Asset Prices Are Being Manipulated (What You Need To Do) | Mark Moss

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Summary

➡ Mark Moss talks about how despite all asset classes reaching new highs, many investors feel they’re not getting wealthier. This is due to the fact that while asset values increase, purchasing power decreases because of inflation. The government’s continuous increase in debt and the subsequent increase in the money supply are causing this. Therefore, even though on paper you may seem wealthier, in terms of purchasing power, you’re actually poorer.

Transcript

Are you really getting wealthier, or is it all just an illusion? Now, if you’re invested in the market and you’re paying attention, now you know that we’ve seen almost every single asset class make a new all-time high at the same time, right now. Gold, stocks, crypto, real estate, all of them. But while this is happening, most investors are feeling like they’re falling further behind, and guess what? It’s true. But why is that? Well, the truth behind these new market highs might actually shock you. Now, real quick, if you’re new to the channel, my name is Mark Moss.

I’ve been studying and analyzing macroeconomic landscape. I’ve been helping thousands of investors navigate them for about a decade. I speak at some of the largest financial conferences in the world, and so the comments that I see, 5,000 comments a week, the hundreds of people I talk to at these events, they all ask a very similar question, or they tell me the same similar problem. But the good news is, once you understand this, you can fix it. Because yes, you can build wealth faster, but only once you understand what I’m going to break down. So in this video, we’re going to break down.

Why do market highs not actually translate to actual wealth increases? Which assets are actually outperforming, and which ones are just faking it? And most importantly, how you can adjust your strategy for actual financial growth. So stay tuned, because what you think you know about your investments is about to change. It’s about to be turned upside down. And by the end of this video, you’re going to have the insights and strategies you need to secure your financial future. So let’s go. All right, so we’re going to talk about the illusion of wealth, because there’s something that looks like it’s there, but it’s not.

Now, what am I talking about? Let’s say, hypothetically, that I’m hiking, I’m climbing, maybe the tallest mountain in the world. Maybe I’m climbing Mount Everest, and I’m climbing, and I’m climbing, and I’m climbing, and I think the top is right there, and I finally get to where I think the top is in heavy clouds. And I get up to the top, and I realize that I’m not at the peak. As a matter of fact, I still got a long way to go. You see, not everything is always as it seems. And so as these assets continue to show us this new peak, a lot of times we’re being faked out.

Let me break this down for you. So we see all assets at all-time highs right now, at the same time. Now, this is not supposed to happen. So stock indexes are at all-time highs, gold’s at all-time highs, real estate just made a new all-time high, Bitcoin’s back into all-time high territory, and again, that’s not supposed to happen at the same time. So what is going on? Well, we have to understand what’s really happening. I’ve put out some tweets. By the way, if you’re not following me on Twitter, check me out at one Mark Moss.

But I talked about that maybe the asset bubble isn’t an asset bubble. Maybe the bubble is not in the asset itself. The bubble is in the denominator. Let me show you what I’m talking about. I got a bunch of charts. Let’s run through this as quick as we can here. So here we have the consumer price index CPI. And of course, it keeps going higher and higher and higher. Gas goes up, food goes up, travel goes up, everything’s going higher. But as prices go higher, what’s really happening is your purchasing power is going dead. So you already know this.

I don’t need to go deep into this, but it’s not that things are getting more expensive. It’s that the purchasing power of your dollar, your currency units, have gone down. You can see how they work in perfect unison. Now, you have to understand that if you want to understand your investing and building wealth. Now, why is it doing this? Why are those purchasing power units going down? Well, it’s because the government continues to increase their debt. And look at this trendline growth difference. As a matter of fact, it took a few hundred years to get to one trillion in debt.

And now we’re adding it about every quarter. And so as they print these more currency units, they buy you less and less. So they go down, but the price goes up. Now, once you understand that, you can start to understand a couple other things. For example, why does it feel like you’re actually getting more poor when you think on paper you’re getting more wealthy? I make more money than I’ve ever made before, right? My assets are worth more than they’ve ever been. So why is it that I feel poor? And the reason why is because in purchasing power, you’re actually going down.

I’m going to show you exactly at which rate and how this mechanic works. But this is why over time, your purchasing power is going down. And so as your purchasing power is going down, your rent is going up. This is exactly what’s happening. And if you want to understand why, or more importantly, mechanically, how, this is the chart you want to look at. So when the government print more money, deficit spending, borrow more, etc., it increases the money supply in the world. What we might call liquidity. The liquidity in the system in order to keep the system moving.

And this is a chart of the S&P 500 and global liquidity. And what we can see is that the S&P 500 moves almost exactly with global liquidity. As a matter of fact, about 95% correlation. So what does this mean? It means it’s not really the S&P 500 going up into a bubble. It’s the bubble in the money supply that’s pushing it up. You see, so if it’s only going up at the rate of money growth, you’re not actually getting ahead. And this is the problem. That’s what’s really driving prices. So the difference of assets and wages.

