Stock market is a "fully-fledged epic bubble" and will burst

[DonkeyApple]

vulture1 said:

An ETF is seen as a safe way to invest. Leveraging something does not seem safe it looks more like gambling.

Also ETF is getting a little stretched in its meaning with some things. An ETF full of mega risky stocks ie Cathy Woods stuff) seems contradictory in its meaning

Yup. An ETF is just a tax and cost efficient way to get a basket of investments an ISIN and into the retail investor space.

No one should ever be thinking that because a product is an ETF this has any meaning at all re it's risk. People must always know what the product is not what it's called.

But leverage isn't gambling. Leverage can be used for gambling and gamblers do exactly that. Leverage is also used by investors for investing.

The only blur is from gamblers who think they are investing.

Leverage on the FTSE iShare and other blue chip ETFs and equities is perfectly kosher for investment purposes. It's not even actually leverage on many occasions as the capital is in one tax environment and leverage is used in another.

Even retail investors can do this. An investor may have a £300k debt on their property but £300k in their pension. They aren't leveraged but are using leverage to arbitrage a tax and capital gain advantage. People gear up each month on their credit cards despite having the capital in their savings accounts. They then net that off via monthly income receipts.

We do a lot of long term spread bets on funds because clients have maxed out their tax wrappers or have received a large lump sum that will take time to move into wrappers. Those investments are typically 5x leveraged but the client is normally holding cash elsewhere.

There's also the nature of the product that you're leveraging. Arguably, 5x geared on the FTSE is lower risk than a 10% minibond, a crypto currency, most small caps or emerging markets etc.

Also position size plays a role. Using leverage to facilitate cash flow can reduce risk.

What's important is that there is nothing dangerous about leverage and nothing about leverage is gambling. Unless someone decides that's what they are going to use it for.

Ultimately, leverage is no different from a gun. It's generally harmless, mostly beneficial but when you deliberately point it at your testicles and deliberately pull the trigger then things are going to get messy.

[NowWatchThisDrive]

If you are a retail investor then generally I would advocate steering well clear of leveraged ETFs unless you fully appreciate, and are comfortable with, the likelihood of your returns being eroded by the products' inbuilt susceptibility to volatility decay

[NRS]

DonkeyApple said:

Anything can get out of hand but the financial crisis was the wake up call for individuals to not over borrow, over spend and go through life without building foundations from which to easily survive market conditions for the most part. Post the financial crisis every retail investor and consumer is far wiser so will not be over borrowing or over spending as they now know the total importance of not carrying on as they were before. Pre 2007 when a bank said you could borrow 5 times your income people didn't realise the risk of doing that but now they do so they will all be saying 'no thank you' to the kind and generous offers and instead borrowing based on what they can easily repay while also saving for their future.

Glad you appreciate that the general public can learn valuable lessons and become financially astute investors who will think about the long term benefits of a good economy at home and not throw their money at random dodgy half baked too good to be true schemes. Normally you don't seem to trust them DA.

[Mr Whippy]

Will there be bail-outs this time?

Bail-in laws suggest lots of stuff will go to zero.

Gonna be fun to see who gets the money this time, but I’ve got a feeling that lessons that weren’t learned last time will be more broadly punished this time.

I’m assuming much more direct stimulus is on the cards this time around.
Ie, helicopter drops, infrastructure stimulus for jobs etc... no protecting monolithic financials to stem systemic risk the sane way as last time.

Hmmmm

[BobsPigeon]

NRS said:

DonkeyApple said:

Anything can get out of hand but the financial crisis was the wake up call for individuals to not over borrow, over spend and go through life without building foundations from which to easily survive market conditions for the most part. Post the financial crisis every retail investor and consumer is far wiser so will not be over borrowing or over spending as they now know the total importance of not carrying on as they were before. Pre 2007 when a bank said you could borrow 5 times your income people didn't realise the risk of doing that but now they do so they will all be saying 'no thank you' to the kind and generous offers and instead borrowing based on what they can easily repay while also saving for their future.

