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The death of money (Jared Dillian, Mauldin)

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Jared Dillian

Episode 1

Over the past couple of months, I’ve been taking steps to get ready.

My personal portfolio was already organized with inflation in mind, but now every position I’m in could be labeled as an “inflation play.”


Because I believe a period of higher inflation is on the way.

And, if there is anything I learned from the 2009–2011 experience, it’s that the market responds to the fear of inflation rather than actual inflation.

It goes back to that phrase, “Buy the rumor, sell the news.”

If you wait for the actual inflation, the trade will be ⅔ over (that’s ⅔ of your profit potential flushed down the crapper).

…I’m not waiting.

This is one trade I intend to be on the right side of.

Because when it comes to inflation, you either get run over, you get out of the way, or you make a lot of money.

I’ll take Option #3.

I’ve been shouting it from the rooftops

I’ve been talking to my readers, and even my family, about inflation for months now.

In a recent issue of my newsletter, The Daily Dirtnap, I shared a conversation I had with a friend (July 7th): 

“Inflation is coming, are you ready?” I asked this as a test case. I told her that, “The market is pricing in 40bps of inflation in 10 years. Will it be higher or lower?”

“For sure, higher,” she said.

“Why?” I asked.                     

She responded, “Because of all the money printing and deficit spending.”

Everyone knows this to be true, even my friend, whose work is about as far away from finance as you can get.

And though quite a few folks agreed with me from the outset, others took longer to warm up to the idea.

Even if you totally disagree with my call, what you can’t disagree with is this: People are finally starting to talk about inflation.

(And, as I mentioned, the populace responds strongly to the fear of inflation. From a psychological standpoint you could say inflation goes up because people think inflation is going up.)

If you recently threw you laptop, phone, Apple watch, desktop computer, or Kindle in the water because you are fed up with the news and have thus been “hiding under a rock,” lemme give you a rundown on why I believe a period of higher inflation is sneaking up on us quicker than Wile E. Coyote:

We Broke Up with China

With the US imposing tariffs on China, and looking to bring more manufacturing back home (no judge)—we’ve essentially broken peace with one of our strongest deflationary forces.

Of course, businesses will always look to move production to another country that isn’t China, but a lot of things are going to end up coming home. And when things come home (or have to be moved to an entirely new low-cost country), they get more expensive to produce. That increase in cost is then passed on to you and me.

We Started Messing with Fiscal Policy

The pandemic has reinforced what the Fed and Congress have been in the pattern of doing for the last 30 years—responding disproportionately to a crisis by printing money and passing it out like the paper it is.

We’ve had a first round of stimulus (How many more rounds will we have? I’ll leave it to your imagination…), PPP loans, and unemployment “bonuses.” The Fed and Congress have essentially messed with our fiscal policy in a way that is utterly unprecedented.

We haven’t seen money supply growth like this since the Civil War.

We Reignited Our Love Affair with Gold … and Crypto? 

Precious metals? You’ve seen the news… Gold hit its highest valuation, ever, early in August at $2,000 an ounce. Silver? Copper? They’re on their way up as well.

In fact, I’ve been watching people (online) who don’t own a single stock suddenly decide they need to be invested in gold or silver. 

The current instability, the weaker dollar, and the rumor of inflation are going to mint a new generation of gold bugs. And that may not be a bad thing (presently).

Look at the things that are rallying—gold, silver, base metals, energy, real estate, and stocks. This smells like inflation to me. This isn’t gold as a safe haven. This is gold as a risk asset. Going forward, gold is going to be a risk asset, for better or for worse, and if stocks crash, gold will crash, too. It is all the same trade—it is the inflation trade.

The Daily Dirtnap, July 20 issue

And yet others are looking to cryptocurrencies as a hedge against a falling dollar.

Overall bitcoin is up 70% this year, while the dollar is down 3% (YTD). 

And I’m in no way saying, “Ugh. What a dumb move.” In fact, I’m down with some of these moves in a big way.

I’m just sharing the signs with you.

On we go…

The Fed Tries to Tame a Rabid Squirrel

The Fed has been talking about offsetting a period of “previous underperformance” by letting inflation run over 2% for a while. This assumes they’d be able to just snap their fingers and stop it at the percentage point they like (3%–4%)… which I would define as the pinnacle of hubris.

