If you are a regular reader of mine, you know that I am a strident critic of monetary policy in our country and that I have been immensely skeptical of our Federal Reserve for (in my opinion) being beholden to daily moves in the stock market to help it set what is supposed to be longer-term monetary policy.
With Jerome Powell's recent capitulation on rates and the Fed pausing hikes, ultimately giving the Dow Jones Industrial Average a several thousand point rally over the last couple weeks, monetary policy has remained a hot topic for discussion.
Such was the case when, early this week, Jim Cramer took to his show Mad Money to argue his viewpoint that the stock market is not in a Fed-induced bubble.
Aside from my obvious beef with the financial media and it’s inherent long bias as a whole, I found this line of logic and argument, especially from a guy who I believe understands the system, to be faulty and flawed. To me, it is disingenuous to ignore the effect that the Federal Reserve has had on the system over the last several decades.
To make matters worse, Mr. Cramer claims that those advocating for rate hikes are mostly just hedge funds with short positions. The idea of financially literate individuals simply trying to push common sense arguments about monetary policy doesn’t even seem to be within his purview.
I took this opportunity on my podcast not only to voice my disagreement with Mr. Cramer’s comments, but also to point out what I believe is hypocrisy, especially given Mr. Cramer’s track record of once running his own hedge fund where he admitted to going short and - far worse - feeding rumors to journalists. I believe Mr. Cramer is looking for a scapegoat and making a morally disingenuous argument that will resonate with his viewership and fan base, instead of making actual sense.
From there, I tie my thoughts on his comments into my thoughts on the Fed going forward and my current investment strategy, which revolves around diversification not only within equities, bonds and other dollar-denominated instruments, but also includes ownership of things like precious metals and commodities, which can be used as a hedge against the system as a whole.
(WARNING: EXTREMELY EXPLICIT LANGUAGE)
Disclosure: I am/we are long GOLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.