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Stocks Have Partied Hard Since Election Night… Now Comes the Hangover

The market is now on very thin ice.

Yesterday worked off some of the “oversold” status for stocks, but we are in extremely dangerous territory today.

The S&P 500 has taken out critical support (red line) as well as the bull market trending running back to early November (blue line).

More concerning for the bulls: bank stocks, which lead to the upside, are now leading to the downside. It looks as though the ENTIRE move in the markets since election night is going to unwind.

This is a major wake up call, I hope you’re paying attention. The markets have rallied on hype and hope of the economy roaring back to life… but that’s not coming for another 12 months (at the earliest.

Stocks partied hard starting election night. Now comes the hangover.

On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.

In it, we outline the coming collapse will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.

We are giving away just 99 copies of this report for FREE to the public.

We’re down the last 9.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

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How To Trade The Health-Care Vote

(Original Link | ZeroHedge)

The Trump administration faces a major legislative test today with the health-care vote, and for those attempting to trade the event, Bloomberg’s Cameron Crise notes that risk-takers need to ask themselves two questions

1) Do I have an edge?

At this point the vote is too close to call. Unless you have someone in DC counting votes alongside the whip, the honest answer is almost certainly “no”

2) Does this vote matter?

On any sort of strategic macro basis, the answer is also probably “no.” Sure, if you manage health-care stocks, today is a big deal. Other than that, the failure or passage of the vote ultimately will say little about the prospects for tax reform, which is the issue of most concern to financial markets.

Health care was always going to be a contentious issue, with both moderates and hard-core conservatives having reservations about the bill (for very different reasons). Tax reform is something that most of the GOP can get behind, on the other hand, even if some of the details have yet to be determined.

Moreover, there is a relatively low expectation among investors that tax reforms will pass this year. An implied delay from a health-care failure should increase the discount factor on tax reform only slightly.

In any event, the results of the vote are likely to come after U.S. markets close, so it seems as if we should prepare for a day of headline-watching that should provide plenty of noise but probably little signal.

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10 Dividend Stocks Increasing Payouts

The S&P 500 Index rallied nearly 2% last week to reach a new all-time high and has now returned more than 10% following the U.S. Presidential election. Investors remain optimistic even as the Federal Reserve hinted at a potential interest rate increase as early as March. Many dividend stocks are optimistic as well.

10 Dividend Stocks Increasing Payouts – RY SRE LAMR WR MTB CM ETN XEL DHR ESS

Ten notable dividend stocks raised payouts over the past week, including three banks, two industrial manufacturers, three electric utilities, and a large real estate investment trust.

Here are ten dividend stocks increasing payouts:

Royal Bank of Canada (NYSE:RY) increased its quarterly dividend by 5%, raising its payment to CAD 87 cents per share from 83 cents. The financial services company will pay shareholders of record as of April 25 on May 24. The stock’s shares trade ex-dividend on April 21.
RY Dividend Yield: 3.41%

Lamar Advertising Company (NASDAQ:LAMR) rewarded shareholders with a 9% raise to its quarterly dividend, increasing it from 76 cents per share to 83 cents. Shareholders of record as of March 15 will receive their higher dividends on March 31 from the outdoor advertising company. LAMR shares will be ex-dividend on March 13.
LAMR Dividend Yield: 4.09%

Sempra Energy (NYSE:SRE) announced a 9% raise to its quarterly dividend, increasing its payout from 75.5 cents per share to 82.25 cents. The gas and electric utility will send its higher dividends out on April 15 to shareholders of record as of March 23. SRE shares will trade ex-dividend on March 21.
SRE Dividend Yield: 2.77%

Westar Energy Inc (NYSE:WR) raised its quarterly dividend from 38 cents per share to 40 cents, representing a 6% increase. The electric utility will pay out its higher dividends to shareholders of record as of March 9 on April 3. WR shares traded ex-dividend on March 7.
WR Dividend Yield: 2.97%

M&T Bank Corporation (NYSE:MTB) raised its quarterly dividend by 7%, increasing it from 70 cents per share to 75 cents. The bank holding company will pay its higher dividend to shareholders of record as of March 6 on March 31. MTB shares will trade ex-dividend on March 2.
MTB Dividend Yield: 1.78%

