Week of Sept. 6. The Morality of Profits. Years ago, we wrote this piece for another publication, because, as a part time teacher in the local school system, we often noticed that our young people were laboring under a liberal-mindset delusion that profits were a bad thing.
History is replete with illustrations of the failure to realize the importance of profits as a key indicator of the success and worthiness of an idea or achievement Just as in the old days, we would reward scholars with better grades as an indicator of the importance of the value of smarts and hard work. Unfortunately, our society has deteriorated to the point that we have lost the competitiveness of earlier times. Too often nowadays, we have a mindset that feels it is politically incorrect to destroy a child’s “self-esteem” by simply telling them that they need to get their act together when it comes to competition both physically and scholastically. William Bradford, who came to America on the Mayflower, noted the failure of an early experiment with communism. Now, we cling to this outdated economic folly under the guise of liberalism. No, there is nothing wrong with or immoral about profit. It is the incentive that spurs us to excel, to outdo others, to better ourselves. Indeed, it is the catalyst that spurs us on to take on risk.
Watching with interest. One of the things we keep an eye on is the yield on the 30 year bond. It has been, of late, slowly creeping up and today is at 3.71%. Two ETFs we watch are TBF and TBT, which both, this past week, gave us a buy signal, so our trading service is currently long. Years ago, when we wrote the article, “Prices and the Prime”, we noted how commodities and interest rates (as reflected in the Prime) tended to rise and follow each other in tandem. Since the so-called “money” supply has been hemorrhaging due to our profligate ways and insane fiscal and monetary policies, we felt it was just a matter of time when we went into inflation and/or hyperinflation, it was not fall-off-the-log perception that interest rates would soon follow. Ooops, the 30 year just went to 3.72..
At any rate, we expect this rise in interest rates, combined with our out-of-control deficit, depreciating currency (the so-called “dollar”), red-hot grains, white-hot metals, a very real threat of the country being a-bombed, the real prospect of war-in-the-streets, the very real possibility of another flash crash, leads us to maintaining our sell stops in the major indices, as well as buy stops in the inverse ETFs for the Dow, S&P, QQQQs, and the Russell index.