When First Republic Bank stock lost 47% of its value on Monday, some onlookers were surprised and appalled. Events like these are practically inevitable, though, as banks are trust-based institutions that can’t be trusted to manage their depositors’ funds responsibly.

They told you inflation was “transitory,” then assured you that this isn’t actually a recession and “disinflation” is here to stay. In the real world, however, housing has become unaffordable and supply chains are still disrupted – and the theme of unsustainable monetary policy that I’ve been talking about for years is now confirmed with full-on bank failure contagion.

It’s been a while since the media printed headlines about contagion and bank runs. Some investors haven’t been in the game long enough to remember what it felt like when Lehman Brothers and Bear Sterns imploded. Now, they’re getting a taste of what real panic looks and feels like.

It’s been said that the bond market is more sophisticated, and a better predictor overall, than the stock market. If that’s the case, then bond traders are signaling big trouble ahead – even worse, possibly, than the 2008 financial crisis.

If the media is good at anything, it’s coining and circulating buzzwords. In March of 2023, nobody’s talking about “transitory” inflation anymore; now, the phrase on every reporter’s lips is “higher for longer” as Federal Reserve Chairman Jerome Powell fans the flames of rate-hike fears.

As the Federal Reserve unwinds its bloated balance sheet and threatens to keep interest rates higher for longer, investors are forced to reassess everything in their portfolios: stocks, ETFs, bonds, literally everything. Even cash isn’t safe since sticky inflation has made “sitting on your hands and doing nothing” a non-option in 2023.

Trending phrases can make it easier to communicate complex ideas with just a word or two. On the other hand, buzz phrases can blur the fine line between simple and simplistic, and actually make it harder for investors to navigate the financial markets.

In the age of text messages and e-mail, hardly anyone writes or reads letters anymore. Yet, there’s one letter that has the power to change outlooks and move markets, and it’s only released once a year by Berkshire Hathaway’s legendary CEO.

Asset prices follow narratives in the short term, and unfortunately for many retail traders, the narrative has been a fast-moving, constantly changing target lately. Going from “hard landing” to “soft landing,” and now “no landing,” investors have been conditioned to hope for the best but must now expect the worst.

When you’re in a bubble, you don’t see the bubble. What you see is hype, hope, and the crowd moving to one side of the proverbial boat. It’s fun for a while, as the party’s on that side of the boat – until the boat tips over, and then it’s time for the “I told you so” postmortem parade.

We typically think of enslavement as people’s hands and feet being bound by shackles and chains, yet there’s another type that’s devastating as well. It’s insidious, gradual, often hard to detect, and it frequently happens with the populace’s permission and assistance.