TMF Has Jumped the Shark

Investment Analysis Clubs Macro Economic Trends and Risks
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We’ve discussed before TMF’s transition from teaching people who to invest to selling stock picks. You gotta do what you gotta do, I suppose. But now TMF has fallen into full blown nuttery. At one time, TMF featured top tier financial writers like Whitney Tilson and Morgan Housel. Compare anything those gentlemen wrote with this example of crack pottery:

https://www.fool.com/investing/2022/08/23/now-might-be-one-o…

I’ll spare your poor eyeballs. The author is claiming a US recession is “inevitable.” Maybe, but we’re at full employment and prices for lots of things like lumber, energy, and food are dropping. Plus interest rates are still pretty low by historical standards. So, I don’t agree about the inevitable part. Seems like there is still some give in the economy. Then he says when the recession happens the Fed will lower interest rates. Makes sense. Then he claims that will cause inflation. That makes no sense at all. A recession by definition is slowdown in the demand for goods and services. That causes prices to fall, not rise.

He goes onto say the key to surviving his future inflationary period is to buy…Bitcoin. Now, in just over a year Bitcoin has lost 2/3 of its value vs. the USD. Which means Bitcoin is hyperinflating. In other words, he’s recommending you protect yourself from dollar inflation by buying a hyperinflating currency. What kind of crackpot logic is that? And how come Bitcoin isn’t protecting against inflation right now? You know, when you actually need the protection?

The mind reels. I thought it was the TMF April Fool’s joke for a minute.

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The mind reels. I thought it was the TMF April Fool’s joke for a minute.

The Fool’s added content has deteriorated sharply. I have commented before, how the “news” feed on my MSN portfolio page, which isn’t news, but corporate press releases and click bait, has screaming headlines “Motley Fool issues rare all in buy alert”. Over the last several weeks, here on the Fool boards, I have been seeing a banner ad with pix of the two guys and a headline about “in five years you’ll wish you had bought these five stocks”. The Fool’s added content is as bad as bubblevision’s.

Steve

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<when the recession happens the Fed will lower interest rates. Makes sense. Then he claims that will cause inflation. That makes no sense at all. A recession by definition is slowdown in the demand for goods and services. That causes prices to fall, not rise. >

I agree with you about the article.

But I’d like to point out that stagflation, which plagued the 1970s, was a time when the economy was slow but also inflationary. When the Fed tried to stimulate the economy by cutting the fed funds rate, inflation resulted since consumers and businesses were more able to borrow money. But the economy remained slow due to Macroeconomic factors (such as high energy prices).

There is more than a passing resemblence between then and today’s slow economic growth and high inflation.

I can’t disagree that high-risk asset markets (such as the stock and crypto markets) will rise rapidly if and when the Fed definitely cuts the fed funds rate again. But they are hoping to maintain a neutral rate (which won’t slow or stimulate the economy) for the long term. That may leave the high-risk speculators waiting for a long time.

Wendy

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But I’d like to point out that stagflation, which plagued the 1970s, was a time when the economy was slow but also inflationary. When the Fed tried to stimulate the economy by cutting the fed funds rate, inflation resulted since consumers and businesses were more able to borrow money. But the economy remained slow due to Macroeconomic factors (such as high energy prices).

There is more than a passing resemblence between then and today’s slow economic growth and high inflation.

I thought about that as I was writing my post. The 1970s Stagflation was a special case. The price of oil quadrupled seemingly over night and the Fed was slow to raise interest rates. I don’t think those results are likely to be repeated. While our economy is still dependent on oil, oil is a smaller energy input into the economy than it used to be. Energy per unit of GDP has been declining for decades as well. Basically, our economy has become more energy efficient and less vulnerable (but still very vulnerable) to oil shocks. Additionally, the Fed’s inaction at that time is universally now viewed as a mistake and the current Fed has signaled they are willing to raise interest rates. So I don’t think we’ll have 1970s-style Stagflation again. We’ll see something else we didn’t expect, but not that.

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He goes onto say the key to surviving his future inflationary period is to buy…Bitcoin.

Is there a bit of irony that the author’s mini-bio says, “Neil Patel is a long-term investor focused on finding compounding machines. His investing philosophy is simple: find high-quality companies, don’t overpay, and do nothing.”

Do as I say and all that…

Pete

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"here on the Fool boards, I have been seeing a banner ad with pix of the two guys and a headline about “in five years you’ll wish you had bought these five stocks”

What’s a banner ad?

