CRAYON-BRAINED MANIFESTO: BANKS ARE UNLOADING THEIR DEBT ONTO OUR PARENTS’ RETIREMENT ACCOUNTS. Call your parents and ask them how much of their retirement savings is allocated to BONDS.

DD 👨‍🔬

Apes- first, this is not financial advice, I have been snorting crayons non-stop for 48 hours straight and am about to go full-on RICK JAMES, BITCH mode all over your couch. 🖍

If you or your parents have their retirement accounts PASSIVELY MANAGED BY BIG BANKS OR INSTITUTIONS, as opposed to actively-manages funds or having independent financial advisors, PLEASE LISTEN. A passively managed account explained by investopedia here means the bank or institution will invest your savings as they choose instead of you having full control:

Passive portfolio management mimics the investment holdings of a particular index in order to achieve similar results.

This gives them a lot of leeway, but people trust that big banks have the smartest minds managing funds, and “fiduciary obligations” will require them to use those minds to act in my best interests, right??

from investopedia

Well, over the past 4 months of intense brain wrinkling, I learned that many brilliant minds think that a market crash is unavoidable in the near future. As he states here, Dr. Brrrrry believes that a market crash is inevitable, inflation will happen, and both b$tco$n and gold will suffer due to governments directly competing with them for currency. He linked to an article here on TIPS, ”treasury inflation-protected securities.” It explains that they may not be safe from inflation after all and the Fed is buying up almost all of what the Treasury is issuing. About 1/5th of ALL U.S. dollars currently in existence were printed last year, and the debt-to-GDP ratio is near its historical high, having jumped from 107% to 129% in the last year alone. That’s as big of an increase as 2009-2020- all in the last year. Margin debt carried by big banks is up almost double from last year and near historical highs, and that’s just the tip of the iceberg. The Q4 Report on Bank Trading and Derivatives Activities shows the big banks are currently trading, mainly with derivatives bought on margin debt….

appendix table 1

appendix table 2

Reading is really hard so I had to use my crayons, but that says banks own over $163 Trillion in derivatives based on $19 Trillion of assets, and Holding Companies own over $218 Trillion in derivatives based on $17 Trillion of assets. Check out an infographic on all of the world’s money here if you want, I can’t add that high.

Dr. Brrrry posted the following chart on investments that have historically protected one from inflation by rising in value directly proportional to amount of inflation, source:

ApespeeK: dollar go down, bond go down, these go up. (see above about gold)

The Q4 filings showing what Warren Buffet has been up to convinced me that all of this is real, summarized on this webpage. Buffet, the guy who says “our favorite holding period is forever” and has always loved bank stocks, just sold huge amounts of stock- 100% out of some positions- here are some of the biggest sells:

Q4

Q3

Q2

He made some very significant buys as well:

Q3

Q4

His buys match up nearly perfectly with things that rise in value along with inflation according to Dr. Brrrrry’s table. His sells match up nearly perfectly with all the banks and companies that will suffer if Brrrry’s thesis about debt bubble bursting + inflation is correct. Including selling off 100% of his position in gold.

fuuuuuuuucccccccckkkkkkk.

Biases fully confirmed, I called my parents to warn them of things to come. (I posted that here.) My experience was unsettling- I learned that their retirement savings were in passively managed accounts through large institutions. My mom had chosen how “risky” she wanted her investments to be- she chose a 50/50 plan, she said- and let the institution allocate accordingly.

Turns out her investments are in 60% stocks, 40% bonds. My dad has even more in bonds than that. I realize that this is a very common investment strategy for retirement funds, and in most markets provides a dependable, unchanging amount of money back-per-investment.

Dependable, unless you’re concerned about a market crash, inflation, and major dilution of the bonds market.

BONDS WILL NOT PROTECT INVESTMENTS AGAINST INFLATION. BONDS DEPRECIATE 1:1 WITH THE VALUE OF THE DOLLAR.

This Hong Kong fidelity website does a surprisingly nice job of explaining this further.

“Often called the ‘enemy of the bond investor’, rising inflation erodes the value of bonds and makes their coupon payments less appealing, if interest rates remain constant or rise.”

I then learned that my husband’s parents employ an independent financial advisor, paid on commission based on their fund’s performance. That advisor had moved his parents’ funds almost entirely out of bonds, and started doing so over four years ago. Neither of his parents work any more- they’re entirely dependent on that money for the rest of their lives- it’s not something they would take any risks with. Knowing that, their advisor still made this move and went so far as to give his parents a book, “Be an Owner, Not a Loaner”, explaining the difference between how bonds and stocks would retain value based on current market conditions.

Yet here were my parents, having chosen low levels of risk, having their money being invested in 40%+ in bonds.

If you check out J.P. Morgan’s retirement guide here, they actually recommend a portfolio of 60% bonds if you have “medium-term goals” like college or home loans.

JP’s retirement strat

Goldman Sach’s retirement guide is similar, explaining that the lowest-risk portfolios are those with the most money into bonds.

“Fixed income” means bonds allocation

So…. according to the sacks at Sachs, my husband’s retired parents have their money in the “highest risk” portfolio possible. Which doesn’t make sense based on everything I know and have linked above, especially if there’s a debt bubble about to burst, and one good catalyst could trigger it.

Then I happen to see this news posted: 3 big banks hold largest bond sales ever this week. Bank of america sold $15 billion worth, JP Morgan sold $13 billion worth, and Goldman Sachs sold $6 billion. This Bloomberg article goes on to explain:

This bloomberg article goes further into the “capital break” that’s now expired. It includes this fun little bar chart:

Lots of gassy references. If it’s true that “where there is smoke, there is fire,” does that ALSO mean that “where there is gas, there is bullshit”?? Discuss.

Which led me to remember THIS fun little list from the Q4 banking derivatives statement:

SACKS

Strong correlation between debt over-exposure and the banks that Warren Buffet sold 100% of. So- why are banks rapidly unloading debt while clearly over-leveraged to debt while keeping debt in their “low-risk” retirement funds? Fiduciary responsibility my ass…

TLDR: make your own conclusions based on the facts above. I will be calling ape-mom and ape-dad about getting their retirement savings the hell out of bonds.