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

[Scootersp]

It's crazy how they made so much yet never moved so much as 10% into something risk free!? I spose if they had that mindset they'd have never of made the big money and cashed out early? It's like we all have a inner psychology that in some way hinders us in either taking or seeing risk?

It's like my pie in the sky Euro Millions win scenario might involve paying myself half and leaving the other half, so if you turned into a fritterer and things went south then when that dawns on you you can 'win' again with the half you put aside and are hopefully much wiser. Only you know anyone thinking that way now is never going to be that fritterer person and anyone that would be would never restrict themselves from the half in the first place!

We certainly can be our own worst enemies sometimes!!

[ATM]

They are lending against their stock so using it as collateral for a loan. So rather than cash in some for living expenses they are borrowing against. This is beyond all in.

[mwstewart]

I can say something: there is I think a great deal of smart money accumulating crypto. Most of the multi-million USD positions are very well played in surprisingly unknown projects that stack up with fantastic FA.

[Derek Chevalier]

ATM said:

I think the 2000 bubble was very different. It only affected some or most Internet related stocks. Some like Cisco got back to their 2000 highs but it took 15 years. Most just evaporated.

I've posted this already, but it was a bit more widespread than that, and there are many similarities to the late 90s

https://www4.troweprice.com/iws/wps/wcm/connect/fe...
https://russellinvestments.com/us/blog/value-has-t...
https://www.mfs.com/content/dam/mfs-enterprise/mfs...

" For those that gave up on value stocks, they saw large cap growth stocks lose 4.8% per year over the next 10 years."

Now look at the top-selling funds. How many of these aren't large-cap growth/tech/US focused?

https://www.ii.co.uk/analysis-commentary/top-10-mo...

[Derek Chevalier]

mwstewart said:

I can say something: there is I think a great deal of smart money accumulating crypto. Most of the multi-million USD positions are very well played in surprisingly unknown projects that stack up with fantastic FA.

What's the definition of "smart money"?

[mwstewart]

Derek Chevalier said:

What's the definition of "smart money"?

Money that is invested into relatively unknown projects in their infancy, with excellent fundamentals, and for a low price vs estimated future value.

[ATM]

mwstewart said:

Derek Chevalier said:

What's the definition of "smart money"?

Money that is invested into relatively unknown projects in their infancy, with excellent fundamentals, and for a low price vs estimated future value.

Start ups moving to IPO using SPACS or whatever else have been booming recently because of all the dumb money chasing risk and growth. The smarter money takes advantage of this by getting in early pre IPO and then exiting as the retailers all rush in. However if this trend of IPO always making money stops then the smart money will not do the earlier bit and so this get rich scheme dies.

[ATM]

mwstewart said:

I can say something: there is I think a great deal of smart money accumulating crypto. Most of the multi-million USD positions are very well played in surprisingly unknown projects that stack up with fantastic FA.

Crypto price does move impulsively. There is definitely a lot of money moving in and out of crypto causing these moves. It's value is based purely on speculation. But the overall value of all crypto is tiny compared to other asset classes and that's why it can move so much.

A couple of my friends play crypto and believe it will be worth loads in the future therefore it can only go up from here.

But again if markets start to suffer across all assets then crypto will be included. We've seem crypto tank before. If it starts tanking again these die hard crypto bulls will sell. They will still be bulls. They will say they're waiting for prices to go lower to accumulate. They have an argument for all market conditions which means even if they are losing money now they will still win in the future. I don't think that's a healthy belief. Just like the sensible investor who buys equities every month whatever the price because everything always goes up.....

[BobToc]

mwstewart said:

Money that is invested into relatively unknown projects in their infancy, with excellent fundamentals, and for a low price vs estimated future value.

And of course, always judged ex-post with survivorship bias.

[mwstewart]

ATM said:

Crypto price does move impulsively. There is definitely a lot of money moving in and out of crypto causing these moves. It's value is based purely on speculation. But the overall value of all crypto is tiny compared to other asset classes and that's why it can move so much.

A couple of my friends play crypto and believe it will be worth loads in the future therefore it can only go up from here.

But again if markets start to suffer across all assets then crypto will be included. We've seem crypto tank before. If it starts tanking again these die hard crypto bulls will sell. They will still be bulls. They will say they're waiting for prices to go lower to accumulate. They have an argument for all market conditions which means even if they are losing money now they will still win in the future. I don't think that's a healthy belief. Just like the sensible investor who buys equities every month whatever the price because everything always goes up.....