I never see ads on TMF.
https://microsoftedge.microsoft.com/addons/detail/adblock-pl…

It’s available on all other platforms also…
It’s free too.

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His editor probably said… ‘Give me 500-600 words about anything with a couple graphs that we can sprinkle ads around’. Deadline is 4:20 TODAY! (git ur adz in gear!)
We, as readers, are challenged to decide ‘bull/bear’ on article…and maybe click on some ads.
That is how journalism works.

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There is more than a passing resemblence between then and today’s slow economic growth and high inflation.
Wendy

It’s always good to guard against run away inflation; agreed. Does the 2022 economy resemble the 1970 economy? Absolutely not.
1970 the average home mortgage interest rate was 8.5, Nixon had imposed wage and price controls and as the Vietnam War ended unemployment creeped up to 10%. Oil prices Quadrupled. Gas at the pump is averaging around $3.40 a gallon, not $9.60 a gallon. Unemployment? What Unemployment? There were half a million jobs added to the economy last month, not last year, last month.

So… no, this is not 1970

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There is more than a passing resemblence between then and today’s slow economic growth and high inflation.

No. No there’s not. Maybe there will be someday, but not today.

The lowest unemployment of the 1970s was briefly 4.9%, mostly it was in the 6’s and 7’s. GDP growth was negative for two full years (owing to the quadrupling of oil prices, mostly), and inflation locked in because of union contracts when unions had more than twice as many workers by percentage as they do today. Even that disguises the traction: union jobs demanded (and got) COLA+ contracts, and because they were generally better paid those jumps were very large. Now workers are lucky to keep up, and we all know they’ve been losing ground for years, so even their increases are smaller and there are far fewer people affected (again, by percentage.) In the 70’s we also had hundreds of thousands of generally unskilled soldiers (because college students were exempt) returning from Vietnam to an economy chock full of no jobs.

I have posted before that there is some circularity to inflation that plays out over time (rents, contracts, suppliers, labor shortages) so this is not some “oh, it’s nothing to worry about” post, and I don’t need to repeat the caveats. That said, it’s not anywhere in the category of “stagflation of the 1970s.” Unemployment, at the moment, is 3.5%, tied for the lowest on record, and there are still help wanted signs on every third store I pass.


Year.   Unemp.  GDP+.   Infla.  Comment
1972	5.2%	5.3%	3.4%	Ongoing Stagflation; Watergate break-in
1973	4.9%	5.6%	8.7%	CETA ; Gold standard ;  Vietnam War ended
1974	7.2%	-0.5%	12.3%	Nixon resigns; Min. wage $2.00
1975	8.2%	-0.2%	6.9%	Recession ended
1976	7.8%	5.4%	4.9%	Expansion
1977	6.4%	4.6%	6.7%	Carter took office
1978	6.0%	5.5%	9.0%	Fed raised rate to 20% to stop inflation
1979	6.0%	3.2%	13.3%	 
1980	7.2%	-0.3%	12.5%	Recession
[https://www.thebalance.com/unemployment-rate-by-year-3305506...](https://www.thebalance.com/unemployment-rate-by-year-3305506)

Yes, terrible article. Not all of them are great, in fact not all of them are good. Some are downright bad, but that’s always been true. You have a rather large content hive with many bees turning out the honey, some of it is bound to reek. Maybe not as badly as this one, but the bell curve works at content factories too.

I must say, tho, I love how a meme from The Fonz has penetrated popular culture and everyone instantly understands the meaning. At least we learned something from the 70’s besides flawed comparisons to economic events like “stagflation.”

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< this is not 1970 >

I never said today resembles 1970. It doesn’t.

I said today’s economy may fall into stagflation. That problem lasted from 1973 - 1980. I’m not the only one who noticed it.

https://www.brookings.edu/blog/future-development/2022/07/01…

Wendy

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The author is claiming a US recession is “inevitable.”

Well, they’re correct, one is going to happen…

… now if they get into details about when or why, there’s an excellent chance they’re wrong.

But sometime in the next few hundred years, yep, there’ll be a recession in the US.

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We, as readers, are challenged to decide ‘bull/bear’ on article…

And 99% of the time it’s both - bull, and what bears do in the woods.

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I said today’s economy may fall into stagflation. That problem lasted from 1973 - 1980. I’m not the only one who noticed it

I think this is so unlikely that thinking about reveals a lot of misconceptions or ignorance.

