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

[ATM]

DonkeyApple said:

The same way as gold is probably a few %.

Didn't Buffet buy gold for the first time recently. Ok its a mining company but its all the same. The youtube people who know nothing and talk about what they think other people know is full of this. But yes its probably only a small percentage for him. Is he positioning for a correction?

[TobyTR]

ATM said:

DonkeyApple said:

The same way as gold is probably a few %.

Didn't Buffet buy gold for the first time recently. Ok its a mining company but its all the same. The youtube people who know nothing and talk about what they think other people know is full of this. But yes its probably only a small percentage for him. Is he positioning for a correction?

he bought a position in Barrick Gold in July, iirc.

For someone so against "shiny rocks that do nothing" Buffett likes to keep quiet about the time in 1997 when he bought 111 million ounces of physical Silver at an average price of US$4.25 per ounce for US$471.7 million and then sold it all in 2006 for US$1.44 billion

I wouldn't be surprised if he's got a warehouse full of physical Silver & Gold somewhere.

[Benbay001]

ATM said:

So no one is suggesting it will replace currencies. It is just a better way of storing value that can then be easily moved, stored and transferred if you want to do that outside of banks and fiat currencies.

If youre a Chinese billionaire looking to get your wealth out of China, how do you get your money from fiat money to BTC?

At somepoint there will be an RMB to BTC transaction and i can only imagine how easy it would be for the CCP to get the state owned banks to report that transaction.

[Condi]

DonkeyApple said:

BYC is what I would tend to refer to as a 1%er. It's illogical, has no intrinsic value, is mostly the talk of gamblers and dreamers but it's a large enough global product to be a 1% holding in a good quality, sensible portfolio. The same way as gold is probably a few %.

How do you value that 1%? Even if you accept you want some exposure to it (although god knows why) then how do you known when to buy in and cash out. Without an entry and exit you become a "hodl-er" who doesn't have a plan or any strategy to what you're doing.


Nope, sorry, if I want to gamble I prefer it to come with free drinks and pretty croupiers. Its a somewhat more visceral experience.


EDIT - It is also amusing that we are discussing bitcoin in a thread about a stock market bubble. The stock market is as flat as a pancake compared with the bubble which is bitcoin. And all those who say bitcoin and stocks are comparable have a fundamental misunderstanding of what each investment does. The stock market provides an underlying return to investors (dividends), bonds and gilts do the same, even cash has some return. Bitcoin does non of those and it's value is simply what someone else will pay for it. If/when the world decides that it has no use and the layman stops buying it, then its value will trend towards zero. IMO.

Edited by Condi on Friday 15th January 09:54

[Mr Whippy]

Condi said:

DonkeyApple said:

BYC is what I would tend to refer to as a 1%er. It's illogical, has no intrinsic value, is mostly the talk of gamblers and dreamers but it's a large enough global product to be a 1% holding in a good quality, sensible portfolio. The same way as gold is probably a few %.

How do you value that 1%? Even if you accept you want some exposure to it (although god knows why) then how do you known when to buy in and cash out. Without an entry and exit you become a "hodl-er" who doesn't have a plan or any strategy to what you're doing.


Nope, sorry, if I want to gamble I prefer it to come with free drinks and pretty croupiers. Its a somewhat more visceral experience.


EDIT - It is also amusing that we are discussing bitcoin in a thread about a stock market bubble. The stock market is as flat as a pancake compared with the bubble which is bitcoin. And all those who say bitcoin and stocks are comparable have a fundamental misunderstanding of what each investment does. The stock market provides an underlying return to investors (dividends), bonds and gilts do the same, even cash has some return. Bitcoin does non of those and it's value is simply what someone else will pay for it. If/when the world decides that it has no use and the layman stops buying it, then its value will trend towards zero. IMO.

Edited by Condi on Friday 15th January 09:54

So what you’re saying is bitcoin is more like Tesla?

The problem is “markets” are meant to be a mechanism for price discovery and thus a way for wealth to be allocated to those things with real value.
While bailouts have been indiscriminate, almost everything has done well and the junk is impossible to see.

Haven’t most big businesses just being borrowing money and buying back shares to generate their dividend inducing profit?

Ie, they’ve taken on debt at very low rates to create your dividend?