Canadian Imperial Bank of Commerce (USA) (NYSE:CM) increased its quarterly dividend by 2% to CAD $1.27 per share from $1.24. Shareholders of record as of March 28 will receive dividends from the global provider of financial products and services on April 28. The company’s shares will go ex-dividend on March 24.
CM Dividend Yield: 4.29%

Eaton Corproation, PLC Ordinary Shares (NYSE:ETN) announced a 5% increase to its quarterly dividend, raising it from 57 cents per share to 60 cents. Dividends will be paid from the large industrial conglomerate on March 17 to shareholders of record as of March 6. ETN shares become ex-dividend on March 2.
ETN Dividend Yield: 3.33%

Danaher Corporation (NYSE:DHR) moved its quarterly dividend higher by 12%, increasing it from 12.5 cents per share to 14 cents. The diversified industrial manufacturer will pay its higher dividend to shareholders of record as of March 31 on April 28. DHR shares traded ex-dividend on March 29.
DHR Dividend Yield: 0.65%

Xcel Energy Inc (NYSE:XEL) increased its quarterly dividend by 6%, raising its payment from 34 cents per share to 36 cents. Shareholders of record as of March 15 will receive dividends from the electric utility on April 20. XEL shares will be ex-dividend on March 13.
XEL Dividend Yield: 3.32%

Essex Property Trust Inc (NYSE:ESS) grew its quarterly dividend from $1.60 per share to $1.75, representing a raise of 9%. The residential real estate investment trust will pay out its higher dividends to shareholders of record as of March 31 on April 17. ESS shares are expected to trade ex-dividend on March 29.
ESS Dividend Yield: 3.02%

As of the time of this writing, Simply Safe Dividends did not hold a position in any of the aforementioned securities.

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A 66 Percent ‘Smart’ Money Trade Call & Put Option Sells

Elections have consequences, and one of the most surprising consequences of November’s election has been the sharp increase in economic optimism. This can be seen in surveys of investors or business owners.

The general mood of the nation is captured by Gallup, which published a number of surveys. Their Economic Confidence Index shows some recent weakness, but is up sharply since the election.

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Digging deeper, we see that there is a sharp divide based on political affiliation but, on average, Americans seem happier today than they were in early November.

The same is true of small businesses, according to the National Federation of Independent Business (NFIB) Small Business Optimism Index.

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NFIB notes that “the stunning improvements in the Index components that occurred after post-election were improved in December and confirmed in January.” These improvements should lead to higher business spending and more jobs. If we see that, economic growth this year will begin to outperform 2016’s.

Surveys are important, but economic growth will result only if spending follows the optimism. We should know by the middle of the year whether that’s the case. I’ll be watching economic data to see whether business and consumer spending rise enough to deliver the expected growth.

One advantage of being a trader instead of an economist is that we can get sentiment measures that show what investors are doing with their money instead of what they are saying they plan to do with their money. This is especially true in the futures markets.

In futures markets, the Commodity Futures Trading Commission (CFTC) issues a weekly report showing how many contracts various groups of traders own. The weekly report is known as the Commitment of Traders (COT) report. Traders are divided into three categories: Commercials are usually considered the smart money, hedge funds are included in the section reporting large speculators, and small speculators are individual traders.

Commercials are the producers and users of a commodity and are considered to be the smart money in a market because they know the fundamentals better than anyone else. Commercials will often be short a commodity in the futures market because they’re hedging their positions. A miner produces gold so always has a long position in the mine, at refineries and in inventory. To hedge that position, they can sell gold short in the futures market.

The grey line in the chat shows a zero position for each group. Other groups are shown as colored lines, which are labeled. Notice that commercials are almost always short. Large speculators tend hold large long positions when prices peak and smaller positions when prices bottom.

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To make this data easier to understand, I convert the positions to an index that places the position into a range from 0 to 100. A reading of 100 indicates the group is holding its most bullish position over the time frame measured with a reading of 0 showing extreme bearishness. The timeframe used in the next chart is six months and as you see, commercials are more bullish now than they have been since the major bottom that occurred in late 2015.

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Commercials, the smart money in futures, are bullish on gold. We can trade alongside them using gold mining stocks.