The Fed is going to allow inflation expectations to get out of control. They already have—look at precious metals. This is just the opening act.

The Daily Dirtnap, July 23 issue

Mortgage interest rates may be down (which is awesome), but your grocery bill is on its way up.

I don’t know if you noticed, but your overall grocery bill has been 4.5% more expensive than it was in February. Common items like beef showboated by shooting up 20%.

We Lose Our Favorite Mom & Pop Shops

And very sadly, over 100,000 small businesses have permanently shut their doors since the pandemic began. That’s a little under 3,000 a week, and you can bet more will be added to that number.

When fewer companies are around to provide goods and services, the price for those same goods and services will rise.

So, what does this mean to you?

The answer is simple: Don’t be on the wrong side of this trade.

Positioning yourself correctly now offers you a chance to reap some serious profits.

I intend to make plenty of money off this. I’ve already made money off it, and these are just the early stages.

In fact, on a recent call when I was discussing my inflation plays with a couple of fellow investors, I said, “This is a lot of fun. It’s the kind of environment I do really well in. I’ve already made gross amounts of money, and we’re still very early in this.”

So, how do you make sure you come out on the right side of inflation?

I Can Help

…and I’ll tell you exactly how I plan to help you over the next couple of days.

Episode 2

Yesterday, we spoke about why I believe an inflationary period is on the way.

Today, we’ll talk about how to profit from inflation instead of being steamrolled by it.

At this moment, I have eight inflation profit strategies in place, and I mentioned two of them to you yesterday.

Did you catch them?

Gold & Bitcoin.

No, I am not wearing a tinfoil hat. No, I’m not stocking up on beans to move into my lush underground bunker. And no, I have not transformed into a goldbug or a conspiracy theorist.

I simply know a good opportunity to profit when I see one.

As for the remaining six strategies, I recently detailed them in a special Inflation Playbook issue of my letter, The Daily Dirtnap.

And yes, I’m going to invite you to join. I’m being completely up front with you on this.

Not only will I continue talking about inflation for the next couple of episodes, but I’ll also be talking about how The Daily Dirtnap can assist you as an investor.

I think you know me well enough by now to know that I only offer up what I think you might enjoy/benefit from.

If you get to the end of this series and decide the Dirtnap isn’t for you, that’s fine with me.

Regardless, you’ll get valuable information from reading. And if it sparks something in you that leads to great investments, I’ve done my job.

Big News

Yesterday, we covered why I believe a period of prolonged inflation is on the way. If you didn’t catch that email, I cover yesterday’s points here.

But as a quick reminder,

  • Production is moving out of China, many companies will return to the USA and will then pass the increased cost of production on to you and me. Summary: We’ve just lost one of the dollar’s greatest deflationary allies.
  • We’ve been printing a lot of money lately. From stimulus checks, to PPP, to increased unemployment benefits. With extra cash on hand, many are spending big. Summary: We have more money chasing the same amount of goods. That’s a classic set up for inflation.
  • We’ve lost 100,000 small businesses already. How many will we lose before the year is out? Summary: Fewer companies are around to provide you goods and services. The price for those same goods and services will rise.
  • The FED wants to see “moderate inflation” of 3% to 4%. They believe if they just let it rise for a while, that they’ll magically be able to stop inflation at the rate they prefer. Too bad they aren’t actually magicians. Summary: The Fed is going to allow inflation expectations to get out of control. You pay more for common goods. Like groceries.
  • People are once again turning their eyes toward “safer” investments. Mistrust in the dollar is increasing. We all know gold is a traditional haven, but this time a new hedge has been added: Bitcoin. Summary: Gold’s hovering around $2,000. Bitcoin has been hovering around $12,000 for a couple of weeks now, and the dollar is down 3%.

So, what was the big news?

Earlier this week, I sent out an issue of The Daily Dirtnap that contained this text, “Pay close attention to what Warren Buffett does, not what he says.”

Buffett has been hostile toward gold for years.

You’re probably familiar with many of his gold-related critiques, like: “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their heads.”

And yet, this same man just bought shares of Barrick Gold.

And I have zero bad things to say about his reversal.