The intrinsic value of many businesses could be negative at this rate, if they can’t sell more bonds, or borrow at very low rates tomorrow.

At least bitcoin can’t go negative... though I do wonder how manipulated even btc may be now... like paper gold.

[DonkeyApple]

Condi said:

DonkeyApple said:

BYC is what I would tend to refer to as a 1%er. It's illogical, has no intrinsic value, is mostly the talk of gamblers and dreamers but it's a large enough global product to be a 1% holding in a good quality, sensible portfolio. The same way as gold is probably a few %.

How do you value that 1%? Even if you accept you want some exposure to it (although god knows why) then how do you known when to buy in and cash out. Without an entry and exit you become a "hodl-er" who doesn't have a plan or any strategy to what you're doing.


Nope, sorry, if I want to gamble I prefer it to come with free drinks and pretty croupiers. Its a somewhat more visceral experience.


EDIT - It is also amusing that we are discussing bitcoin in a thread about a stock market bubble. The stock market is as flat as a pancake compared with the bubble which is bitcoin. And all those who say bitcoin and stocks are comparable have a fundamental misunderstanding of what each investment does. The stock market provides an underlying return to investors (dividends), bonds and gilts do the same, even cash has some return. Bitcoin does non of those and it's value is simply what someone else will pay for it. If/when the world decides that it has no use and the layman stops buying it, then its value will trend towards zero. IMO.

Edited by Condi on Friday 15th January 09:54

I can't argue with that perspective but it's value is clearly linked to the to the consumer culture and the almost distopian outlook of the masses that opt for fractional ownership of lots of objects now over the accumulation of wealth in order to procure shelter and stability. If you think that that trend is likely to reverse any time soon then it is fair to hold the view that BTC is of no value but there is no particular reason to think that consumers will suddenly become savers and investors, as such, millions of people will continue to borrow to obtain temporary use of chattels while throwing money into speculative, anti saving, anti investing things such as BTC. Events such as the twaddle over vaccines in recent months tend to give credence to the view that many millions of people will continue to throw money into these things. Ands the odds surely favour an increase in such activity rather than a decrease?

[Loafer]

DonkeyApple said:

Condi said:

DonkeyApple said:

BYC is what I would tend to refer to as a 1%er. It's illogical, has no intrinsic value, is mostly the talk of gamblers and dreamers but it's a large enough global product to be a 1% holding in a good quality, sensible portfolio. The same way as gold is probably a few %.

How do you value that 1%? Even if you accept you want some exposure to it (although god knows why) then how do you known when to buy in and cash out. Without an entry and exit you become a "hodl-er" who doesn't have a plan or any strategy to what you're doing.


Nope, sorry, if I want to gamble I prefer it to come with free drinks and pretty croupiers. Its a somewhat more visceral experience.


EDIT - It is also amusing that we are discussing bitcoin in a thread about a stock market bubble. The stock market is as flat as a pancake compared with the bubble which is bitcoin. And all those who say bitcoin and stocks are comparable have a fundamental misunderstanding of what each investment does. The stock market provides an underlying return to investors (dividends), bonds and gilts do the same, even cash has some return. Bitcoin does non of those and it's value is simply what someone else will pay for it. If/when the world decides that it has no use and the layman stops buying it, then its value will trend towards zero. IMO.

Edited by Condi on Friday 15th January 09:54

I can't argue with that perspective but it's value is clearly linked to the to the consumer culture and the almost distopian outlook of the masses that opt for fractional ownership of lots of objects now over the accumulation of wealth in order to procure shelter and stability. If you think that that trend is likely to reverse any time soon then it is fair to hold the view that BTC is of no value but there is no particular reason to think that consumers will suddenly become savers and investors, as such, millions of people will continue to borrow to obtain temporary use of chattels while throwing money into speculative, anti saving, anti investing things such as BTC. Events such as the twaddle over vaccines in recent months tend to give credence to the view that many millions of people will continue to throw money into these things. Ands the odds surely favour an increase in such activity rather than a decrease?

Ah so your saying BTC is a call option on human stupidity and greed?

That's a trade I can go long on

[Zigster]

Condi said:

How do you value that 1%? Even if you accept you want some exposure to it (although god knows why) then how do you known when to buy in and cash out. Without an entry and exit you become a "hodl-er" who doesn't have a plan or any strategy to what you're doing.