Glad you appreciate that the general public can learn valuable lessons and become financially astute investors who will think about the long term benefits of a good economy at home and not throw their money at random dodgy half baked too good to be true schemes. Normally you don't seem to trust them DA.

I got my first mortgage at 21, assuming a lot of people are still doing that (they're probably not in the SE, but it's quite likely up north) they'd have been 8 during the GFC, so probably not paying that much attention.

[ATM]

My friend got a flight from MAN airport today. It was deserted. He had a pint of lager before his flight as you do. It was £6.75.

[ATM]

Is the bubble popping finally?

[anonymous-user]

Seems like less and less people are believing the claims that inflation is at 2.0%.

Interesting one, how do the governments get out of this one, not as if they can just print even more money this time?

[Scootersp]

Keep printing and look for/build a scapegoat or hope you can delay the bad stuff to until you are out of office..............Virus or Evergrande, blame China etc, politicians rarely fall on their sword or take responsibility these days and many of them will simply not understand the complete financial system to themselves know who has been to blame (human nature mainly!?)

[Mr Whippy]

Joey Deacon said:

Seems like less and less people are believing the claims that inflation is at 2.0%.

Interesting one, how do the governments get out of this one, not as if they can just print even more money this time?

Interest rates have been going south to try get growth for over a decade.

Then covid19 was a useful patsy for UBI and that’s generated short term growth at vast expense.

But the cracks are showing large now.


I thought full Weestern NIRP would never be a thing but the stupidity of governments and central banks for decades suggests they have no clue... can kick or bust.

I think they’ll keep going nirp and money printing etc until the government/councils/bureaucrats are being dragged into the streets and society collapses.


Right now I get this vibe (what’s on the news), that we’re seeing more and more distraction/doom patsys.

Covid19
China
Climate
Energy crisis
Housing crisis

All these things make people feel they need government to protect them.

But government have failed perpetually to do any work to alleviate any of these concerns.
They’re inept and stupid. They have 4 year sight at best.

NHS is screwed. Roads screwed. Railways screwed. Housing screwed. Finances screwed.
There isn’t a single bit left in good shape.


Just how can they bks it up so much?

How hard is it to just keep normal people working and solvent and able to buy and heat a home and do productive work?

Failure failure failure. For decades.



Now even the energy issue.

How hard to project for a not windy winter? And imported gas faltering.
This isn’t 1 in 1,000,000 stuff... it’s probably 1 in 10 or 20.

And they rushed to decommission coal because of carbon which China is pumping out with gay abandon.
Cripes had we had carbon capture on coal we’d have had our strategic supply of co2 for ‘food’ and whatever... now we rely on fecking fertiliser/gas industry for strategic co2 supply.

What a complete and utter joke.

These clowns exist for these issues. But they’ve proven inept at the small issues, and completely absent from the big issues.


You look at China’s CCP as “big and evil” as they are but I get this image in my mind that they’re looking at the 100 year goal of world domination... not the 4 year plan of feathering their own pension pots and future careers like our cretins in Westminster.

Edited by Mr Whippy on Monday 20th September 10:11

[Phooey]

ATM said:

Is the bubble popping finally?

No, but biggest spike in the Volatility index since May..

[knk]

Joey Deacon said:

Seems like less and less people are believing the claims that inflation is at 2.0%.

Interesting one, how do the governments get out of this one, not as if they can just print even more money this time?

Why not?

[anonymous-user]

Mr Whippy said:

Interest rates have been going south to try get growth for over a decade.

Then covid19 was a useful patsy for UBI and that’s generated short term growth at vast expense.

But the cracks are showing large now.


I thought full Weestern NIRP would never be a thing but the stupidity of governments and central banks for decades suggests they have no clue... can kick or bust.

I think they’ll keep going nirp and money printing etc until the government/councils/bureaucrats are being dragged into the streets and society collapses.


Right now I get this vibe (what’s on the news), that we’re seeing more and more distraction/doom patsys.

