Dealing with an Unrealistic Market

Back during the dot.com bubble, I was still working at Sun Microsystems; the company’s slogan heading into the peak of the bubble was “we’re the dot in .com”. The company was a huge player in that early commercial internet because their self-designed UltraSPARC powered systems which ranged from desktop workstations to enterprise servers (all running Solaris), was the backbone infrastructure behind most of the largest sites on the early web; especially that then new area of e-commerce with all of its mission critical requirements. Myself, I loved the industrial design of how well made the earlier hardware was (my opinion changed around the time of the SPARCstation 5 when they tried to compete with Pentium based PC workstations). I still have a SPARCstation IPX that runs the earlier BSD based Unix (SunOS 4.1.4 aka Solaris 1.1.2) History of course detailed how that changed once the bubble burst and how demand for those systems fell over time to the point where the company ended up being acquired by Oracle. Marketing across that early internet era was “spend what you can” levels because the euphoria of what became these growing unrealistic expectations took hold of most rational peoples line of thinking. Simply put, human nature for many takes over where one of the things that ends up occurring is HUBRIS. The following are some of the commercials Sun ran on broadcast television (a movie trailer parody and short music video). I had already left the company by this point but recall the ones from a few years earlier being more reasonable. Remember, there was nothing hip that would resonate with non-tech people when it came to UltraSPARC systems and this System V Unix operating system (Solaris 2.x); marketing tried to create this sort of messaging. Before that bubble popped, I had decided to leave Sun to take a chance at Apple with their then new Rhapsody operating system strategy from the NeXT acquisition (I have a very short version of that story as part of my “investing adventures of a dumbass” series). Many at the time couldn’t understand why I’d leave a highly successful company that was powering the majority of the internet for a company that was on the verge of going out of business. Me being me, I just saw all of that as this growing bubble that if not kept in check, would become unsustainable. Then there was that other part of me (still young at the time) which wanted a challenge and this whole NeXT acquisition with OPENSTEP (Unix based) being made the new foundation of the Mac operating system, was more than intriguing enough to take a chance on that opportunity. I had also made my own personal bet by investing in the company before taking a position with Apple. Basically, part of me has this tendency to go against the grain/conventional wisdom (and that has worked out for me more often than not — the exception of course was taking a side stab at day trading during the dot.com bubble where yes, the unrealized gains were in the millions of USD, but ended up disappearing when leveraged assets got taken down when that bubble popped — again, some of this is written in the above series — I knew about tradning on margin, but gave it a shot anyway — the moral is cashing out quickly while ahead in short term trading). The main key takeaway is that even though I knew about most all of the suggest best practices and so called “financial wisdom” for personal longterm investing, I also went and took my own path when it came to things like portfolio diversification, not following the market signals on buying/selling, and owning physical assets not necessarily being bought and timed with various market signals. Personal investing/finance is just that, PERSONAL. And on that side of the equation, I took a longer term buy and hold philosophy. The key is utilizing that knowledge and wisdom, and tailoring it for yourself because everyones personal tolerance for risk and their short/long term objectives are unique. Handling all of this obviously requires a degree of critical thinking skills along with the ability to make sense of a lot of information. In short, it isn’t for everyone which is why there are managed funds, financial/personal wealth advisors/managers, and business “infotainment” sites/networks that do not always provide the best advice (I’m not a fan of cable networks like Bloomberg, CNBC, etc). While I do post a lot of article links from Yahoo! Finance, that is also meant to illustrate the wide disparity of aggregated information which is often times contradictory with each other depending on the source and/or contributor. I’ve seen articles on there that sound just like a pump and dump, others that try to gloss over the reality of the current day events that will have a domino impact on the global economy, and those that are in fact, based on reality; it’s wading through all of the noise to find those actual useful pieces of information. Remember that during the days of currency being backed by actual gold, governments and their central banks wanted to circumvent that inconvenience of that paper currency having to be backed by physical gold (aka, they want to be able to manipulate the money supply via monetary policy without the logistics of that physical gold asset). Going off the gold standard, fiat currency is just a mirage if you really think about it. It’s simply an instrument used to create barriers which the wealthy require in order to maintain control over the much larger number of people that don’t have as much digits in their bank accounts. This one regarding gold (extending losses after the consumer price index noted the highest inflation since 2023) highlights the problem I have with the financial media. The spot price of gold isn’t just determined by the sentiment and surrounding economic climate. There is actual physical gold and also those paper issues (gold exchange traded funds) that were created due to the challenge of handling physical gold. These gold ETF’s are supposed to be backed by physical gold bullion. The important caveat to note is that this does not guarantee actual physical ownership of that gold. Given how this world has revealed the falsehoods of institutional norms when corrupt people are in charge, I’ve long been cynical about this arrangement because these ETF’s are just a trading mechanism to