January Effect Means
Wall Street Isn’t Positioned

My twin boys are really getting big now. Just a couple of months ago, they were crawling around the house and barely stood up against any furniture item, so I spent very little time trying to stop them from unintentionally causing damage.

When the two of them were just crawling around, the worst that could happen was scratching their heads by hitting them on a sharp corner, but now these two are leaning against the sofas, walls, and appliances and moving faster than ever before.

Yesterday, they played with the washing machine settings and it took my wife 20 minutes to undo what they did. They figured out how to turn the lights on and off in their room, so it looks like a party in there, but the highlight came on Saturday morning.

When I was listening to the quarterly earnings report of one of my biggest portfolio positions from the other room, I heard the both of them laughing from each other’s company for the first time.

My wife, my daughter, the nanny, their grandparents and I make them laugh every day, but to hear them wandering around the apartment and joyfully making each other crack up was a first.

We quietly sneaked from behind them to see what was so funny and found them standing over the toilets and playing with the water!

The situation turned from emotional to hilarious…

We really have to put limits and say NO to them, so they understand what’s forbidden, but if you let those two roam free, they can’t help but topple things over, break things and make a mess.

The only real solution is either to constantly monitor them, which isn’t sustainable, or to play with them in their toy room and close the door, which is our preferred method.

Parenting twin boys that seem to grow more confident and independent with each passing month (they’re only 13-month-olds) and teaching them what is and isn’t allowed is very similar to trying to stop financial bubbles and raging inflation, when you’re the Federal Reserve.

I can’t help it; these analogies come to me…

My boys don’t know that toilet water isn’t the same as a hot shower, nor that washing machine features can ruin clothing or that opening kitchen cabinets with porcelain plates and taking them out could easily break them.

If left to their own devices, they’ll make many mistakes out of ignorance.

The apartment is like zero interest rates, which made money accessible, cheap and too tempting not to borrow and circulate, but the bailouts of 2020 are far more seductive and created an enormous bubble in housing and equities.

After letting America purchase Rolex watches, homes at record prices and JPG files of monkeys for hundreds of thousands of dollars, the Federal Reserve wants to re-educate the public that this isn’t how the world works.

If parents let kids do whatever they want, they can’t expect 13-month-olds to know that you don’t stick your finger into the drawer and so forth, and, even though grown-ups should assess risks better, financial education isn’t part of the Federal Reserve’s mandate and their expectation that the populous will properly manage their finances, is out of touch.

Therefore, when you see one FED governor after another taking interview requests and repeating the mantra that inflation is far too high and that more is needed, this is totally intentional and they are all aware of the layoffs and the slowdown in housing that it brings.

For over a decade, they acted without restraint and let Americans build risk formulas in their minds that were detached from reality, and now they’re punishing them for taking the bait that they themselves dangled in front of them.

The kings of mediocre centralized social and financial engineering, again proving their incompetence… unfortunately for us.

Best Regards,

Lior Gantz
President, WealthResearchGroup.com