Let It Be?

Let It Be - Album Cover

I didn’t start the fire. Other people did. The global warming fire that is; or the environmental crisis that is; or the doomsday scenario for mankind, that is. I will admit that I’m not doing much to help put it out though. For instance, I continue to drink water from a plastic bottle, but tap water is dangerous, isn’t it? Remember Flint, Michigan? I used to fly public, but since 2002 I find I just can’t do without my Challenger or Gulfstream or whatever it is that I own. Never taken my shoes off in an airport either. Much too personal.

I also need to heat my swimming pool to a comfortable 90 even in the summer. Too cold otherwise. And the natural gas it uses is the most CO2 friendly source of energy, isn’t it? Doing my part there I suppose. And oh, I’ve got two TSLA’s. Come to think of it, I’m a pretty environmentally friendly guy. Haven’t done much for the whales yet but it seems like I’m doing my part for now.

I’m thinking too about donating money to Greta Thunberg you know – got to give back to the younger generation and all since I’ve been so lucky. But I find others are not so concerned. I see that the ice shelf off of Antarctica (or is it the Arctic—very confusing) is slowly disintegrating and the “experts” say that sea levels may be 5 meters higher sometime this century!! Florida or NYC officials however don’t seem to care much and isn’t this a governmental issue anyway? I’ve never been close to either pole so someone would have to prove it to me on Twitter or Instagram or Facebook (I don’t know which one – don’t use any of them much, just know their stock symbols) I mean what’s a guy / gal to do? I won’t be around to see the damage anyway nor will my near 50-ish kids for that matter. Eat, drink and be merry I guess – live for the moment. Lennon/McCartney had it right. There will be an answer – let it be – let it be.

Investors can’t afford to let it be these days. They must take action -- do their part (like I have) -- to adjust their portfolios for a new era of higher inflation, slower global growth and geopolitical conflict.  In some cases, the early bird has caught the worm: selling (or shorting) high duration, earnings absent high flyers, many of which are down 50% -- 75%; voiding their portfolios of bonds in the mistaken notion that 60/40 stock-to-bond portfolios are legitimate even at 0% interest rates; selling credit sensitive high yield and corporate bonds; smiling at the absurd mantra that cash is aways trash.

Oh well, there are still things to do in this low/negative return world. For instance, due to the now-hawkish Fed chairman Powell, short rates have risen above the absolute trash level. While my brokerage account’s money market fund still yields .20% annually (for shame Morgan Stanley)

I find that two year Treasuries at 2.65% are a better deal than at the start of the year and state-tax free no less. While these are technically “bonds” and seem to contradict my obvious contempt for fixed income, they pose little price risk and mature at 100.

I’m also still shorting GME and AMC, despite the obvious risk of future high growth rates (Not). (AMC is expanding into popcorn kiosks in malls, and GME has bought a defunct gold mine as well as offered a mysterious stock split/stock dividend at some point in the future, but management won’t discuss it or anything for that manner. Media silent. Very strange and dangerous).

And there remain somewhat less attractive buyout/merger situations where 4%-8% annualized returns can compensate for those of you where 2.65% Treasuries don’t pay the bills. I own ZNGA, TGNA, CERN, and ROG in this category.

Despite all these ideas, I remain perplexed by their highly taxable status. Being a well-off ex-Bond King, I am mired in a short-term gain world of 50% federal and 15%+ state taxes which take close to 60% of everything I make. And when I kick the bucket, they’ll take 40% of the remainder, making the effective tax rate at 76%. And now of course with inflation at 8.5% (and peaking they assure us), the remaining 24% falls further and further behind.

What’s a rich guy with a private plane to do? My fuel bill has doubled! And heating my pool? Don’t ask. Yet I’m Still Standing as my new and last book proclaims. At 78, with a few lucky putts, I might be able to shoot my age this year. Life, indeed, is grand!

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Bond King Bill Gross and the PIMCO Express