The latest from John Hussman on this (who correctly called the 2000 and 2007 bubbles), with a wonderful description which could apply to several of the assets now being touted as good investments.
Nothing so animates a speculative herd as a parabolic price advance in an asset detached from any standard of value. I am convinced that future generations will use the present moment to define the concept of a reckless speculative extreme, in the same way our generation uses “1929” and “2000.”…One of the hallmarks of every bubble is a loss of interest or ability of investors to distinguish between investment and speculation. Once that mentality has taken hold, and prices become wildly elevated, it is impossible to sustain the bubble without also making its consequences worse.
The wording here is important - the loss of interest or ability
I think lots of people see bitcoin, spacs and stocks like GME as ways to make lots of money quick, and don’t much care or know if they are investing or speculating. The millions who joined wsb read stories of people making millions overnight and want to emulate them.
Much of the rhetoric on WSB seems to focus on holding forever, which seems odd for speculating and more associated with investing, though I suppose it is a convenient way to make sure others sacrifice their wealth to the early promoters who get out first.
I don’t think the people calling the bubble refer to this, they are more likely to refer to the rocketing IPOs, the large number of SPACs and the number of techology and renewables/EV companies at multiples of over 100 or not even making profit. Add to this the rapid rise of Bitcoin.
I got into ETH in summer because I read (alot) about eth2.0 that was due December. It was at around 400$. Now its 1600$ and still smaller than BTC. ETH is useful and they’re building apps on top of it. It is the web. One of several legit real decentralised webs. Removing the middleman --isnt this what its about? Removing single points of failure (think FX providers, Drivewealths, and Citadels)–like Ticketmaster ripping us off right now and shady music rights holders…
yeah when it’s 0% for what seems like forever, 30X is normal. And when it’s 1%, 30X will be the bottom new normal–they’ll make up a reason for why 50X is the benchmark. It’s all subjective tho fundamentals are important.
I’m not sure I quite understand what you mean. My feeling is that given there is a floor on the risk free return I can’t see people paying 50X for equity, but hey I’m sure people said the same about the current situation and were wrong.
a few large caps have added trillion dollars each last year. Wall St are the original YOLO traders They are raising their “price targets” as we speak. I want to see those spreadsheets
Interesting that SG are hanging their hat on this. All the mumblings and rumblings I’ve heard is that the Bank is instinctively not a fan of a rate cut to zero and below. Pushing Sterling lower will also be something the Bank will be keen to avoid, given the inflationary pressures of brexit and supply side disruption.
I do think additional monetary stimulus is a given, but a rate cut to zero isn’t going to do much to stimulate consumption or investment. The government needs to consider a comprehensive fiscal stimulus plan primed for when we enter the recovery phase that’ll bring growth, moderate inflation and crucially, tax revenue. No eat out to help outs, no SDLT holiday, but a long term integrated plan to transform and support the productive economy. We can but dream.
The way I look at it, stock market crashes and bear markets, usually last a year or two, before they start picking up and eventually hitting new highs a few years later.
I’m a hold for ever investor, so I won’t sell until I retire, and use the downturns to pick up some cheap bargains.
the Internet made this process much faster (2020). Fast trading and faster information processin.
We get big crashes every 10 yrs +/- 2 and smaller corrections in between which dont last long.
if the wealthiest ppl hold stonks and real estate, theyd do everythin to make sure their assets only go up in value. Im on the same train as them but in economy plus thanks to private/public stonks and crypto
They are raising their “price targets” as we speak. I want to see those spreadsheets