The reason to invest in miners is that they’re a leveraged trade on the price of gold. This is because production costs tend to remain relatively constant under normal market conditions, and increased market prices in gold can result in larger percentage gains in the profits of miners.

My favorite gold miner right now is Agnico Eagle Mines Limited (NYSE: AEM).

You can buy AEM shares outright to play the upside in gold, but that’s not what I’m recommending in Income Trader, my premium newsletter. Instead, I’m suggesting readers sell puts on the shares and collect a 66% annualized “yield.”

Giving away the exact trade wouldn’t be fair to my subscribers. But if you’re interested in learning more about selling puts, or even getting the exact details of my AEM trade, I put together a presentation you’ll want to see. Click here to access it.

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The low-risk way to make 30% a year in stocks

My team and I recently made a critical breakthrough… And it reinforces what I’ve been saying for years.

You don’t need to take big risks to make big money in the stock market.

You don’t have to find the needle in a haystack. You don’t have to get extremely lucky by picking the right tech stock.

In my Investment Advisory, we’re business junkies. We love great businesses. And usually, the kinds of businesses with staying power aren’t exciting or glamorous.

Last week, I told DailyWealth readers about my latest project to investigate the stocks that returned an incredible 1,000% or more over the past 20 years.

My team and I found a way to identify these stocks – the small, under-the-radar companies that have huge growth potential.

Today, I’ll explain one of the secret ingredients to boosting boring investments and making double-digit annual returns, without taking on more risk…

Regular readers know “capital efficiency” is one of our key metrics to finding successful businesses. (Read our educational essay on the subject here)

When we say “capital efficiency,” we’re measuring how easy it is for companies to grow revenues without heavy reinvestment. That’s how you find great, healthy investments. These are the companies that will keep growing and will never go out of business. It’s the one sure way to get rich in the market.

My colleague Bryan Beach puts it this way: When you think about capital efficiency, think about what you would want to see if you were the company’s owner.

In other words, when you have a business that’s growing like crazy but you aren’t making more money, you wouldn’t be excited to own that business. You’ve probably had to hire more people and deal with more problems. If cash isn’t left at the end of the day for the owners, what’s the point?

Personally, I look at it in a bigger-picture way… like a seesaw. On one end of the seesaw, you have growth. On the other end, you have profitability.

Think about my own company, Stansberry Research. If we wanted to spend $100 million on advertising, we could grow our business and sales tremendously, but it won’t lead to more profits. Or we could cut back our marketing budget to almost zero and live off the renewal income and the incremental sales, and we could report a great, profitable year. It’s really difficult to do both at the same time. And the businesses that can do that are exceedingly rare.

One of our big tests is whether a company can grow its revenues by 25% or 30% and still be capital efficient. When a company can make $0.25 or $0.30 in cash on every dollar of revenue AND continue to grow, you’ve found an extraordinary business.

Now here’s the really surprising thing about all this. Like I said, these are unique, unusual businesses. But more often than not… they’re boring.

When we investigated the stellar performers of the past two decades, the results we turned up weren’t necessarily the high-flying tech stocks. Most of them fit the same boring industry categories we’ve been writing about for years…

You find these stocks with the same process that we put all of our best recommendations through in my Investment Advisory. For instance, chocolatier Hershey (HSY) and insurance firm W.R. Berkley (WRB) were great investments because they had tremendous growth and were incredibly capital efficient.

But with our new system – the kind we’re using in Stansberry Venture Value – you see even better growth (and therefore, even bigger returns) buying the exact same kinds of stocks. Instead of making 6%-8% a year, these stocks can return 20%-30% a year.

Consistent, double-digit returns every year… without taking more risk… without crossing your fingers and hoping you picked the next big winner. The same reliable types of companies we recommend in my Investment Advisory… but with the ability to deliver 20% or 30% a year on your portfolio.

Regards,

Porter Stansberry

Crux note: Capital efficiency is just one piece of the puzzle. Now you can learn how to find the next McDonald’s, or the next Hershey, with a metric called the “D-Factor.” It’s the key to Porter’s new “10x Project,” designed to help you make 10 times your money or more in the markets. Get all the details by watching Porter’s brand-new presentation right here. (Or click here for a transcript.)

