Whenever a movie has been a huge hit, the film industry tries to follow it up by doing a sequel. The sequel is almost invariably far more costly, as there’s the anticipation by those who create it that it will be an even bigger blockbuster than the original.
Tag: Bubble
Some clear thinking on $50,000+ Bitcoin
Guest Post by Simon Black
There are famous stories that come out of the Great Depression in which very astute financiers sold all of their stocks just before the big crash of 1929.
Joseph Kennedy famously dumped his portfolio after receiving stock tips from a shoeshine boy. And Bernard Baruch, one of the wealthiest financiers on Wall Street, said after the crash,
“Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me [stock] tips. . .”
Now, these comments make it seem like taxi drivers and shoeshine boys don’t have financial sense. And that’s wrong.
Is This The Biggest Financial Bubble Ever?
Authored by John Rubino via DollarCollapse.com,
If you’re over 40 you’ve lived through at least three epic financial bubbles: junk bonds in the 1980s, tech stocks in the 1990s, and housing in the 2000s. Each was spectacular in its own way, and each threatened to take down the whole financial system when it burst.
But they pale next to what’s happening today. Where those past bubbles were sector-specific, which is to say the mania and resulting carnage occurred mostly within one asset class, today’s bubble is spread across, well, pretty much everything – hence the term “everything bubble.”
When this one pops there won’t be a lot of hiding places.
Continue reading “Is This The Biggest Financial Bubble Ever?”
Don’t Live Your Life In a Bubble
Guest post by Roger W. Koops
Dear Younger Generations;
I am writing to the younger generation. When you become an old-timer like me, anyone younger is of the younger generation. My focus is on the slightly more than half of the population of the U.S. who are younger than the age of 40, but this message is for those older as well. I write this because I, as a scientist, am very worried about what has become of the human species. In just a few short months, we have seen the species devolve into a panic-driven, irrational, hysterical species.
MAKE MONEY IN COLLEGE – IT’S EASY
what stage of the cycle is this @awealthofcs @michaelbatnick pic.twitter.com/rBrGyLZhKM
— futurestradinggod (@LVDTrades) February 4, 2020
The Tight Rope Market
Guest Post by Sven Henrich
None of us can know where markets would be trading without the Fed’s constant massive liquidity injections, but now that the bubble recognition has gone mainstream (Bloomberg, FT) and acknowledged by at least one Fed president (Kaplan) I think it’s fair to say: Lower, much lower.
But while investors continue to dance on the liquidity driven momentum rally right into major resistance currently ignored data keeps suggesting that risk is much higher than anyone is willing to acknowledge. Indeed these data points suggest investors may be walking a precarious tight rope without even realizing it.
I do my best to keep pointing out these data points, but so far admittedly in vain:
It sucks being the only sober guy in a bar full of drunks. That is until they barf all over themselves.
— Sven Henrich (@NorthmanTrader) January 13, 2020
Since the Fed is currently hosting the most expensive frat party of all time it’s no wonder that investors are currently ignoring everything else consequences be damned.
Popping the Bubble
Guest Post by Sven Henrich
Now that we have an open admission from the Fed that their balance sheet expansion is exacerbating asset prices and creating excess and imbalances (see Ghosts of 2000) the term bubble can no longer be dismissed as some fringe rantings by cranks like me, but rather a recognition for what any bubble is: An overpricing of asset prices far above where they should be based on earnings, fundamentals or the growth basis of the economy.
The question on everybody’s mind of course: When does the rally end, when will the bubble get popped? You know it’s bad when even bulls call for corrections but can’t get any. In December what seemed an aggressive call for 3,333 $SPX by March 3rd by BAML already looks overly conservative as $SPX got within a stone’s throw of 3,300 on January 10.
Current sentiment:
“I See Bubbles Everywhere” – Fearful Bob Shiller Warns “There’s No Place To Hide”
Authored by Mike Shedlock via MishTalk,
Economist Robert Shiller says there is no alternative to riding out bubbles.
Please consider Stock Market Crash Near? Nobel Laureate Sees ‘Bubbles Everywhere’
When Nobel Laureate and “Irrational Exuberance” author Robert Shiller says he sees bubbles in the financial markets — you’d better listen up. He literally wrote the book on stock market crashes and bubbles after all.
“I see bubbles everywhere,” Shiller, economics professor at Yale University and author of just-published “Narrative Economics” told investors gathered in Los Angeles Wednesday. “There’s no place to go. You just have to ride it out. You invest even though you expect the price to decline.” Shiller famously predicted the 2000 stock market crash and the 2007 crash of the housing market.
Shiller says the housing market is in a bubble phase, not unlike 2005. That was the point the housing bubble was inflated, but yet to go parabolic. “It’s like 2005 again,” Shiller said. “San Francisco and L.A. are already slowing down.” That’s a “bad indicator,” he said, as those markets have been going up for years.