Covid19
China
Climate
Energy crisis
Housing crisis

All these things make people feel they need government to protect them.

But government have failed perpetually to do any work to alleviate any of these concerns.
They’re inept and stupid. They have 4 year sight at best.

NHS is screwed. Roads screwed. Railways screwed. Housing screwed. Finances screwed.
There isn’t a single bit left in good shape.


Just how can they bks it up so much?

How hard is it to just keep normal people working and solvent and able to buy and heat a home and do productive work?

Failure failure failure. For decades.



Now even the energy issue.

How hard to project for a not windy winter? And imported gas faltering.
This isn’t 1 in 1,000,000 stuff... it’s probably 1 in 10 or 20.

And they rushed to decommission coal because of carbon which China is pumping out with gay abandon.
Cripes had we had carbon capture on coal we’d have had our strategic supply of co2 for ‘food’ and whatever... now we rely on fecking fertiliser/gas industry for strategic co2 supply.

What a complete and utter joke.

These clowns exist for these issues. But they’ve proven inept at the small issues, and completely absent from the big issues.


You look at China’s CCP as “big and evil” as they are but I get this image in my mind that they’re looking at the 100 year goal of world domination... not the 4 year plan of feathering their own pension pots and future careers like our cretins in Westminster.

I find it almost impossible to disagree with any of that.

Our governments, of all flavours, over the last few decades, have failed to develop and implement any competent long term plans for pretty much anything.

They just knee-jerk react to everything, and only care about headlines and looking after themselves for a few years.

It's a truly ste state of affairs.

Utter incompetance.

[leef44]

Lord Marylebone said:

Mr Whippy said:

Interest rates have been going south to try get growth for over a decade.

Then covid19 was a useful patsy for UBI and that’s generated short term growth at vast expense.

But the cracks are showing large now.


I thought full Weestern NIRP would never be a thing but the stupidity of governments and central banks for decades suggests they have no clue... can kick or bust.

I think they’ll keep going nirp and money printing etc until the government/councils/bureaucrats are being dragged into the streets and society collapses.


Right now I get this vibe (what’s on the news), that we’re seeing more and more distraction/doom patsys.

Covid19
China
Climate
Energy crisis
Housing crisis

All these things make people feel they need government to protect them.

But government have failed perpetually to do any work to alleviate any of these concerns.
They’re inept and stupid. They have 4 year sight at best.

NHS is screwed. Roads screwed. Railways screwed. Housing screwed. Finances screwed.
There isn’t a single bit left in good shape.


Just how can they bks it up so much?

How hard is it to just keep normal people working and solvent and able to buy and heat a home and do productive work?

Failure failure failure. For decades.



Now even the energy issue.

How hard to project for a not windy winter? And imported gas faltering.
This isn’t 1 in 1,000,000 stuff... it’s probably 1 in 10 or 20.

And they rushed to decommission coal because of carbon which China is pumping out with gay abandon.
Cripes had we had carbon capture on coal we’d have had our strategic supply of co2 for ‘food’ and whatever... now we rely on fecking fertiliser/gas industry for strategic co2 supply.

What a complete and utter joke.

These clowns exist for these issues. But they’ve proven inept at the small issues, and completely absent from the big issues.


You look at China’s CCP as “big and evil” as they are but I get this image in my mind that they’re looking at the 100 year goal of world domination... not the 4 year plan of feathering their own pension pots and future careers like our cretins in Westminster.

I find it almost impossible to disagree with any of that.

Our governments, of all flavours, over the last few decades, have failed to develop and implement any competent long term plans for pretty much anything.

They just knee-jerk react to everything, and only care about headlines and looking after themselves for a few years.

It's a truly ste state of affairs.

Utter incompetance.

The key is the four year plan - that is what we work to with our democracy.
CCP secured Xi Jing Ping leadership to 2035 or something like that. Anyone who opposed him seemed to suddenly fall to a scandal in their family requiring them to resign. Any hows, it means he can have a long term plan. World domination.