There is a lot of trash out there - pure speculation - but those 'projects' should get weeded out once regulation starts to bite. The key I think is a focus on high-IQ projects with real-world utility e.g.:

https://www.quant.network
https://allianceblock.io
https://vectorspace.ai

[ATM]

mwstewart said:

ATM said:

Crypto price does move impulsively. There is definitely a lot of money moving in and out of crypto causing these moves. It's value is based purely on speculation. But the overall value of all crypto is tiny compared to other asset classes and that's why it can move so much.

A couple of my friends play crypto and believe it will be worth loads in the future therefore it can only go up from here.

But again if markets start to suffer across all assets then crypto will be included. We've seem crypto tank before. If it starts tanking again these die hard crypto bulls will sell. They will still be bulls. They will say they're waiting for prices to go lower to accumulate. They have an argument for all market conditions which means even if they are losing money now they will still win in the future. I don't think that's a healthy belief. Just like the sensible investor who buys equities every month whatever the price because everything always goes up.....

There is a lot of trash out there - pure speculation - but those 'projects' should get weeded out once regulation starts to bite. The key I think is a focus on high-IQ projects with real-world utility e.g.:

https://www.quant.network
https://allianceblock.io
https://vectorspace.ai

I've not looked at your list. For me the risk is dumb money floods in and then they have so much cash they can fail and still earn personal fortunes. This is the risk with 'Jam Tomorrow' businesses. I've seen that thrown around a lot with riskier AIM shares and never understood it. If a business can come along with a good idea and a good story and get lots of early money flooding in from junior investors who want to get in early then the business can basically do nothing and there is no penalty or incentive to succeed. This was the problem during the dot com bubble. I've followed some AIM shares recently who promised great things but these never ever seem to happen and there is just delay after delay after delay. If you could short all these 'Jam Tomorrow' type companies I think you would net profit. But I realise that AIM is a little different even the principal is the same, although the amounts are probably very different. If you want to see some good 'Jam Tomorrow' type businesses just look at what Cathy Wood invests in through her ARK brand. Another I wanted to short but unfortunately I cant find a way to execute that trade.

[Gooose]

I haven’t long started to invest in funds like vanguard LS and FTSE all cap so it’s all new to me. This has increased my anxiety levels because I check everyday and read the latest price and global news all the time.

The thing which is obvious is that inflation is coming and faster than people think but there is still obvious room to grow by continuing to come out of the pandemic. I know there are a million factors but as a beginner this is what I’m seeing. Even though inflations is hitting home now there are still plenty of good news out there, good news from American banks today, growth lower than expected but only by a bit in the uk, and still lower that pre pandemic so plenty of room to grow. I am an absolute beginner mind so I could be talking out of my arse

[LooneyTunes]

ATM said:

Start ups moving to IPO using SPACS or whatever else have been booming recently because of all the dumb money chasing risk and growth. The smarter money takes advantage of this by getting in early pre IPO and then exiting as the retailers all rush in. However if this trend of IPO always making money stops then the smart money will not do the earlier bit and so this get rich scheme dies.

I agree with the point on SPACs (and there are some interesting articles out there linking them to overheated markets). There is also some crap going out via SPACs.

Looking at pre-IPO, that isn’t something the typical retail investor can access directly. Similarly when you look at Angels/VCs/PE very of these will always make money on each transaction… as with other investments it’s generally about the portfolio.

Also don’t make the mistake of thinking that a pre-IPO investment necessarily sees an IPO take place. The earlier you’re in the less visibility of the likelihood there is, in fact it could be argued that you’re “chasing risk and growth” at early stage… which is the criticism you’re levelling at the “dumb” money.

Oh, and don’t fall into the trap of thinking that pre-IPO is too similar to listed stock. Risk profile and effort involved can be quite different!

[NRS]

Gooose said:

I haven’t long started to invest in funds like vanguard LS and FTSE all cap so it’s all new to me. This has increased my anxiety levels because I check everyday and read the latest price and global news all the time.