So what we’re seeing is assets, the S&P 500, the real estate in the United States, etc. are going up at the rate of money inflation, monetary increase. And what is that? Well, it’s about 8 or 9%. But your wages go up with the rate of growth of GDP growth, which is right now about 1.6. So your wages are going up at 1.6, but the prices of everything are going up at 8 or 9%. That’s why you’re feeling this divide. Okay, but there are some golden tickets in here. Okay, not everything moves up the same.

Obviously, you understand this. Why did TVs and computers get cheaper while gasoline and steak got more expensive, etc., right? So not everything moves up the same. Let’s run through some different charts. Now, just to illustrate this, let’s just take a look at this. So in 2008, when QE, quantitative easing started, you can see the Fed’s balance sheet, the liquidity, the money they printed, put the liquidity in the system, it increased massively. So at this point in time, 2008 is when everything started taking off. Now again, the S&P 500 basically is just like a proxy for inflation.

It basically represents the money supply increases. So that’s not where you’re going to make any money. And unfortunately, for most people, they’re just passively investing. As a matter of fact, the rise of passive investing has only gotten bigger and bigger and bigger. My money goes from my paycheck into my mutual funds, my 401k, and they just put it into the S&P 500 index. That’s why you’re not making any money. Let’s take a look at some of this. If I look at the S&P 500 and I divide it by the increase in the money supply.

So what I can see is there was a peak right here back in 2000 and it’s never reclaimed its high. This is where it would be, it need to be this level. So since 2000, your S&P 500 index that you’re probably investing to has never reclaimed its high. I mean, it’s gone up and down, up and down, but it’s basically flat. Look how flat it’s been right here. Now, if we look at the S&P 500 priced in other things. So for example, the S&P 500 is an asset just like gold or your house or your food is an asset.

So we can look at your house. How many US dollars is your house worth? How many ounces of gold is your house worth? How many barrels of oil is your house worth? How many bitcoins is your house worth? We can look at a price of different things. Now, I say this all the time. We don’t want money. We want the things, the goods and services money buys us. We need commodities. We need real things. We need gas. We need energy for our house, right? And so if we take a look at the S&P 500 priced in commodities, things that we really need, we can see that again, it’s down.

So this is why even though your index says it’s at new all-time highs, you feel more poor than ever because in terms of real things that you really need, it’s actually losing money. You’re actually going broke. Now, let’s look at it a couple other ways. As I said, the Case Shiller Index, the United States housing market just hit a new all-time high last week. Well, did it really? Because what we can see right here, since the year 2000, I’m sorry, 2008, homes have never recovered their high. Now, on paper, yes, my home has never been worth more.

But when you adjust it for the money supply, for the increase in the money, it’s actually down 48% since 2006, not 2008. So since 2006, my home has actually lost 48% of value compared to the increase in the money supply. Let’s look at some other assets though. So the S&P 500 is not a good place to be. Real estate is not a good place to be. But let me say this, first of all, real estate works. First of all, real estate would be a horrible investment for us if we had to pay cash for homes, but we don’t.

We use leverage, and so that leverage allows us to make a higher return. We also get what we call inflation debt destruction so that because we can lock in 30-year loans in America, other countries not so lucky, that inflation destroys that. And then if it’s a rental property, I let someone else pay it off for me. So real estate works and also tax efficiency as well. So real estate works because of those four other factors. But if I had to pay cash, as I showed you, it’d be a horrible investment. But not everything is lost, don’t worry, because there’s golden tickets.

So, for example, gold. Gold is up 48% even in the face of all the money printing. So not only has gold been able to overcome the loss of money printing, it’s up 48%. Sounds pretty good. And then what we really have going on is a tech narrative. And so the NASDAQ, not the S&P 500, the NASDAQ represents most of the tech stocks. And we can see since 2020 right here, it’s up 90% when adjusted for the money supply. So it’s overcome the debasement of the money and it’s gone up 90% in real terms.

Pretty good, we’re getting warmer. What else? Well, again, following that tech narrative, we can see Bitcoin is up since 2020 900%. So it’s overcome the debasement and it’s gone up 900% just since 2020. Then we have Nvidia, which is the most incredible company that we’ve ever seen in the whole history of the world. Makes no sense, but here we are driven by the tech AI narrative. Since 2020, it’s up 1800% overcoming the debasement. Now, if we look at this, remember I was talking about how liquidity is the most important thing to watch and understand and I showed you how liquidity basically moves the S&P 500 up in exact perfect terms.