Warren Buffett, if anything, is a pragmatist.

One by one, people are being converted to gold.

When one of the world’s most well-known investors makes a move into an asset that he’s historically held contempt for, pay attention.

Bonus: This also leaves crypto-enthusiasts postulating about when Buffett will make his move on Bitcoin.

Earlier, I said I would like to invite you to become a reader of my newsletter, The Daily Dirtnap. If you’ll allow me, I’d love to tell you more about it.

What is The Daily Dirtnap?

As you know, I was the head of ETF trading at Lehman Brothers for close to a decade.

At the start of the 2008 crisis, I walked out of Lehman to start doing my own thing. My “own thing” ended up being an investment letter called The Daily Dirtnap… an (almost) daily contrarian, macro outtake on the markets.

In the beginning, the people who read The Daily Dirtnap (I call them my “Dirts”) were strictly professionals, people who worked in “the business.” Over time I received more and more requests from regular investors asking to join. I shrugged and said, “Sure!” The more the merrier.

So the Dirtnap’s readership has expanded to include people who don’t necessarily make their living in the capital markets, but are maybe market junkies, or just personal investors looking for a fresh voice in an arena that usually operates as an echo chamber.

Today, it sits at about a 50/50 split of industry professionals and independent investors.

The way I see it is this… the biggest gift you can give to anyone is “idea generation.” As investors, we’re always looking for new ideas, fresh outlooks, and new strategies. And in a world that is filled with repetitive ideas, a fresh voice can be hard to find.

The Daily Dirtnap is, yes, my opinion based on qualitative analysis and contrarian views, but it also works as a “brain vitamin” and/or “idea generator” (at least this is what “the people” tell me, see below). No one wants to end up in a thought ditch. I strive to keep you out of that by offering up new, and fresh, ideas and outtakes daily.

“The Daily Dirtnap is my mind vitamin. Jared’s writing and insights are refreshingly different from any other research or strategy you will find. When I come back from a vacation, I read all the back issues.” T.W.

The Daily Dirtnap is run kind of like an underground newspaper. Not everyone knows about it, and it’s super-exclusive. Additionally, I’m the only person running it. There is no hidden paymaster telling me what to write. No one’s paying me but you—and for you, I’m completely uncensored.

(If you’re surprised to be reading about a non-Mauldin Economics publication in an email from Mauldin Economics, fear not. They love me, and they love the publication, so they allow me to tell you about it. In fact, they encourage it.)

Plus, I’ve seen about all there is to see in the markets—and have made my share of mistakes (with the scraped knuckles to show for it). I am able to let you know what traps to avoid. No one wins every trade. And if they claim they do, they’re full of it.

Thomas B. has this to say about my research and The Daily Dirtnap:

“I have made money from your ideas and avoided numerous pitfalls.”

One of my last big calls covered the unraveling of the 2018 short volatility trade. In the midst of that chaos, reader Eric wrote to me and said:

“So far, you are the only person I have ever listened to that has gotten it right a majority of the time. Thank you! Made lots of money on the way up, and didn’t lose much the last week, from reading between the lines of The Daily Dirtnap.”

And because social proof is important, I’m going to share a couple more reader quotes with you.

“[It’s] a look behind the curtain… it has greatly expanded my view of markets, how they work, and the players involved on a day-to-day basis.”  Stanley P., Dirtnap Subscriber

“A realistic voice in an otherwise sometimes crazy market.” Hans, Dirtnap Subscriber

“It’s a slap in the face… but realizing you needed waking up.”Terry F., Dirtnap Subscriber

And in response to my recently sent, special Inflation Play issue, Calvin J. emailed me and said:

«I subscribe to all of your publications. Today’s issue of [The Daily Dirtnap] reminded me why. Thank you for your insights.»

Let’s swing back around to your upcoming inflation plays.

As I mentioned, you want to trade on the rumor. That’s when the profit potential is highest.

If you wait for the headline that says, “Inflation prophets were right all along. 1 lb. of ground beef now costs $10. Milk is up to $6.” then you waited too long to act.

The ideal time to take your position is “now”—or as soon as possible, meaning over the next couple of weeks.

You don’t want the crowd to catch up with you—you want to stay ahead of them.