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ETFs Might Be a Bad Way To Play The Infrastructure Boom

When the president-elect pledged to facilitate a $1 trillion infrastructure-spending binge, exchange-traded funds with “infrastructure” in their name seemed like a sound way to cash in.

But that narrative was upended on Wednesday when the biggest product in that category — the iShares Global Infrastructure ETF (IGF) — suffered over $161 million in outflows; its largest one-day withdrawal on record.

IGF US Equity (iShares Global In 2017-01-05 09-38-40
Source: Bloomberg

Those hunting for the proximate cause of this exodus are less likely to find it in the taunts Donald Trump lobbed at Senate Democratic leader Chuck Schumer, who has expressed support for the future president’s infrastructure plan, than in the realization that with these funds, the wrapping paper often belies the present.

Read the rest of the article at Bloomberg

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Here Comes The First Bitcoin ETF

If you’re excited about the idea of investing in a bitcoin-tracking exchange-traded fund, you’ll have to wait a bit longer to learn if you can—again.

The Securities and Exchange Commission on Wednesday designated March 11 as the date by which it would either approve or disapprove the Winklevoss Bitcoin Trust ETF, which would be the first to exclusively track the digital currency.

A decision would represent the end of a multiyear campaign to bring a bitcoin ETF to market. Tyler and Cameron Winklevoss, who run Winklevoss Capital, first announced plans for one in 2013; the pair also run both WinkDex, a bitcoin price index, and Gemini, a bitcoin custodian and exchange.

Winklevoss Capital didn’t immediately return requests for a comment.

Visit MarketWatch for the rest of this article

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2016 Was a Record Breaking Year For ETFs

Exchange traded funds tracking major stock indexes were mixed Thursday morning as investors digested mixed news on job cuts and jobs growth.

SPDR S&P 500 (SPY) dipped 0.4% on the stock market today in early trade. This ETF, a proxy for the broad U.S. market, has shuffled sideways since posting an all-time high of 228.34 on Dec. 13.

ETF inflow in 2016 set a record at $284 billion, $39 billion more than the previous record set in 2015, according to a new report from State Street Global Advisors.

Highlights from the report include:

  • Fixed-income ETFs gathered more than $90 billion in assets, nearly doubling the 2015 total of $58 billion. Bond-based funds surpassed the 2015 record in August, and added $30 billion more to close out the year.
  • Equity ETFs fell short of the record $196 billion inflow in 2013, but broke the record for highest monthly flow in November with $49 billion of net inflow — and broke the record again in December, attracting over $58 billion.

Read the rest of this article at Investors Business Daily

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The Best 7%+ Dividends For 2017

What will 2017 hold for income investors?

Let’s sort through the current hysteria regarding interest rates, Trump and inflation. Thanks to some first-level insanity, there are once again pockets of value that pay meaningful dividends of 6%, 7% or better.

And many have some price upside to boot! Why?

Because Rate Hikes Will Probably Disappoint

This time last year, the Fed was promising four rate hikes over the next twelve months. The “smart money” crowd (via Fed Funds futures prices) was betting on two. And both parties were too aggressive as we saw just one rate hike in 2016.

Today we have Yellen & Co promising three hikes in 2017, while the futures markets say just two:

The Smart Money Bets 2 Hikes in 2017

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Given their track records, I’m inclined to take the “under” on both predictions. But it doesn’t really matter if we see one rate hike or two (or even three) next year.

The income investments I like best have already been discounted well in excess of their rate hike risk. I’ll highlight a few in a minute – but first, let’s address the long-term rate boogeyman, too.

The Long Bond Needs a Breather

The 10-year Treasury rate has nearly doubled off its summer lows. It pays 2.5% today and, quite frankly, needs a breather:

The 10-Year Yield Won’t “Go Parabolic”

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When everyone believes long-term rates have nowhere to go but up, you know what happens – they drop. Get ready for a pullback that will surprise everyone.

Read the rest of this article at Forbes.com

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3 Dividend Stocks That Are Insanely Cheap

The S&P 500 is currently trading for about 26 times trailing earnings. That’s at the high end of its historical range, which is making it hard for value investors to find attractive stocks to buy. Thankfully, even during times of market euphoria, investors can still find value if they’re willing to turn over enough rocks.