[leef44]

knk said:

Joey Deacon said:

Seems like less and less people are believing the claims that inflation is at 2.0%.

Interesting one, how do the governments get out of this one, not as if they can just print even more money this time?

Why not?

This reminds me of after global financial crisis of 2008. Mario Draghi was ECB chief at the time.

Recession looms, politicians panic, stock market falls, what are we going to do? Mario says, we will print more money. Everyone else replies, wow that is a brilliant solution, you are brilliant, stock markets go back up.

Liquidity falters, politicians panic, stock market falls, what are we going to do? Mario says, we will print more money. Everyone else replies, wow that is a brilliant solution, you are brilliant, stock markets go back up.

Growth forecasts dip, politicians panic, stock market falls, what are we going to do? Mario says, we will print more money. Everyone else replies, wow that is a brilliant solution, you are brilliant, stock markets go back up.

[DonkeyApple]

Lord Marylebone said:

I find it almost impossible to disagree with any of that.

Our governments, of all flavours, over the last few decades, have failed to develop and implement any competent long term plans for pretty much anything.

They just knee-jerk react to everything, and only care about headlines and looking after themselves for a few years.

It's a truly ste state of affairs.

Utter incompetance.

Of take a slightly different view.

When considering the factors mentioned earlier:

Covid19
China
Climate
Energy crisis
Housing crisis

I would be more inclined to consider these perspectives:

Covid: we've actually done OK. Brits love to complain but post C19 they are for the most part alive, employed and vaccinated. There is an argument that the real long term disaster of C19 for the UK is that we had to turn all NHS employees into untouchable superheroes at a time when it was abundantly clear that the NHS needed very serious and invasive surgery to cut out the rot that was murdering people and costing the taxpayer huge excess sums. But it was a trade off to avoid having innocent victims dying in corridors and Ubers.

The long term ramifications are quite frightening in that the bad NHS people and practices have become even harder to deal with and over the next 5 years we will probably lose more people to what were treatable illnesses than we lost due to Covid net of those who were scheduled to pass away anyway.

Morally, we did the right thing in the end. And the positives are that the process of work place evolution that was already underway has been brought forward a decade and should create a competitive advantage.

China:

What can we do? We have specifically outsourced our low end manufacturing and it's pollution to the other side of the planet. For Americans this is a major issue as they will lose their premier economic position in due course and over the next decade they are going to find military pressures in the Pacific. The US also controls the oil economy and the West is switching away from that to a Chinese co trolled energy economy. None of this is good for the US but we aren't American. We're a small island of two faced, duplicitous s who are spectacularly competent at sitting between super powers and earning a strong crust. We are the cultural and economic buffer yet again between two superpowers and we will prosper from being so.

Climate:

Absolutely nothing at all that we can do in the UK. There has been zero modelling of climate predictions for an offshore island whose climate is 100% controlled by the Jet Stream and the Gulf Stream. Climate modelling is a bit crap on a global scale but there are absolutely zero viable predictions with regards to how the Gulf Stream or the Jet Stream will move/change. If we do not know what those two controlling factors will be doing we have absolutely no idea if the UK long term climate evolution will be to warmer or colder, dryer or wetter. No idea at all so there is absolutely nothing we can do to invest in this change at this moment in time. The UK has to wait and see.

Energy crisis:

What actually is the energy crisis? We don't have a shortage of energy and while costs ebb and flow, the UK economy, the 6/7th largest on the planet can afford energy.

Housing crisis:

There isn't one. What there is is an employment crisis and an old people not dying crisis. There are almost 500,000 empty homes in the UK. There isn't actually a shortage of houses.