In the 1960’s the U. S. economy was based on exports and energy was one of the main exports. Nixon closed the gold window, ordered the fed to pump money into the economy and at the same time the Texas Railroad commission gave up swing producer status. The economy was built on two legs that were kicked out from under it at the same time, exporting and cheap energy. The recovery from that was actually pretty quick, 10 years or so.

Add into that the largest generation of Americans coming of age at the same time and you get a very pain filled decade.

If you look at the monetary charts from the 1960’s and 70’s you will see a constant health velocity of money. So, the rising money supply did create a painful inflation without a lot of economic activity. If you look at today’s charts, you will see a huge, mind boggling rise in Money supply with a falling almost non existent velocity of money.

Add in that we have fee new workers and no easy place to import more from, not an easy place to export work to, and you have recipe for rising wages. These wages will cure the falling Velocity of money, it has and will continue to create inflation pressures, but it will also increase economic activity.

So, while those with capital may look for hiding places to preserve the power of that capital, the quest is likely to
fail. About the only thing capital can do is prebuy labor, and sell capital. In other words buy leveraged income producing properties.

Other than that, invest in ventures that create massive amounts of wealth and avoid situations that attempt to collect money by controlling capital.

I would guess that any lessons we have learned in the last 50
years should be lessons we avoid paying attention to. In fact, we would probably be better served to try to understand Europe, not the United States in mid to late 19th century.

Cheers
Qazulight

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I never said today resembles 1970.

Yes you did.
You said … “There is more than a passing resemblence between then and today’s slow economic growth and high inflation.”

However, I can understand that you might want to qualify your comment. That said, I still suggest that although Anything is possible, ten years of stagflation is not going to happen.
Thanks for the article from Brookings. I don’t think comparing the 2020 (pandemic) recession to the 1971 - 72 recession makes any sense at all.
I can give you a multitude of reasons why the 2020 recession was completely unique and unlike the recession of the 70s but I think you know that they’re dissimilar in many, many ways.

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I must say, tho, I love how a meme from The Fonz has penetrated popular culture and everyone instantly understands the meaning.

I watched Happy Days as a kid. I didn’t really remember the shark episode, but the first time I heard ‘Jumped the Shark’ used as in this thread was … wait for it … in a TMF article, probably in the ~1999 time period. I totally forget what they were saying had jumped the shark, I didn’t see the article turn up on a quick search, but the phrase was most definitely not widely used like that at the time.

I see now with a little searching that TMF didn’t coin the phrase, but it’s still funny to me to see it turned on them like this when they introduced me to it in the first place.

https://en.wikipedia.org/wiki/Jumping_the_shark

Wiki says that the episode was a huge hit and the show continued to be #1 for years afterward, so maybe the phrase is a little off the mark, or not. At any rate it’s part of pop culture now.

I watched Happy Days religiously the first couple years, but was already tuning out by the shark jumping episode. When I think of Happy Days, it’s the Fonz banging the juke box to get a free song, Richie, Joanie, and Potsie hanging around the drive-in. Pinky Tuscadero! (I’m just realizing every character ended with an ‘ie’ sound).

Fun show.

TMF jumped the shark a while ago. The articles I see churned out on the stocks I follow are routinely garbage with little to nothing useful to say. I don’t know why I keep clicking on them, but I do, so I guess they’re filling their function.

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Personally - no complaints on TMF. Changes they’ve made this year - I am pleased with.

BUT, I resent people growing upon jumping the shark.

FONZIE DID IT OK! FONZIE JUMPED THE SHARK!!!

He was tough, he was cool, and he was a gentleman who could balance all those qualities. And yeah he jumped the shark.

I think people are just jealous cause they never jumped the shark.

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If there was only a Foolcoin

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Not aware of what the quality of the stock picks or portfolio performance is in the US.

But in OZ I can say it is truly atrocious, they are in fact so bad I would give stock picking away and go for an ETF. There is the Motley Fool special pick, that drops 30% about 3 months after selection.

The only portfolio I have access to now is ~30% below the index after 5 years!!

The problem is they do not go for miners considered not to be long term. But they are long duration trades.

As the years add up the long term gets shorter

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I can give you a multitude of reasons why the 2020 recession was completely unique and unlike the recession of the 70s but I think you know that they’re dissimilar in many, many ways.

Are they comparing the 2020 recession with the 70s recession, or are they comparing the 2023 recession with the 70s recession??? :sweat_smile:

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