I don’t do a lot of promotion for The Daily Dirtnap. If someone signs up, fine. If someone tells a friend, fine.

But every now and then, something really big happens that makes me think, “Uh… I should probably tell more people about this.”

The coming inflation is that “big thing.”

I want to send you the special Inflation Playbook issue that I created just for Daily Dirtnap readers.

But in order to do that, you would need to become a Daily Dirtnap reader.

Not only does the Inflation Playbook cover, in detail, my eight inflation plays, but it also discloses my current, personal Inflation Portfolio.

So, you know when I disclose my plays in this letter—I’ve got skin in the game.

It’s at this point, I should mention that I’m offering a discount if you choose to shoot your shot with The Daily Dirtnapview your discount here.

Which is something I rarely do.

Even more rare, is a 30 Day, risk-free trial run offer.

… but you are getting that as well.

On that note, here is my formal invitation: Please join me at The Daily Dirtnap.

Episode 3

 I woke up to see quite a few new members added to my Daily Dirtnap roster this morning. That’s pretty exciting for me. It also confirms a couple of things:

There are a lot of you out there that agree with my inflation call, and…

If you don’t, you agree with the money you could make off the fear of inflation.

I’m happy to have you with me either way.

Yesterday, I promised a Q&A covering some common questions about The Daily Dirtnap:

Q: You mentioned that the Dirtnap was great for “Idea Generation,” what does that mean? And how does it help me?

A: Most financial commentary out there exists in an echo chamber of sorts. Not a lot of fresh ideas.

The Dirtnap does a couple of things pretty well:

  • Helps you understand human behavior and market sentiment—which is one of the most powerful tools in the investor toolbox. More than anything, the market runs off human sentiment. Fear causes movement (as we’ve been discussing). Excitement and greed cause movement.

«His insight into market psychology is matched only by his wit. He’s a voice worth listening to for any serious student of the markets.”—M.P., Dirtnap Reader & Portfolio Manager

  •  I write in such a way that encourages intellectual flexibility (see: agility), and the removal of bias and emotionality from your investing practice.

“It’s a slap in the face… but realizing you needed waking up.”—T. F., Dirtnap Reader

  • I also think I do a pretty good job of breaking down complicated ideas—making them bite sized. You don’t have all morning to read a research paper. I’m here to light up your synapses and let you get on with your day

“[It’s] a look behind the curtain… it has greatly expanded my view of markets, how they work, and the players involved on a day-to-day basis.”—S. P., Dirtnap Reader

  • As far as letters go, The Daily Dirtnap is a different animal. It doesn’t simply share a ticker with you and split (though I obviously do share what I’m personally investing in, or am interested in).

    You’re getting a level of qualitative analysis and macro thinking that, frankly, can only be found in the world of “luxury consultancy”—where someone charges you $10,000+ an hour to pick their brain.

    I don’t charge anywhere near that, and don’t plan to. Ever.

«The Dr. House of trading.”—K.L., Dirtnap Reader & Financial Advisor

  • I make it fun. My goal is to make my commentary a joy to read, in addition to being super-smart and timely as hell.

“I read it as soon as I possibly can after it hits the inbox.”—S. H., Dirtnap Reader

Q: What if I disagree with one of your calls or opinions? The inflation call for example.

A: Are you going to agree with my every musing? No, of course not. I wouldn’t expect you to. I write an idea generating letter—I’m not running a cult. I value individual thought and opinion. If you disagree with me, and that sparks you to make a profitable play, then I’ve done my job.

That goes with this inflation call as well. You don’t have to agree with me about prolonged, higher inflation being in the pipes. You just have to look at what is happening NOW and take advantage of it. As I’ve mentioned a couple of times, you have the potential to either make “a lot” of money from this play or an absurd amount—the “difference” depends on whether the fear of inflation solidifies into actual, hit-you-at-home inflation.

I’m already profiting, so I’m very confident when I say: The potential for you to profit from this play is there.

Q: I’m a 10th Man reader. The Dirtnap sounds pretty advanced—will I have problems making the jump?

(This goes for Street Freak and ETF 20/20 readers too.)

