Foot finds can

[Bill Bonner’s Diary]( Foot Finds Can By Bill Bonner Thursday, October 7, 2021 [Bill Bonner] BALTIMORE, MARYLAND – The press is reporting this morning that the foot is finally making contact with the can. Here’s Bloomberg: Senate Closes in on Deal to Pull US Back From Brink of Default Is that great news, or what? The spending, borrowing, printing, bribing, squandering, corrupting, twisting, distorting, cheating, fouling, and destroying can go on. Hallelujah. And this week, we’ve been looking at the effect this program has on investors – [university endowments]( for example. America’s leading colleges are probably the least curious institutions in the country. They are convinced that they have The Truth – diversity, anti-racism, climate control, equality… and ESG (environmental, social, corporate governance) investing. No need to look any further. And so, when their own [endowments earn preposterous returns]( no one asks any questions. Or, if… in a fit of admiration… Duke alumni dare to wonder: “Uh… how did you make 10 times more than GDP growth?”… they get the anodyne answers: “Super-smart managers… and alternative investments.” Not quite. Recommended Link [MISSING: Bill Bonner’s LAST and Most Important Book]( [image]( Recently, Bill Bonner published a new book, which details [his final warning to investors](. But shortly after it hit bookstore shelves, it disappeared, without a trace. Today, you’d be lucky to find a used copy online for $79. While some suspect Bill’s book has been “shadow-banned” by major retailers… the truth is far more interesting… and urgent. For the full story – including how you could claim a copy, free as part of this limited-time offer… [Click here]( -- No Genius As [we reported yesterday]( Duke was an outlier in 2021, with a 56% return… while the economy is growing at about 5%. On average, university endowments didn’t earn 10 times more than GDP growth… only about half that much. And not with “alternative” investments or genius managers. Here’s the lowdown from InsideHigherED: College and university endowments posted their strongest annual performance in 35 years, according to new data from Wilshire Trust Universe Comparison Service reported by Bloomberg. The median return before fees was 27 percent in the 2021 fiscal year, which ended on June 30. By comparison, U.S. college and university endowments saw a 2.6 percent median return in fiscal year 2020 and a 6 percent median return in fiscal year 2019. College endowments of at least $500 million – of which there are about 200 – reported a median return of 34 percent in fiscal 2021, higher than the overall average. There’s no reason to think college endowments will be any better than anyone else at choosing the year’s hot sector or hot stock. And they are so large, they are very unlikely to outperform… as a group. [Featured: Are you ready for Congress’ “Wealth Transfer Act”?]( The Nasdaq rose from 9,875 at the end of June 2020 to 14,500 at the end of June 2021 (a fiscal year for the endowments). That’s a 47% increase, considerably more than the median endowment fund return of 27%. The Dow, meanwhile, went from 25,600 to 34,300. That’s a 34% increase. And the S&P 500 went from 3,050 to 4,300 – a 40% increase. In other words, with a median gain of 27%, the endowment managers underperformed. No “alternatives” or geniuses were needed. Recommended Link [Why is Ford Piling Trucks into This Rural Kentucky Complex?]( [image]( [Click Here to Find Out.]( -- Rigged Game But wait… This is where it gets interesting. How could the entire capital market grow so much faster than the economy that supports it? In a healthy economy, one company may do better… another may do worse. But one’s sales are another’s profits. One’s costs are another’s revenues. One month may be strong. Another may be weak. Profits may accumulate in a boom year… but dissipate in the next bust. Overall, they can’t do much better than the economy itself – because they are the economy. [Featured: The End of the NASDAQ…]( Let’s say we have a banana stand. And let’s say we make a profit of $1,000 a year. We could sell our banana stand to someone for… say… $10,000. The buyer would be getting it at a price-to-earnings (P/E) ratio of 10. Very reasonable. And he could expect to get a 10% annual return on his investment. The next year, he might see his returns go up to $1,050 – a 5% increase. Then, he could expect to sell the enterprise to someone else for, maybe, $10,500 – a 5% increase. Not a 30% increase. So, if these endowment funds were investing in America’s capital structure… in the banana stands that produce goods and provide services… they should expect growth equal to GDP… and no more. And yet, last year, they and other investors did at least five times better. The question won’t be raised at meetings of university endowment boards… nor in the U.S. Treasury Department… nor at the Federal Reserve… nor in the financial press. So we’ll raise it here: How come? And here we propose an answer: They are not really “investing” at all. They are just gambling… “taking” not “making,” in a zero-sum game… and counting on the Fed to rig it for them. Recommended Link [Congress’ Latest Screw Up?]