Let’s take a closer look at three income stocks — Scripts Network Interactive(NASDAQ:SNI)Amgen(NASDAQ:AMGN), and Carnival (NYSE:CCL)(NYSE:CUK) — that all pay out solid dividends and trade for below-average multiples. With analysts calling for earnings growth over the long term, could they be attractive buys today?

Overcoming cord-cutting

Investors have serious concerns over what the future holds for cable TV, which has caused them to approach companies like Scripps Networks Interactive with caution. This company owns a number of hit cable channels like the Food Network, HGTV, and the Travel Channel that are all dependent on attracting eyeballs in order to keep the revenue flowing.

With all signs pointing to cord-cutting being a trend that isn’t going to reverse itself anytime soon, traders have cut Scripps’ P/E ratio nearly in half since early 2014. As a result, share now trade for less than 12 times trailing earnings, which could be a ridiculously cheap price.

SNI PE Ratio (TTM) Chart

SNI PE RATIO (TTM) DATA BY YCHARTS.

Thankfully, Scripps Networks’ strong programming has largely helped it to overcome the downward pressure on viewing. Ratings on the company’s top channels are actually on the rise, which has translated into increased ad and affiliate fees. That allowed the company’s sales to grow by more than 3% last quarter, which was a far better showing than larger rivals such as Walt Disney and Time Warner can claim.

Looking ahead, market watchers believe Scripps’ strong programming will help it overcome the effects of cord-cutting and allow it to put up profit growth of more than 10% annually over the next five years. That’s a solid growth rate for a company that offers up a 1.4% dividend yield and is trading at such a cheap valuation.

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Investing According to Ideology Can Be Dangerous

Robert Murphy, an economics professor at Texas Tech University, has said that an understanding of economics is a necessary but insufficient condition for the successful investor. Jeff Deist, the president of the Mises Institute, agrees.

Mr. Deist, who is also Ron Paul’s former chief of staff, adds that investing according to one’s ideology can be dangerous.

In a recent Power & Market Report interview, Jeff offered his insider’s perspective on some recent political events and his general philosophy on investing (see interview transcript below).

He also extended an invitation to all of us, particularly those of us in the southern California area, to attend his upcoming Mises Institute event in San Diego on February 25th featuring Patrick Byrne, the founder of Overstock.com.

I will be in attendance and would love to see you there.

Interview Highlights (edited for readability)

Albert: I think this interview is long overdue. How are you?

Jeff: I’m doing great. Thank you, Albert.

Albert: Just before we get started, I just want to tell you how much I’ve appreciated what the Mises Institute has done throughout the years, particularly more recently I’ve been a regular at the Houston Mises Circle and I understand you have an event coming up in San Diego, so just as we start off, could you tell us a little bit about that?

Jeff: Sure. We’re going to be in Southern California this coming weekend, next week on the 25th, Saturday, in the Point Loma area. So anybody who’s in Los Angeles, Orange County or San Diego, I will put up a graphic later with our link to the event. But we’d love to see you. We got some great speakers. Albert is going to be one of our panelists, but we also have Patrick Byrne who’s the very libertarian CEO of overstock.com, who’s really becoming a huge voice in the blockchain community. Not so much talking about bitcoin but talking about the practical applications and really world-changing potential applications of blockchain.

We’re going to have Nomi Prins as a speaker. She is also a Southern Californian and an absolutely fantastic writer and historian when it comes to the Fed and central banks generally. So she’s going to be a very interesting guest. We’re going to have Tom Woods who I’m sure some of your listeners and viewers are familiar with. Tom is a leading voice in libertarianism. So we’re looking forward to it and we’d love to see anybody in driving distance from Southern Cal attend.

Albert: And certainly appreciate you guys making the trip all the way over here to the west coast. I’m a big admirer of Patrick Byrne and he incidentally did a talk at the Mises Institute some time ago. You reposted it on your website, so if I remember, I’m going to make sure I link to that because it’s a fascinating talk that he gave about his own background. He is connected to Warren Buffett. They had a relationship—

Jeff: Yes.