A: No. You may feel like you walked into an ongoing conversation when you get your first issue, but it’ll only take you three days or so to start feeling like an insider.

“Loved The 10th Man, so I decided to take the leap, no regrets.”—J.F., Dirtnap Reader

I’ve mentioned that this letter is for serious investors, and that about half of my reader base is composed of institutional investors.

So, yes… this is an “advanced” letter. But if you don’t mind looking up a few acronyms or terms you aren’t familiar with, you’ll be more than fine.

I would even go so far to say, all you really need is the spirit of an independent learner. If you are on the newer side of investing, you could think of this like auditing a college class in a subject you feel challenged by, but are excited about. Reading the Dirtnap every day will put you light years ahead of the newb who just sits there and googles, “Five good stock picks, cannabis.”

You have a full 30 days to decide if The Daily Dirtnap is a good fit for you. I would encourage you to do this:

1.     Sign up here.

2.     Download the Special Inflation Report & Portfolio.

3.     Read every issue for one month.

4.     See if it’s added value for your life.

This is getting kind of long, so I’ll cut it off here.

If you’re interested in seeing around the corner, keeping ahead of the trend, and being in constant contact with new ideas and strategies, then click here.

Not only will you snag a rare 25% discount, you’ll have that 30-Day, risk-free Test Drive I mentioned.

If you still need some convincing, Episode 4 of “When Money Dies” comes out tomorrow. I’m going to dive into a macro trend that we all care about.

Episode 4

There is no way we’re going to know who’s president on election night.

Regardless of what you think about mail-in ballots, they have one pretty obvious logistical problem: They take a long time to count.

And you’ve seen what’s happening with the USPS in the news. There’s a lot of “drama” there.

It’ll take weeks (months?) to count all those mailed in ballots. You can bet no one is going to concede defeat on election night. The probability of lawsuits is high. The probability of civil unrest is higher.

What does all this mean?

Political risk has returned.

I’m already talking to my Daily Dirtnap readers about strategies going forward. Insecurity and fear are causing many to rush toward gold, bitcoin, and real estate.

As you know, I feel strongly about a coming period of inflation, and November’s impact is being factored into the portfolio.

You’ll notice, I just disclosed one more of my eight strategies for profiting from the new inflationary regime—real estate.

If you want to find how I plan to implement this strategy, click here to take advantage of your risk-free, 30-Day Daily Dirtnap Test Drive.

Let’s do one more Q&A, real quick:

Q: You mentioned some politically sensitive stuff just now… Where do you stand and how does that affect your investing?

A: I am as aggressively neutral as they come. Everyone has biases, but I do better than most at disregarding them. At the very least, I take them into account. That’s a skill that’s extremely tricky to learn.

Liberals and Conservatives have equally shaken their fists in the air at me, and I’m fine with that. You can’t separate politics from the markets.

It all goes back to human behavior, market sentiment, and doing your utmost to remove emotionality/personal bias from your trading—which I mentioned to you yesterday.

Political risk—which is once again a factor—is something we have to take into account when strategizing.

Alright. Done with that.

Let’s Talk Dirtnap

There are only two more emails in this inflation series, and I want to know where you stand. If you’ve made it this far into the series, it’s probably because you’re interested in what I have to offer.

So firstly, thanks. And secondly, try me and The Daily Dirtnap out.

I’m sure you’ve clicked this link at least once this week. So you know I’m offering you a pretty attractive discount plus that handy 30-Day Trial.

I’ll leave you with two comments from Dirtnap readers whom I highly respect:

“I’m an investing and financial research junkie. I read about 20 research services a month. Jared Dillian is hands-down one of the best thinkers and writers on the planet. Getting access to Jared’s thinking and recommendations for the price he charges is a ridiculously great deal.”
~ B.H., Dirtnap Reader & CEO of a Financial Publishing Service

“If you can’t make money with this thing, then you’re holding it upside down.”
~ T.G., Dirtnap Reader

There will be a lot to keep on top of over the next few months. And you can bet I’m keeping my eye on it all. Anything that could affect my, and your, investing strategy will be laid bare every morning in The Daily Dirtnap.

As an investor, you know there is an “ideal” time to enter the trade in order to maximize your profits. That time is now. I would urge you to act as quickly as you can.

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