No Place to Go?!
Continue reading ““I See Bubbles Everywhere” – Fearful Bob Shiller Warns “There’s No Place To Hide””
The Ghost of Christmas Present
Guest Post by Jim Kunstler
Apparently one additional world leader turned up in Buenos Aires without fanfare this weekend. The General Secretary of the North Pole, known popularly as Santa Claus, took his latest-model hypersonic sleigh to the G-20 Meeting, and made sure that the global financial elite would find their Christmas stockings stuffed with sugarplums one last time before the great reflation bull market dies of incredulity.
Washington’s Bloated Big Engine That Can’t—Why The Shutdown Threat Matters
We have been here before—-in the blow-off stage of a stock market mania that is being driven by nothing more than momentum. Speculators and robo-machines alike are buying the market solely because it is going up (almost) every day.
Their excuse is FOMO. But their downfall will be utter failure to have noticed headwinds gathering everywhere—but most especially in the Imperial City.
The fact is, the current Continuing Resolution (CR) impasse underscores that Washington has been reduced to a state of operational dysfunction, policy fracture and partisan paralysis like never before. The pols can only keep the lights on 4 weeks at a time—or maybe even less as tonight’s shutdown showdown will determine.
To be sure, the talking heads of bubblevision bravely insist that this latest shutdown threat doesn’t matter because when push-comes-to-shove these CR and debt ceiling impasses always get resolved, enabling the market to live for another day. No sweat!
Continue reading “Washington’s Bloated Big Engine That Can’t—Why The Shutdown Threat Matters”
BITBUBBLE
BUBBLE????
Bitcoin price growth in days:
$0 – $1000: 1789 days
$1000- $2000: 1271 days
$2000- $3000: 23 days
$3000- $4000: 62 days
$4000- $5000: 61 days
$5000- $6000: 8 days
$6000- $7000: 13 days
$7000- $8000: 14 days
$8000- $9000: 9 days— Not Being Governed? (@ArtofNBG) November 27, 2017
Bitcoin: An Unknowable Bubble?
“Whatever [Bitcoin] is, I missed it… It looks and smells like all the bubbles I have seen throughout history.” – billionaire investor Jim Rogers
Authored by Constantin Gurdgiev via True Economics blog,
There is a much-discussed in the crypto-sphere chart making rounds these days, plotting Bitcoin price dynamics against the historical bubbles of the past:
The chart is striking. Albeit simplistic. See Note 1 below for a technical argument on the chart timing.
Bubble-nomics
Authord by Chris Hamilton via Econimica blog,
Question: What is a bubble?
Answer: A bubble is trade in an asset at a price range that strongly exceeds the asset’s intrinsic value. Or it could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future.
Question: How do you know when you are in a bubble?
Answer: Gauge asset prices against a standard, foundational premise to determine if the price appreciation is warranted.
Lucky for us, the Federal Reserve provides exactly what is needed to show how unjustifiable current prices are against households disposable income. The chart below is all US household’s net worth (current value of all real estate, stocks, bonds, etc.) as a percentage of their disposable personal income (disposable income is what they have left to spend or save after paying their taxes). To round out the picture, I’ve added in the net growth in full time workers during each period, dramatically decelerating.
Three Massive Bubbles in 17 Years: When Will This One Bust? A 60% Decline Coming?
Guest Post
John Hussman’s presents a message no one wants to hear because nearly everyone is too busy believing for the third time in 17 years that “It’s different this time”.
Last week Hussman wrote about Valuations, Sufficient Statistics, and Breathtaking Risks. This week it’s more of the same with his post Behind the Potemkin Village.
The markets are so overvalued now that Hussman expects a 60% decline from here.
Continue reading “Three Massive Bubbles in 17 Years: When Will This One Bust? A 60% Decline Coming?”
Is This The Bubble?
Authored by Lance Roberts via RealInvestmentAdvice.com,
As a portfolio manager, I start each morning by consuming copious amounts of a heavily caffeinated beverage and a data feed from a litany of web and blog sites. Over the last few days, as asset prices have set new records, there have been numerous articles on whether the market is currently in a bubble. Here are a few I grabbed from a Google search:
- Where’s The Next Bubble Forming In The Markets?
- How The ETF Bubble Feeds The Stock Market Bubble
- Market Entering A Bubble Zone
- U.S. Stock Market: Is The Bubble About To Burst
Well, you get the idea. First, like a “watched pot never boils,” bubbles occur when no one is looking for them. Bubbles are a function of greed running rampant combined with a mass hypnotic state the current ride will never end. The shear fact that multitudes of articles are being written about “market bubbles” is a sign that we are likely not there…just yet.