eliminate the hassle involved in the actual movement of that physical gold. Nonetheless, the market dynamics do have an impact on the spot price of that gold depending on external factors. And that is where you can see these disconnects of the reported impacts of gold spot pricing relative to inflation, interest rates, the money supply, etc. Physical gold as an asset is a vehicle for hedging against inflation. A gold ETF is simply a instrument that is traded (buy low, sell high on the long side while doing the opposite if shorting). Should the governments banking arm choose to raise interest rates (which raises the cost of borrowing), this also has an impact on gold as a hedge against that inflation (as the fiat currency goes through this devaluation). The problem is that todays market has long stopped operating on the basis of reality (lot of the Iran War isn’t priced in as some have claimed; the fact that oil reserves are going to be hitting that “tank bottom” scenario soon due to this self-inflicted conflict that both Israel and the US regimes are unwilling to compromise on, is what is setting the stage for what will likely be a long lasting and damaging impact to the global economy. The U.S. governments consumer price index (CPI) is also not telling the whole story because it has conveniently cherry picked a limited basket of goods that might not be reflective of the spending habits in current day society. Due to the wealth inequality gap that continues growing, a much larger percentage of the burden of the rising cost of living is beared by those whose wages have not kept pace with inflation while the ultra wealthy have been able to continue spending on higher priced goods and services. Today’s May CPI report came in at the highest it has been since 2023 at 4.2%, but is likely understated by more than 5% (because it doesn’t include that spending on high ticket items by the wealthy). I’m also personally cynical of any number coming out from this government since the appointees heading these agencies are loyalists that have been proven to lie more often than tell the truth. That of course is a big problem when the actual facts no longer matter (we’re seeing this manifest itself in this disconnect with the SpaceX IPO, the AI bubble which even the major financial firms are trying to play off because they need clueless suckers to purchase those shares they want to unload onto the greater fool, in order to make their profit. Even the global energy crisis and the domino effect it will have is being shrugged off. Myself, the icing on the cake will be that scenario where the SpaceX IPO does go through the roof in this unsustainable way (because all that will do is make the crash that much larger). Yes, I am at the point where people who don’t believe the shitshow that usually comes around after a bubble bursts, need to experience everything blowing up around them. Some of us have experienced that twice and have prepared as best as possible to deal with that fallout. This is why I’ve been moving cash into gold and not just any type of gold. The proceeds from the smaller sell of some AAPL in May went into buying certified NGC and PCGS gold coinage. Since I’ve long been a coin collector, this also goes beyond simple hedging because besides the melt value (based on the spot price), there is that numismatic value with the historical part of that coinage. In the past, there were various gold coins that I could only dream of purchasing; I’ve included some of those long desired coinage as part of this process (though I am mostly sticking to acquiring gold eagles or Japan Mint issues that are of mint state quality and within certain percentage of the average spot price of 1 troy ounce of gold. Following is some of that certified slabbed collection (I also have uncertified gold coinage that I have in regular holders that I need to certify): Gold Coins/Specimens 1908 Saint Gaudens Double E... View Photo 1908 Saint Gaudens Double E... View Photo 1908 Saint Gaudens Double E... View Photo 1914 Saint Gaudens Double E... View Photo 1914 Saint Gaudens Double E... View Photo 1908 Saint Gaudens Double E... View Photo 2019 Emperor Akihito Enthro... View Photo 2019 Emperor Akihito Enthro... View Photo 1837-1858 (Tenpo) 1 Ryo Kob... View Photo 1837-1858 (Tenpo) 1 Ryo Kob... View Photo 1837-1858 (Tenpo) 1 Ryo Kob... View Photo 1837-1858 1 Ryo Koban Rever... View Photo 1837-1858 (Tenpo) 1 Ryo Kob... View Photo 2009 Emperor Akihito Enthro... View Photo 2009 Emperor Akihito Enthro... View Photo 1736-1818 (Genbun) 1 Ryo Ko... View Photo 1736-1818 (Genbun) 1 Ryo Ko... View Photo 2015 Doves Earthquake Recon... View Photo 2015 Doves Earthquake Recon... View Photo 1894 Liberty Eagle Reverse View Photo 1894 Liberty Eagle Obverse View Photo 2019 Naruhito Enthronement ... View Photo 2019 Naruhito Enthronement ... View Photo 2019 Naruhito Enthronement ... View Photo 2019 Naruhito Enthronement ... View Photo 2019 Naruhito Enthronement ... View Photo 1910 Indian Eagle Reverse MS62 View Photo 1910 Indian Eagle Obverse MS62 View Photo 1911 Indian Eagle Reverse MS62 View Photo 1911 Indian Eagle Obverse MS62 View Photo 1908 Saint Gaudens Double E... View Photo 1908 Saint Gaudens Double E... View Photo 1856 Indian Princess Head T... View Photo 1856 Indian Princess Head T... View Photo 1834 Classic Head Plain 4 H... View Photo 1834 Classic Head Plain 4 H... View Photo 1895 Liberty Eagle Reverse ... View Photo 1895 Liberty Eagle Obverse ... View Photo Draped Bust Gold Half Eagle... View Photo Draped Bust Gold Half Eagle... View Photo 1806 Draped Bust Gold Half ... View Photo 1806 Draped Bust Gold Half ... View Photo 1799 Draped Bust Gold Eagle... View Photo 1799 Draped Bust Gold Eagle... View Photo If the spot price continues taking a dump, this will just make some of this coinage more cheaper to purchase. I’m not playing this based on yields or waiting for what the Fed will do with interest rates. My concern here isn’t that physical gold doesn’t yield returns. My investments in select equities since the late 90’s have done that with the Apple shares that I am beginning to divest from in larger quantities, leading the way by covering any miniscule by comparison, interest rate changes. This is how I deal with these unrealistic markets (unconventional as always). As always with posts like this, the disclaimer applies.