CHRIS MACINTOSH ON THE ART OF CRITICAL THINKING
Today’s podcast is slightly different from Chris’ podcasts we’ve shared with you in the past. But it might be the most important one.
Because while our educational institutions excel at creating professional conformists, they are notoriously bad at teaching critical thinking. That’s what Chris discussed recently with Christine Smith from Coming Home — how to be a critical thinker (or if you’re a parent, how to teach your kids to think critically).
They discussed things like:
- What it means to be a contrarian thinker (and it does not mean to automatically disagree with everything)
- “Explain it to me like I’m 11” — the most powerful phrase in teaching critical thinking
- Trust the science: why PhDs and blue collar workers are the most skeptical segments of the populace when it comes to “trusting the experts”
- A practical framework for setting up your kids for success in life
- Why focusing on facts and figures will not give you an in-depth understanding of how the world works (and what to focus on instead)
Whether you have kids or not, critical thinking is one of the most important traits to have as an investor. Listen to the entire conversation here.
BONDS ARE GETTING SPANKED
Ouch! Bonds are getting publicly spanked.
As Holger Zschaepitz (@Schuldensuehner) points out, the most popular treasury bond ETF (the iShares 20+ Year Treasury Bond ETF) lost a whopping 51% since peaking in 2020. It’s now at the lowest point in 16 years. Oy vey!
Of course, if you’re a long-time reader this comes as no surprise. We’ve been bearish bonds for some time. Now, the mainstream press is telling folks to hold their noses and buy bonds…
But we disagree. As Chris pointed out a few months ago in the Insider Newsletter:
Investing in fixed income (aka bonds) at the end of a debt supercycle is like eating vindaloo that has been left out on the bench for a week and has gone furry.
We believe bonds are due for a multi-year bear market with the duration and magnitude of this bull market likely to surprise everyone (including ourselves). Could we see a repeat of 1960-1980 where bond yields rocketed from 4% to almost 16%? Possibly…
ALL THINGS TRANSITORY…
Feels like a lifetime ago, when — back in February 2020 — we started warning that lockdowns will bring about inflation and shortages. Fast forward to today, and this pesky stuff is now part of our daily lives. We recently set up a dedicated inflation channel in our Insider private forum, where members can share their own experiences with all things “transitory”.
This week, we have an “inflationary anecdote” from Insider member Rhud:
I had a business trip to Toronto this week, tons of sky cranes and construction everywhere. Notices all through the downtown that they’re tearing down old buildings and doubling the size of them. So I asked every driver/waiter/local downtown “Hows the economy?” The first sentence out of everyone’s mouth was always “Inflation” related. All different walks of life and careers, demographics, cultural backgrounds, and neighborhoods. Everyone there was giving me horror stories from the very recent (1-2 month) past. It all started after the pandemic, but I really got the sense that it’s completely crushing the locals. I heard stories about rent’s doubling over the past few months, and the housing scarcity despite their massive construction boom. Floating rate home loans on their condos. Crediting Cosco shopping for allowing them to be able to afford to buy food. Every single one felt trapped in that city. Really wild. Everyone blamed “foreigners” for buying new construction and driving up the prices, making it unaffordable for locals to buy. The other side of that coin was the business owners also blamed them because they claim they don’t live in the units so the apartment buildings are as vacant as their restaurants. Everyone also talked about how high the taxes were. Really wild to see.
Which brings us to…
If you listen to “luminaries” like Paul Krugman, inflation is a thing of the past. That is, if you don’t account for food, energy, shelter, used cars,… you know, everything that us bipeds spend most of our money on.
In fact, as one commenter points out, the true inflation rate might very well be 0%.
On a serious note and going back to our earlier point about bonds and rising bond yields…
Bond yields are essentially a function of inflation expectations. If — like us— you think oil prices are going above $100, then inflation is far from being “transitory.”
Credit for this one goes to Insider member Wayne:
Have a great weekend!