The real problem is that the UK economy is extremely heavily biased to the South East so the houses are in the wrong place. More precisely, as you can't move houses, it is employment that is in the wrong place. The SE has suffered from enormous economic migration from the regions but this is being redressed by attempts to enable to migration of employment back to the regions. The other driving issue is that the elderly/retired have momentarily stopped dying which has stalled the release of assets. But it hasn't halted it. This demographic will die off but the UK has been caught by the failure of previous Govts since the 60s to make provisions for the known impending impact of an abnormally large demographic that has also transpired to have much greater life expectancy than the industrial past. This impact is also felt within the NHS which is under excessive burden as a result but we know that this burden will have all but disappeared by the time any new hospitals are delivered etc.

All Govts are a bunch of self serving, narcissistic, borderline kleptocracies and this one is no different but they aren't the architects of the current issues but are in the position that either there is zero ability to know yet how to invest to deal with global issues or zero point as the expiry of the Boomer generation will remove many of the major domestic issues.

I'd even go so far as to argue that they've managed a small miracle of halting much of the artificial economic boom that was deliberately created via debt deregulation without toppling the house of cards which is bizarrely impressive.

[Earl of Hazzard]

Another good post Mr Apple

[Mr Whippy]

DonkeyApple said:

Of take a slightly different view.

When considering the factors mentioned earlier:

Covid19
China
Climate
Energy crisis
Housing crisis

I would be more inclined to consider these perspectives:

Covid: we've actually done OK. Brits love to complain but post C19 they are for the most part alive, employed and vaccinated. There is an argument that the real long term disaster of C19 for the UK is that we had to turn all NHS employees into untouchable superheroes at a time when it was abundantly clear that the NHS needed very serious and invasive surgery to cut out the rot that was murdering people and costing the taxpayer huge excess sums. But it was a trade off to avoid having innocent victims dying in corridors and Ubers.

The long term ramifications are quite frightening in that the bad NHS people and practices have become even harder to deal with and over the next 5 years we will probably lose more people to what were treatable illnesses than we lost due to Covid net of those who were scheduled to pass away anyway.

Morally, we did the right thing in the end. And the positives are that the process of work place evolution that was already underway has been brought forward a decade and should create a competitive advantage.

China:

What can we do? We have specifically outsourced our low end manufacturing and it's pollution to the other side of the planet. For Americans this is a major issue as they will lose their premier economic position in due course and over the next decade they are going to find military pressures in the Pacific. The US also controls the oil economy and the West is switching away from that to a Chinese co trolled energy economy. None of this is good for the US but we aren't American. We're a small island of two faced, duplicitous s who are spectacularly competent at sitting between super powers and earning a strong crust. We are the cultural and economic buffer yet again between two superpowers and we will prosper from being so.

Climate:

Absolutely nothing at all that we can do in the UK. There has been zero modelling of climate predictions for an offshore island whose climate is 100% controlled by the Jet Stream and the Gulf Stream. Climate modelling is a bit crap on a global scale but there are absolutely zero viable predictions with regards to how the Gulf Stream or the Jet Stream will move/change. If we do not know what those two controlling factors will be doing we have absolutely no idea if the UK long term climate evolution will be to warmer or colder, dryer or wetter. No idea at all so there is absolutely nothing we can do to invest in this change at this moment in time. The UK has to wait and see.

Energy crisis:

What actually is the energy crisis? We don't have a shortage of energy and while costs ebb and flow, the UK economy, the 6/7th largest on the planet can afford energy.

Housing crisis:

There isn't one. What there is is an employment crisis and an old people not dying crisis. There are almost 500,000 empty homes in the UK. There isn't actually a shortage of houses.

The real problem is that the UK economy is extremely heavily biased to the South East so the houses are in the wrong place. More precisely, as you can't move houses, it is employment that is in the wrong place. The SE has suffered from enormous economic migration from the regions but this is being redressed by attempts to enable to migration of employment back to the regions. The other driving issue is that the elderly/retired have momentarily stopped dying which has stalled the release of assets. But it hasn't halted it. This demographic will die off but the UK has been caught by the failure of previous Govts since the 60s to make provisions for the known impending impact of an abnormally large demographic that has also transpired to have much greater life expectancy than the industrial past. This impact is also felt within the NHS which is under excessive burden as a result but we know that this burden will have all but disappeared by the time any new hospitals are delivered etc.