Albert: For many years, he ran one of Mr. Buffett’s companies and I thought it was just a wonderful interview. So I’ll make sure I link to that. Jeff, I’ve heard you speak many times, but I rarely hear you talk about yourself, your own career and that’s of interest to me actually because Economics in general compared to other sciences—this is my opinion, but it’s sort of an intellectual desert. The Austrian School is this oasis in the middle of that desert. I’m not kidding. I come from the sciences and, you know, most sciences they don’t go about business that way. You can’t talk about alien space invasions and be taken seriously, let alone given Nobel prizes. So, how did you convert to Austrianism or discover the School of Austrian Economics.

Jeff: Well, really, I discovered it through a friend of mine who was attending UNLV getting a graduate degree in Economics and he chose UNLV because Murray Rothbard was teaching there at the time. So he specifically went out of his way to find an Austrian-friendly professor. I was sort of a garden variety libertarian at the time, but I didn’t really have much of a background or grounding in Econ which I think you have to have to make effective arguments for liberty and against the state. I think it’s really important that economics is in your arsenal and I’m a layperson. I’m an attorney, but I think we all have an obligation to know something about economics and be able to discuss it competently.

So, driving up to UNLV from San Diego at the time—this was in the 1990s—I went into my friend’s classroom and here is this kind of short guy with a bowtie speaking rather quickly, and I said, “Oh my God, who is this guy?” And I started to learn about Murray Rothbard and from there, obviously I began to read Mises and Hazlitt and Hayek and some others. But prior to that, I mean if you think back to the dark, dark ages before the internet existed, for libertarians, there was no one out there in terms of what was available in Austrian literature. If you went to your local physical brick-and-mortar bookstore, they might have someJohn Kenneth Galbraith. They might have Milton Friedman’s Free to Choose, stuff like that, but Mises and Rothbard and Hayek, you know, this literature wasn’t widely available.

So, the digital revolution has been such a leveler. I mean it’s just absolutely incredible to think about what digital technology allows us to achieve. You know, what was unread literature, unheard of literature is now available anywhere in the world with a few clicks for free generally in a PDF or HTML format. So, compared to the 1990s when I met Murray Rothbard, we’re in great shape.

Albert: It seems like it. And, boy, I’m so envious. Jeff, it’s very rare that I ask that question and the answer is, well, Murray Rothbard, not the books but the person. What a great story and I can see how you would have been swept away by some of these ideas.

You write at Mises.org and following the Superbowl, you had an article titled Human Action Beats Stats in the Superbowl. I enjoyed that thoroughly. Can you tell the viewers what you’re getting at there in that piece?

Jeff: Well, what’s inflamed economics in the past few decades is “mathiness.” We’ve started to treat economics like a physical science. We’ve started to treat it as a predictive mathematical exercise and modeling much like we view statistics and probability where they’re a subset of math. And, of course, math and physics are physical disciplines. Economics is a social science. I think we forget that. And because we forget that, we tend to view economic principles or economic theories as hypotheses that we should go out and test. “Well, if we raise the minimum wage, will unemployment increase or decrease? Hmm, I don’t know. Let’s go test that.” Hypothetically. Or I should say empirically, excuse me. But we can know—without testing, we can know a priority that all other things being equal, if you raise the price of something, the demand for it will fall. That includes wages.

So as a result of this mathiness that has infected economics, I think the profession has gotten very far afield and I think it’s a failing profession. I think both in terms of professional economists in the business world and academic economists at universities, I think econ is failing us. It’s failing to describe the world as it is and it’s failing to produce a benefit for society. As a matter of fact, I think it’s harming society. I think the post-Keynesian demand-side stimulus world we live in has created huge amounts of harm, and I think we saw that in the crash of 2008. I think we’re going to see it in a nastier series of events and shocks in the coming year. So, economics is not math and the attempt to make it math I think has done more harm than good. So the article is just a whimsical attempt to point that out.