But if we take a basket of monetary hedges, which is basically gold and Bitcoin, we can see that there’s only an 80% correlation. So times like this, it’s overperformed, overperformed, overperformed, and yes, it underperforms as well. What this basically tells us that for every 10% increase in global liquidity, the sensitivity ratio for gold is 1.4, which means it goes up by about 14%. The sensitivity ratio to Bitcoin is 8.95, which means Bitcoin goes up by about 90%. So every 10% increase in liquidity, we see Bitcoin go up by 90%.

That’s exactly what you’re seeing here. So again, this is why you’re not feeling it if you don’t understand this. Alright, so what we’re really seeing is that purchasing power is what we have to look at things in, not the value, not the nominal value, not that my S&P 500 index has never been higher or my house never been higher, but the purchasing power of that. So for example, in 2008, we saw gold come down with stocks. But even though gold came down in US dollar terms, it could still buy me more things.

So even though the US dollar value went down, the purchasing power went up. So we have to retrain our brain to look at things differently. Now, like I said, we’re seeing assets basically move up at the rate of the money supply increase, which is eight or nine percent, but wages go up with GDP. Now GDP, as you can see right here, is way down. Now, this is since 2021-ish. 2021, we had a 7% GDP. Back here in 2021, 5%, 6%, 7%. Now we’re at one and a half-ish. Who knows what the real numbers are? And you can see we’ve been pretty flatlined for the last several years at the 2% range.

So while everything’s going up by 10%, 15%, your wages are not keeping up. So the important thing to understand is that we want to look at the purchasing power when we’re looking at our assets. If we’re only looking at them in the currency, whether that’s euro, yen, dollars, etc., you’re being faked out. All these paper gains are not real. So knowing this, what’s the strategy? Well, the strategy is, number one, you need to understand that you can’t just use the unit of account being that fiat currency, dollar, yen, euro, etc.

You need to look at these assets in relation to other assets, a basket of assets. So again, how many ounces of gold? How many Bitcoin? How many barrels of oil? And then you can start to understand the purchasing power of those things. You have to understand that we need to keep an eye on the money supply, the liquidity, and not the inflation. So the government’s like CPI, CPI, CPI, inflation, inflation, inflation. That’s not what’s really driving prices. So again, back when everybody thought the market was going to crash down, homes were going to crash, stocks were going to crash.

If we remember back to late 2022, early 2023, I was making videos saying, no, they’re not going to crash. Why? Because I was watching the money supply. The next strategy is diversification. Now, diversification is something that you’ve been taught by the likes of Ray Dalio and of course your mutual fund and your 401k advisor. The problem is that doesn’t work. It’s not working right now. Warren Buffett would tell you to put all your eggs in one basket and watch the heck out of that basket. And so diversification is really diversification right now with the stage that we’re in with rapid monetary base increasing.

We want to go into assets that will hedge against that. And that’s specifically this tech narrative. Again, AI crypto narrative with some gold. And so we want to concentrate into that. It’s not the time to diversify across a broad index of S&P 500 because the S&P 500 ain’t going up. All right. So we don’t want to diversify. We that’s to diversify. We want to concentrate. Then as I said, we want to ride the tech trend, AI and Bitcoin. It’s why I have a Bitcoin fund. We invest across the entire Bitcoin industry, all the businesses that are building on and around Bitcoin.

And we’re also using AI and a lot of the businesses. And then also you can think non-traditionally. Obviously, I’ve already made the case traditional investments. S&P 500 ain’t working for you. So we want to think non-traditionally. So that might be peer-to-peer lending, for example, peer-to-peer businesses. Obviously, yes, investing into your own business is going to be the highest investment you can make. Invest into yourself, for sure, if you need that. Private equity has been outperforming the S&P 500 by several hundred times. Venture capital, again, I have a Bitcoin fund, so we invest into that side as well.

And then, yes, as I said, yourself. The thing is with investing into yourself is no matter what happens to the market, you can’t take away the improvements you’ve put into yourself. So anyway, hopefully this makes sense. This is why you’re being faked out. The gains you’re seeing on paper are not real. And if you don’t learn to see this differently and learn how to measure it differently, you’re never going to get ahead. If you continue to diversify against a basket of things that are losing value, you’re going to keep losing value.

But if you concentrate into the trends, you’re going to get ahead. Let me know what you think about this. Are you ready to diversify across the basket or are you going to concentrate? Let me know. Diversify or concentrate in the comments down below. Of course, as always, if you like this video, give me a thumbs up. And if you don’t, you can give me a thumbs down. That’s okay. But at least tell me why in the comments and don’t forget to subscribe while you’re here. That’s what I got to your success.

I’m out. [tr:trw].

See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.

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asset classes reaching new highs decrease in purchasing power effects of inflation on purchasing power government debt increase impact of inflation on wealth increase in asset values investors not feeling wealthier money supply increase understanding wealth in terms of purchasing power wealth perception versus purchasing power

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