The investment winners of 2020

 

Let's face it, 2020 through nearly everyone for a loop, myself included.  But, being the economics and futurist geek that I am, I knew some crazy economic times were coming, two or three years ago.  I've been blogging to try and warn people to prepare for the crazy times ahead since early 2018.  One guy listened.  I DID NOT see a 100 year pandemic coming, though, which made things get much crazier, much faster, on many levels.  But I did make several financial predictions, in my blog, on January 26th, 2020, all of them would seem completely crazy to nearly all experts at the time.  Mostly, I predicted a major drop in the stock markets, and a major recession, that I thought would turn into a full blown great depression .  Here's the blog post with those predictions from 11 months ago.  I got three of them right, and other headed in the direction I predicted, but didn't make the numbers I predicted. 

Yesterday I dug into my predictions, researching my predictions versus what actually happened.  That blog post, and my predictions for 2021, are coming soon.  But along the way, I looked at several investments that did well last year, despite huge the economic crash, and the subsequent depression* (yes, we ARE, officially, in a depression).  As anyone who ever looks at the stock market knows, the market, or at least some stocks, surged afterwards.  

This happened for one reason only.  The Federal Reserve created a gigantic, enormous, unprecedented, amount of money, basically out of thin air, and added it to the banking system, to prop up the banks, most major corporations, and the economy as a whole.  The M2 money supply, an official stat, grew  from $15.22 trillion to $19.3 trillion in 2020.  It grew by an unprecedented 25.14% in one year (Dec. 2019-Nov. 2020).  To put it simply, this means every dollar you had at the beginning of 2020 is now worth about 75 cents in buying power.  Your dollars, overall, buy 25% less than they did a year ago.  So for any investment to have the same buying power it had in January 2020, that investment had to increase by 25%, just to break even.  

With that in mind, here are several of the most popular investments, and how they fared, from January 3rd, 2020, to December 31st, 2020.  

Tesla stock- Up 696%.

Bitcoin- up 291%

Amazon stock-up 73.7%

Apple stock- up 71%

Netflix stock- up 64%

silver bullion- up 42.89%

Nasdaq (100 stock composite index)- up 42.86%

Facebook stock- up 30.9%

Alphabet (Google) stock- up 28.7%

gold bullion- up 24.28%

Dow Jones Industrial Average (30 stock composite index)- up 6.88%

Again... because of the unprecedented, intentional increase in the money supply in 2020, any investment had to grow by roughly 25% to have the same buying power.  So any investment that grew less than 25% in 2020, actually went down in real value.  For any of you making an hourly or salary wage, your paycheck is worth 25% less as well, in overall buying power.  Yes, I know, some things (like gas) are cheaper than a year ago, and other things, like food, healthcare, and home prices in major cities, are generally more expensive.  The loss of value in the dollar will become much more apparent over the next few years, as the massive increase in the money supply ripples through the economy.  Inflation doesn't just raise every price evenly, all at once.  Some things go up in price, and others may go down for a variety of reasons.  Eventually, the value of any fiat money (currency not back by gold, or something of intrinsic value) drops to zero, and the currency becomes worthless.  Here's a 1 minute video explaining hyper inflation,  and here's a good 4 minute video explaining a gold standard currency versus fiat money (what our Federal Reserve notes are).  The system is in collapse, that's the backstory to 2020, but that's a whole 'nother subject for another day. 

You may notice that gold went in up price just over 24% in 2020 almost the exact amount the dollar went down in value.  That's not an accident.  Gold, over the long term, holds its value as currencies, like our dollar, go down in value.  Gold, and precious metals may surge up or down at times, but over the mid and long term, gold and precious metals hold their value well.  This is why wealthy people, and smart governments, buy gold ahead of turbulent economic times, and why many wealthy people were buying a lot of gold bullion in 2019, though pretty quietly.  

My dad, Tom Emig, leaning against his 1957, powder blue, Ford Thunderbird, in 1964.

For an example of how a precious metal retains value over time, here's my personal favorite example. In 1964, my dad owned a classic 1957 Ford Thunderbird.  He could drive to the gas station, and with a 1964 quarter (which was 90% silver then), buy a gallon of gas to go cruising in his T-Bird.  Now, 1964 was the last year U.S. quarters were made mostly of silver.  Quarters since then are made with far less valuable metals.  

If you have an average 1964 quarter, you can sell it to a gold/silver dealer, jeweler, collector, or a pawn shop for $3.50 to $4.00 today.  Gas, even the special, more expensive, less smog producing California blend, is $2.85 or $3 a gallon, as I write this, here in SoCal.  So today, in 2021, that 1964 quarter (because of the silver value), if you sell it for its silver value, will still buy a gallon of gas 56 years later.  The U.S. dollar is worth a lot less, but silver will still buy about the same amount of gasoline.  That's an example of silver, as a store of value, over a 56 year period, where there's been a huge amount of cultural change holding its value compared to another important commodity, gasoline.  While fiat currencies lose value over time, and eventually become worthless, things like precious metals, hold their value over time, and can be traded for the same amount of other commodities and items of intrinsic value.

The only good photo left of my dad's third T-Bird, the 1957 he's leaning against in the photo above.  These T-birds, in good shape, are worth about $35,000 these days.  My dad bought this one for $1,500 or so, I think, in 1983.  Cars, classic ones anyhow, can also hold value over time well.