Nowhere To Hide From The Collapse Of Everything

Nowhere To Hide From The Collapse Of The Everything Bubble

Nick Hubble

We’re told not to put all our eggs in one basket. The idea is that each basket performs differently at different times. During a crash, at least some of your portfolio is supposed to hold up.

But what do you do when all the baskets get hit by the same earthquake?

Usually, when stocks are crashing, bonds surge. But this time, bonds have performed even worse than stocks by some measures!

Property, a favourite hedge for inflation because of its tax advantages and the leverage used to buy it, is plunging too.

Gold is fairly flat, especially in currencies other than the US dollar. But it’s supposed to surge at times like this.

Utilities stocks are a favourite defensive investment, but they’re being hammered by disruption and government intervention like price caps.

Bank stocks are supposed to benefit from rising interest rates. But not this time. There’s a panic over interest rates going too high too fast for their customers.

Basic necessities like food are caught up in supply chain and fertiliser and energy chaos. So those stocks are struggling too.

Energy stocks are performing quite well, but the government is intent on crushing the most important parts of their businesses in coming years.

Commodities keep booming and busting erratically and they’re not usually a good way to play market crashes. I suspect a lot of the commodities boom is explained by underinvestment, which only makes commodity producers look profitable in the short term because they’re not spending money on new projects. In a few years’ time, they won’t have enough revenue.

Cash is outperforming most investment classes lately, which is incredibly ironic given the surge in inflation…

The point is, there’s nowhere to hide from this sell-off. The story we’ve been fed for decades about diversification is not proving to be true so far. Everything is falling together.

Why is that the case, though? What has gone wrong?

Well, central bankers and governments intervened so heavily in the economy that they created an everything bubble. Even the mainstream media figured this out on the way up… which is very unusual.

But what was the everything bubble? Well, Nall asset prices were bid up to lofty levels.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Japan is currently testing the theory.

In simple English, central bankers pumped up the market to such highs that they must all fall now that central bank stimulus is being withd