Albert: And the parallel you drew was, of course, Superbowl where we have this historic comeback by the New England Patriots. If you just looked at statistical probabilities in the third quarter, what did you say? I think the chances that they gave the Patriots winning were less than half a percent or something miniscule. Anyway, but having followed that team myself for over 20 years and more recently over the last 15 years with the new regime, the Belichick regime. I knew something about that team that probably was not captured in the numbers and that is that they just would not quit. I just knew that and there’s a human element that the numbers don’t capture and when you sort of translate that to economics and markets, it’s really funny you have a group of Fed governors who expect people, actors in the market, to conform to their models and, therefore, be predictable and while at the same time, they don’t even know what they’re going to do with interest rates 3 months from now. They themselves admit that they’re looking at data and they don’t know and they put up this meaningless dot plots. They’re examples of human action, yet they don’t even realize it. I find it totally absurd.

Jeff: Well—but we should take heart in our understanding knowledge. Economics is really a subset of a greater field of human action because when we talk about the economy or the global economy, what we’re really talking about is 7 billion people, individuals all who get up every day and for the most part, except for the deeply irrational or mentally ill, almost all those 7 billion people try to better or advance their material lives every day. So, no matter what governments and central banks do to thwart this, there’s a natural human desire to get a little bit better off each and every day and so that’s an awfully tough thing to suppress. So, that’s something that should give us optimism or long-term hope for the world economy, is that—you know, if we look back in history, even horrific wars and horrific collectivist actions by totalitarian governments have never really been able to suppress the market. It always grows up through the cracks. So while we—as libertarians, we tend to fret about government. We tend to think about it maybe too much and let it dominate our thinking. We should sometimes take a, you know, more high-level view and say, “Look, all these billions of people are not just going to stop what they’re doing. They’re going to keep doing it and we should be hopeful.”

Albert: You make just a very important point and that is the focus or the obsession that many libertarians have on government as coming from the investment side. My impression has been that many libertarians focus in their investments on institutions, avoiding institutions, fear and take almost a deer in the headlights approach to investing because they’re so concerned about these problems we see which are all real. But, at times they just end up shooting themselves in the foot. What do you see—do you have any thoughts on investing given your background in Austrian economics? What approach do you take? I know you don’t have an official recommendation or you’re not in the business of giving advice, but what are your thoughts on investing in general?

Jeff: Well, I think investing according to one’s ideology can be pretty dangerous. You know, I remember Bob Murphy told me one time that his thought was that—and I’m sure a lot of your viewers are familiar with Robert Murphy, the economist at Texas Tech. He said understanding economics is necessary to be a good investor, but it’s not sufficient. In other words, you still need to go out and do homework and research on lots of different things. You know, I think that people should look at people who are more successful than them financially and emulate them. I mean that seems to me the simplest approach. I would never invest or spend money on anything I don’t understand, and since I only understand a few little things, that’s why I’m investing.

But if you look at Warren Buffett whom you mentioned earlier, he talks like a Keynesian but he acts like an Austrian. The companies Berkshire Hathaway tends to invest in are not—for the most part, not sexy, not glamorous, not high-tech and they tend to have physical features to them, actual property and plants and equipment, actual manufacturing. So, you know, Warren Buffett is not out there investing in paperclips.com. He’s out there investing in tangible stuff.

And for me, anyway, as a fan of Jim Rogers, with my limited amount of time and my limited ability, I can understand commodities and physical stuff in a way I can’t really understand market sectors or industries or even companies and their particular management. So, I personally like to read about and think about stuff and so that’s sort of my focus as an investor.

Albert: Great answer, Jeff. And I agree 100% on your observations of Mr. Buffett—speaks like a Keynesian, big government person, but if you look at the way, at least to the extent that we have vision into his business and his life, he definitely is. However, the fact that he is not a tech buff I think really owes more to his age, I think.

Jeff: Right.

Albert: But, he focuses on individuals. If you look at the way he runs his group of companies, he really focuses on people because he knows that—like you said before, humans are going to keep doing what they’ve been doing and the right management team if you let them go, they’re going to adapt to the environment and produce positive outcomes. I totally agree with that.

So, as we close, I just want to remind people, go to mises.org/events. It’s going to be Saturday, February 25th, is the Mises Circle in San Diego. Really looking forward to that. I’m going to be there, so please come out. Meet Jeff. Meet Tom Woods. Meet Patrick Byrne. It’s going to be a wonderful time. Thank you very much, Jeff, for joining me today. I hope we can do it again soon.

Jeff: Sure, thank you.