Monday, May 31, 2021

VPU Performance v.005

Months Elapsed: 5
Total Growth: 6.65%
Annualized Growth Rate: 16.70%
Distribution Yield (TTM): 3.13%

5 months down, 195 to go. I'm thankful that it's much like watching paint dry, at least so far. Definitely not looking for any drama here.

Wednesday, May 26, 2021

The Sarcasm Report v.285

Love this advertisement. Let's zoom in for a closer look.

South Park is using obsolete old school thinking. Why limit yourself to a 100% loss? Leverage up! A 459.66% loss for the win! 20 million people can't be wrong!!

Thursday, May 20, 2021

Teslacoin Idea

Tesla should make digital teslacoin. Each coin would buy one Tesla of your choice. Tesla would sell the coins directly and the price would initially be set to equal the most expensive Tesla currently being sold. The coins are also collectible and transferable. Only 21 million will ever be made, so they should appreciate dramatically in this environment. And if, due to the rarity of these coins, they do appreciate, investors may wish to hoard them instead of using them to actually buy a Tesla. This could transform Tesla into the first auto manufacturer that no longer needs to manufacture any cars. Investors make money. Tesla makes money. Win win.

If this idea is successful, it could spread to all the other areas of our economy. At some point, we may never need to manufacture anything real again. Just go 100% digital. Let them eat cakecoin! Everybody wins!

Tuesday, May 11, 2021

The Fed’s Near Miss

The line in black shows what the effective Federal Funds rate has been. The line in red is what the Fed thinks the effective Federal Funds rate will be over the longer term.

A stopped analog clock is exactly right twice per day. No idea why I mention it.

Sunday, May 2, 2021

The Cascading Exponential Trend Failures of Real GDP Growth

The headlines are dominated by talk of robust GDP growth during the recovery. Thought it might be a good time to offset that with a few charts of real GDP reality.

Here is a short-term chart of the natural log of real GDP. When using logarithms, constant exponential growth is seen as a straight line.

Note that, thanks to the virus, we failed to stay in the green channel. We're currently throwing everything at real GDP, including the kitchen sink, just in an attempt to get back to where we were. Also note that real GDP growth was weakening before the virus even hit. The Fed raised rates in 2017 and 2018. In 2019, the Fed was forced to backtrack on that plan. In hindsight, a rate of 2.4% was too draconian. The Fed ended the year at only 1.6%. And then, the virus hit.

So, in the short-term, we're definitely attempting to claw our way back to that green trend channel. But what about long-term?

The red channel is where we once were. That ship has sailed. No hope of ever getting back to it, especially now that we have a Covid baby bust. That exponential trend failed spectacularly, leaving us with a new green channel. The green channel then failed too. Cascading exponential trend failures. That's where we are now.

Here's the good news. We're all in this perma-ZIRP handbasket together and some of us strongly suspect where we are headed. Brush up on your Japanese and enjoy the ride! We might not like the ultimate destination all that much, but the path to get there is filled with easy money. And when I say easy money, I'm not expecting retired savers patiently waiting for interest rates to "normalize" to someday make out like bandits. This isn't a Hollywood movie. If anything, it's more like Gilligan's Island. Being stuck at zero is normal. Interest rates have been exponentially decaying for 40 years. It's just more of the same.