( [ad_img]( If you thought Congress couldn’t get any worse, this new bill will shock you. Some have called it “absurd.” Regardless of your political view, you should pay attention. Because the implications could be drastic. According to Bloomberg, “More than $40 trillion of retirement savings is at risk.” [But click here now for the details.]( -- Who’s the Loser? But this hypothesis only introduces more puzzlement. If they are winning so much… who is losing? Who’s on the other side of the trade? Obviously, they can’t be taking their winnings from each other, because we’re talking about the median return for the whole group. And the economy itself didn’t produce the extra wealth; it grew only by about 5%, while the funds added 27%. So who’s the pigeon? And wait a cotton-pickin’ minute. Aren’t these the same universities that are committed to ESG – environmental, social, corporate governance – and are willing to sacrifice some investment returns in order to promote their political agenda? And now, they’re gaining wealth five times faster than the common working man’s wage increases. Oh dear, Dear Reader… have you jumped ahead of us again? Is it possible that they are taking the money from the downtrodden masses, making fools of the very people they pretend to care so much about? Let’s look at it tomorrow and try to figure out what is going on. Regards, [signature] Bill --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Foot finds can). --------------------------------------------------------------- FEATURED READS [How to Vet Great Stocks for Your Portfolio]( Research shares founder Doug Casey’s “Nine P’s” to evaluate resource stocks. It’s a simple question and answer process that you can use to evaluate your own investments. You don’t need to be a math whiz to benefit from this invaluable tool… [Why Your Clothes Could Soon Get Even More Expensive]( prices jumped to fresh 10-year highs, joining a long list of booming commodities and raw materials. The commodity is up 22% in the past two weeks alone. Droughts and heat waves have wiped out cotton crops in the United States, the world's leading cotton exporter… MAILBAG Readers continue the conversation about economics, Washington, and [fiscal insanity]( If it helps to get some sanity back, I’m all for pretending Washington, D.C. doesn’t exist for a little while longer. Our country is in a world of hurt and everyone in government has blinders on. As for how many years the U.S. has left, it’s anyone’s guess. Not many, I suspect… at least, not as we have known it. – Rosemary L. Have to agree with Bill that we've trained smart people to be stupid. As to our politicians, I think that we have lowered the bar (the American people have) for qualifications so low, and allowed campaign finance to be untaxed and untethered, that they are the best we have. A sane, rational, logical, “common sense” person, who operates above the bar, is smart enough to not subject themselves and their family to the political-media-only corporate interest swamp it has become. – Richard S. Dear readers extend their warm wishes to Bill’s daughter Maria, who was recently married, and give their thoughts on Bill’s wedding speech that he included in [Tuesday’s Diary]( What a great speech and what a great family. You have a great family, but I really wanted to see the elusive Elizabeth. We have all heard so much about her over the years and she is clearly the brains of the operation, so how about a peek at her? You can assure her we all hold her in the highest esteem, but we are nosey and want to get the measure of her. It will help us understand how she’s put up with you all these years! Congratulations to the lovely Maria and the clearly delighted Adrien – lucky man. – Anthony O. Beautiful bride, beautiful gown, and exquisite veil. Congratulations and best wishes to Maria and Adrien. Elizabeth, well done! Bill, stick to finance, not wedding speeches. – Barry C. This was one of THE BEST things I have ever read by Bill! My congratulations to him and his family! – Dennis P. That was fantastic, congratulations Bill. May the rest of your life be filled with days that are better than this one. – Rick H. What did you think of Bill’s wedding speech for his daughter, Maria? What was one of the happiest days of your life, Dear Reader? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Foot finds can). IN CASE YOU MISSED IT… [BEWARE: 70 million Bitcoin Owners At RISK]( Most people are obsessing over the latest price fluctuation of Bitcoin. But they’re in for the shock of their lives. Because a new bug has quietly emerged in the Bitcoin network. It has nothing to do with Bitcoin’s volatility. Or its environmental impact. It’s infinitely dangerous. And it could soon lock 70 million investors out of their Bitcoin wallets. [Click here to see how to protect yourself from the Bitcoin flaw.]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. [image]( [The Trader’s Guide to Technical Analysis]( [image]( [The Ultimate Guide to Taking Back Your Privacy]( [image]( [How to Earn Free Bitcoin]( [Rogue Economincs]( Rogue Economics 55 NE 5th Avenue, Delray Beach, FL 33483 [www.rogueeconomics.com]( [Share]( [FACEBOOK]( [Tweet]( [TWITTER]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Rogue Economics welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. 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