Quick summary: If you think Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank are the ‘worst of the banking breed’, think again. This may come as a surprise, but SVB was NOT the worst offender in miscalculating interest rate and duration risk. How long is the queue of undercapitalised banks standing behind the now-collapsed SVB? Read on…
The Bubble Should Have Busted in 2017
In 2017, the S&P 500 Index was up almost four-fold from its March 2009 low. Eight years of relatively steady appreciation is rare. The Roaring Twenties bubble took around six years to inflate. The dotcom bubble was five years in the making. The US housing bubble only took a little over four years. By historical measures, in 2017, the US market was living on borrowed time. The only thing we didn’t know was when, not if, this latest episode in exuberance and excess would end…
Anxiety Levels Are Quietly Rising — Part Three
The majority of people are either blissfully unaware of or dismiss the prospects of another (and more severe) credit crisis. Believing you can solve a debt crisis with more debt is nonsense. The global economy is geared for growth, so a marked slowdown in economic activity will impact the very heart of the system…the banking sector.
Anxiety Levels Are Quietly Rising — Part Two
Having a clear, well-thought through plan is absolutely critical to surviving (and eventually thriving from) a market intent in correcting the greatest period of excess in history. The Fed’s actions, and those of investors who believed this flawed institution was omnipotent have consequences.
Anxiety Levels Are Quietly Rising
The many economic factors at play right now have raised anxiety levels a notch or two…especially for millennials with mortgages. The anger with Phil Lowe is palpable. “He lied to us” is a common theme. And those with savings — who are beneficiaries of rising rates — are also unsettled. I’ve not witnessed this level of concern for a number of years. Protecting capital looks like everyone’s top priority right now…
Too Late to Save Society, but You Can Save Yourself
The world of prosperity — steadily increasing economic activity, rising share and property values — was taken for granted. This was how our world functioned. It was our norm. Now, it’s become expected. Any disruption to what we’re entitled to has to be met with vast amounts of stimulus (more debt). Does anyone else see the idiocy in this? We are living in a world of total make-believe. Read on…
Expansion Is ALWAYS Followed By Contraction
We know, accept, and recognise the need for the principle of balance in our lives. We know excesses always have consequences. Yet, when it comes to investment markets, we somehow want an exclusion zone to be applied on this principle. However, periods of excessive exuberance have all been countered by an equal and opposite force of fearful selling. Balance, in due course, is always being restored. Look at the momentum behind the everything bubble pendulum…taking valuation metrics well-beyond 1929 and the dotcom peaks. The process of restoring balance has begun yet again…but how far will it go?
FANGAM — The ‘Fable a New Generation Accepted Mindlessly’
In today’s Daily Reckoning Australia, the dominance of the mighty six FANGAM stocks spread the belief that ‘you could not go wrong buying them’. But it’s exactly this line of thinking that destines disappointment to whatever it is assigned to. In essence, whatever ‘you can’t go wrong buying’ is put in front of is likely at its riskiest state…
Pathways Past Are Signposts of the Future
In today’s Daily Reckoning Australia, trends come and go and come again…not just in fashion, but also finance. Last decade was an exceptional one for finance. Ultra-low rates meant almost anything you touched made some value. But that era is well and truly over. So, what financial ‘trend’ are we seeing resurface now?
Our Past Leaves Us Ill-Equipped for the Future
In today’s Daily Reckoning Australia, cycles always rotate, yet far too many people fail to recognise or acknowledge these rhythmic patterns that can decide the course of our lives. The Big Loss can come in different guises, more than the obvious market crash. Diversification won’t hold up in the long run…so what will?
