I never watch college football, but I follow the outcomes because the stakes are crazy high (entire careers and millions of dollars are on the line every week for the coaches and the young players) and because there are some incredible lessons.
And this week provided a fascinating lesson that we can all learn from: In preseason polls, Texas was ranked #1, Penn State was ranked #2, and Clemson was ranked #4. But now, 6 weeks into the season, their combined records are 8 and 7…and they pretty much suck. 😊
Non-football fans, please keep reading, as I promise this will be brief and you will find this interesting.
SIDEBAR #1: This is day #6 of the government shutdown, and I’ve now eaten my children, and my entire neighborhood is a burned-out crater… OK, that joke’s now old, but rates are up again today, DESPITE the shutdown – reminding us again that shutdowns might not be as serious as legacy media might have us believe.
SIDEBAR #2: ICE (mortgage software firm) said homes appreciated in September, both month-over-month and year-over-year – largely because rates fell, fostering more affordability and stimulating demand. And rates barely fell, so I can only imagine what will happen if rates fall significantly. The “crash bros” refuse to acknowledge the impact of falling rates on housing.
SIDEBAR #3: New listings are below pre-pandemic levels. The crash bros, terrified of a surge in inventory, might put this in their pipes and smoke it too. Barry Habib shared this and the ICE data in his paywall video today.
Why the Preseason College Football Poll Is So Interesting
The people getting polled are coaches and sports writers – true experts with more knowledge than anyone. And yet, they were ridiculously wrong. Interestingly, they were similarly wrong in 2022 and 2024.
And the reasons are the same: the entire college football paradigm changed with new rules that: (1) allow players to effectively get paid for their endorsements or sponsorships (for the first time), and (2) allow players to transfer from one college to another much more easily.
How This Applies to the Economy
We have seen more wrong predictions by “experts” over the last 4 years than ever before – when it comes to inflation, interest rates, home prices, stock prices, and recession predictions – among other things.
I share those predictions often, but I also often remind readers that “nobody knows what will happen in these unprecedented times.”
Why Today Is Unprecedented and Nobody Can Predict
Here are a few things we’ve never seen before.
- COVID Lockdowns. We still don’t understand the full impact of locking down a $21 trillion economy, and it will take years to understand it.
- A $6 Trillion Cash Infusion. We infused as much as $6 trillion of cash into the economy as a result of COVID – stimulating the economy and assets in ways we’ve never seen before – and we’ve yet to feel the full repercussions.
- Addiction To High Asset (stocks and real estate) Prices. We’ve kept asset prices artificially inflated for so long via government subsidies, quantitative easing, and increases in the money supply – that Americans are now addicted to high asset prices and refuse to accept lower prices. This becomes more problematic when we have a president who knows this and who touts high asset prices as proof of his success – making it more likely that the government will step in again to prop up asset prices should they correct.
- Tariffs. We have not seen tariffs at this level since the 1930s. Economists like Steve Hanke believe the impact will be worse than most people think, but we simply have not felt the impact yet.
- Government Dominated Economy. Local, state, and federal government spending now accounts for close to 50% of our economy. This much government spending invariably slows economic growth and fosters massive inefficiencies – that analysts have difficulty accounting for. 100 years ago, total government spending was about 10% of the economy.
Three Things to Remember
- Things are usually “not different this time.” I suspect “things” are just taking longer to play out because of the massive money infusion we’ve seen.In 1999, Barron’s magazine wondered if Warren Buffett “had lost his magic touch” (shortly before the stock market crashed mightily), and humorously, pundits on X are wondering the same thing because Buffett has been out of the market for so long, missing all the gains this year. Brent Johnson mentioned this today in a post, asking – “does Warren have FOMO or is he licking his chops?”
- Don’t get paralyzed waiting for clear answers that will never come. I have a friend who pulled out of the stock market in 2020. Enough said. I also have seen hundreds of homebuyers sit on the sidelines for far too long, waiting for a correction or clarity that never comes.
- Diversify. This might seem obvious to most readers, but I still see people go all in on single asset classes (crypto, real estate, stocks, etc.) or even single stocks far too often. Many do extremely well too… until they don’t – reminding me of the dot-commers who went from billionaire to broke in the early 2000s, or the real estate speculators who went from centimillionaire to broke in 2008.