The thing which is obvious is that inflation is coming and faster than people think but there is still obvious room to grow by continuing to come out of the pandemic. I know there are a million factors but as a beginner this is what I’m seeing. Even though inflations is hitting home now there are still plenty of good news out there, good news from American banks today, growth lower than expected but only by a bit in the uk, and still lower that pre pandemic so plenty of room to grow. I am an absolute beginner mind so I could be talking out of my arse

There's always something to worry about. Statistically it shows it is best not to time the market, but time in the market. Avoid the AIM crap which is basically mostly people gambling on crappy companies that are designed to take money from the investors and line the owners pockets before going bust and them repeating the process with a new company.

Depending how old you are just buy a regular of a low cost (say 0.3% or less) global index fund. Keep a bit in cash (maybe 3/6/9 months salary approximately in case you lose your job - exact amount depends on your fixed expenses, job security etc) and put some into bonds. Relax and don't worry about the news etc. It'll balance out over your life. It's more likely to get you a better financial performance than trying to work out what to do, and will also be far less time and stress.

[DonkeyApple]

Welshbeef said:

Or is a better place to put cash

Into one of those 6 of the best super cars as pistonheads mods suggested.

Premium bonds

It's a terrible place to put GBP because it's effectively an extremely high cost fix trade against the USD. It's only real use is to make old men feel safe and ugly women marriable as it's less valuable than a herd of much loved goats.

[Seek]

https://www.reuters.com/world/europe/swedish-infla...

Swedish krona immediately got quite a bit stronger, probably as investors assume a rate hike is on the cards.

First of many countries...?

[DonkeyApple]

bmwmike said:

Surprised to read somewhere recently that the majority of £1m mortgages are interest only. Would love to know if thats true. Certainly around here 800-1.4m properties seem to have become more prevalent in the last couple of years.

IO debt has a secondary use which is tax management. You don't repatriate or bring in £1m to buy the asset as you'd trigger an enormous tax liability so instead you borrow within the tax jurisdiction and don't bother with repayment because that either triggers the same tax issue or inhibits spending etc.

On top of that, a lot of high incomes aren't paid as monthly, scheduled payments but quarterly, annually or even further out so an IO mortgage fits the bill as the recipient co trips the pay down and links it to their income events.

And finally, lots of higher income earners are flat broke with no long term wealth and monthly outgoings that match their spending so have to do what other people like them do and defer the debt pay down.

[DonkeyApple]

LooneyTunes said:

ATM said:

Start ups moving to IPO using SPACS or whatever else have been booming recently because of all the dumb money chasing risk and growth. The smarter money takes advantage of this by getting in early pre IPO and then exiting as the retailers all rush in. However if this trend of IPO always making money stops then the smart money will not do the earlier bit and so this get rich scheme dies.

I agree with the point on SPACs (and there are some interesting articles out there linking them to overheated markets). There is also some crap going out via SPACs.

Looking at pre-IPO, that isn’t something the typical retail investor can access directly. Similarly when you look at Angels/VCs/PE very of these will always make money on each transaction… as with other investments it’s generally about the portfolio.

Also don’t make the mistake of thinking that a pre-IPO investment necessarily sees an IPO take place. The earlier you’re in the less visibility of the likelihood there is, in fact it could be argued that you’re “chasing risk and growth” at early stage… which is the criticism you’re levelling at the “dumb” money.

Oh, and don’t fall into the trap of thinking that pre-IPO is too similar to listed stock. Risk profile and effort involved can be quite different!

SPACs crack me up. Of all the rebranding of old tricks when they were thinking of a really cool new term under which to relaunch the grand spank of the shell wheeze, they very clearly didn't have an Englishman in the room.

Shells are one of the ultimate mechanisms for profiting from an abundance of completely dumb money and the fact they've reappeared just under twenty years from their last foray says a lot about the stage of the market today.

[Flooble]

In a high inflation environment interest-only mortgages seem like a good idea.

Not such a great move for the banks though I suppose.

SPACs always remind me of the way we make fun of South Sea Bubble investors for putting money in a company “For carrying-on an undertaking of great advantage but no-one to know what it is"

[Mr Whippy]

Let’s just say the inflation people are right... inflation!

Prices double.

All disposable goes to essentials, and paying debt.

So all discretionary goes to crap. So mass joblessness.

That’s deflationary.


There is no inflation from people with too much money to burn.
A few people are pushing demand at a time when supply is limited and spiking prices... but I still think it’s all transitory.

The real risk is a 1929 doldrums event.