All Govts are a bunch of self serving, narcissistic, borderline kleptocracies and this one is no different but they aren't the architects of the current issues but are in the position that either there is zero ability to know yet how to invest to deal with global issues or zero point as the expiry of the Boomer generation will remove many of the major domestic issues.

I'd even go so far as to argue that they've managed a small miracle of halting much of the artificial economic boom that was deliberately created via debt deregulation without toppling the house of cards which is bizarrely impressive.

I know, hindsight.

Covid19 could have been managed better.
Why lock down at the peak? Why no limits on major spreading events in Jan/Feb/March 2020?
Why no idea on mask efficacy?


China. Duh. Export your GBP to China. What does that equal.
Countries used to fight for exports, literally go to war. The West has used cheap labour for decades as a short term sticking plaster to keep inflation low, to a fault.

Climate. I’d call this ecology. Things like bottle returns vs plastic as a starter. Reuse vs recycle.
Central animal slaughterhouses running on co2, being “more humane” but less humane pre-slaughter... which is worse?
Transporting animals around for no reason. Packing food in more plastic.
Mountains of centralisation for profit over consideration for animal welfare and energy costs etc.
There are never just winners, it’s always winners and losers.


Housing. Houses are simple. Building is simple. Considerate planning is simple.
It’s all broken because government want to enrich the builders and land owners.

Thousands of years ago we lived in caves. Hundreds of years, mud shacks.
Recent history, stone.
Romans built houses. Indians Teepees.
It’s not rocket science.
It’s centralised failure. There is only one place that makes these decisions. Westminster.
They can fix this by stopping thinking about themselves and their crony mates and the rich people, and think long term. But they can’t. They’re crippled by their own fears for their sad little careers and jobs.
They live a life and career as a failure to do the job at hand.


Energy. We’re burning gas to make electric.
Gas also heats homes.
Gas also makes the co2 we need to kill food so we can eat.

There is a crisis. We shouldn’t make electric with fecking gas, but here we are!

Centralised failure to think beyond the end of their pensions and the next election.

Jeez how hard is it? France manage it. Yet right now we talk as if they’re a bunch of idiots, while they run half our public transport and profit from it, and sell us electric and profit from it, to enhance their domestic transport and energy supply.

We’re the fking idiots!

[Simpo Two]

Mr Whippy said:

stuff

I think much of what you say is down to Govts and people in general kowtowing to noisy 'activists' who in previous eras would have been thrown in jail. Wanna block the M25 for a few hours? Sure no problem. Can I do it? Nope.

The general population now recieves more information that they have the intelligence to assess, not all of it is right anyway, and it's too easy to make a noise. We also have PC evolving into intolerant 'woke'. So you can find a bloke in the street and interview him for the telly and he will say what he's supposed to say. Quite soon you end up in a loop of st, and if the politicians don't do what the shouters want they get slagged off in the media and voted out for the next bunch.

[2Btoo]

Simpo Two said:

I think much of what you say is down to Govts and people in general kowtowing to noisy 'activists' who in previous eras would have been thrown in jail. Wanna block the M25 for a few hours? Sure no problem. Can I do it? Nope.

The general population now recieves more information that they have the intelligence to assess, not all of it is right anyway, and it's too easy to make a noise. We also have PC evolving into intolerant 'woke'. So you can find a bloke in the street and interview him for the telly and he will say what he's supposed to say. Quite soon you end up in a loop of st, and if the politicians don't do what the shouters want they get slagged off in the media and voted out for the next bunch.

There's truth in this. Add in the fact that social media allows a small number of people with extreme viewpoints to get a disproportionate amount of attention and far left (and far right) groups will grow in number.

Politics is more and more driven by money and hence politicians are more and more given to short-term viewpoints, looking to stay in power at the next election. They therefore pay more attention to shouty people than they should.