars that beat $TSLA to zero. Doesn’t that sound more rational than shorting $TSLA?

Buy the miners. Buy the companies that make the bits of the stuff that Amazon sends you, don’t buy more Amazon. (You should own a bit because it’s capitalism unchained and not owning it makes you a socialist)

In an inflationary economy socialism gets you absolutely fucking murdered because socialists don’t think about price they think value. They’re lovely people and they’re going to get destroyed. You have to be a capitalist and own a physical chunk of the future

Stocks overall only like inflation up to a point. Careful if inflation goes over 5% I think. Can be long but be long volatility too. Own an explicit tail hedge. You’ll thank yourself, this isn’t going to be a smooth ride

Owning a tail hedge is real safety. Screw the bond market, buy some vol, and feel secure to go play with the rest of your portfolio.

Long vol is the new long bond. Out.