Nope, sorry, if I want to gamble I prefer it to come with free drinks and pretty croupiers. Its a somewhat more visceral experience.


EDIT - It is also amusing that we are discussing bitcoin in a thread about a stock market bubble. The stock market is as flat as a pancake compared with the bubble which is bitcoin. And all those who say bitcoin and stocks are comparable have a fundamental misunderstanding of what each investment does. The stock market provides an underlying return to investors (dividends), bonds and gilts do the same, even cash has some return. Bitcoin does non of those and it's value is simply what someone else will pay for it. If/when the world decides that it has no use and the layman stops buying it, then its value will trend towards zero. IMO.

Edited by Condi on Friday 15th January 09:54

Bitcoin sounds to me quite a lot like the dot com bubble from 20 years ago. Bafflingly high valuations for companies which were clearly worth sod all.
Anyone with a brain knew it was going to crash, the only question was when.
(I think I still have my lastminute.com share certificate in a box in the attic. )

[DonkeyApple]

Loafer said:

Ah so your saying BTC is a call option on human stupidity and greed?

That's a trade I can go long on

Or more politely, an investment descision based on the belief that the disenfranchisement of the lowest end of society due to the lack of wage inflation and it's propensity to believe voodoo and tealeavea over reality.

For me the evidence was delivered back, last year, when the global printing presses turned back on and crypto's didn't react. There wasn't a flow of money in seeking to combat deflation. It showed that inflows aren't intelligent or linked to rational economic reasonings but are driven by other factors.

It's easier to correlate flows in to crypto with the flows in to retail gambling and easier to see the logic as to why the two have gone hand in hand. And events of last year such as anti vaccination movements, the attacking of 5g masks and most recently the events in Washington suggest that such momentum isn't going to decline.

It's fair to therefor argue that the biggest threats to the value of BTC would be the appearance of wage inflation and employment security at the bottom half of society and/or the reduction in property values to draw money away from it.

In some ways you could consider BTC to be a global disenfranchisement index like the gaming industry is the opposite of the carpet industry in that when a society feels affluent and has confidence in its economic future it invests in tangible activities such as investing in their home with carpet sales traditionally being a robust indicator of that but when society goes in the other direction there is a manifest rise in dreaming and desperate hope so you see that money flow into the bookies instead.

[Zigster]

fesuvious said:

That wants framing...

It's be like having your own DALAC investing reminder hangng on your wall to keep you on the level.

That’s why I hung on to it. I half-joked at the time that the certificate was probably worth more than the shares themselves.

[anonymous-user]

In a world of ever increasing transparency, ethics and MLR, doesn’t BTC fly in the face of that?

Haven’t HSBC and Lloyds declined to receive deposits form BTC wallets / transfers?

I’m sure it’s fine for people to people, but as a business or on a commercial scale, why would you open yourself up to the risk of receiving funds where the source cannot be verified?

If I was loaded then I would hold some, but only for the same reason that I wouldn’t hold all my wealth in GBP.

Too much speculation without application.

[egomeister]

Lord.Vader said:

In a world of ever increasing transparency, ethics and MLR, doesn’t BTC fly in the face of that?

Yes and no... every BTC transaction is a matter of public record, however linking those to a particular person is not so easy.

[PeteinSQ]

The thing I don't understand about bitcoin is how it can ever be a currency when it's value fluctuates so much? How can anything be reliably priced in bitcoin when the value can shoot up or down the very next moment?

If the price ever gained a level of relative stability as per the USD, Euro, Yen or GBP then I can totally see why it could be attractive. At the moment it just seems a bit like tulip bulbs or any other crazy speculative investment you care to mention.

[NRS]

DA - where do you see the "resolution" of this type of economics with MMT going? It seems all systems get to a certain point and then tend to fall apart as the smart money has found all the ways to exploit the loopholes to their maximum, and the poor/spenders run out of money or believe in the system.

I know the hope would be to slowly get rid of the risk we see now, but I would suspect given short term politics in the west that we won't do that and so will let the system run until it fails spectacularly. Is that in more extreme politics due to enough of the population being left behind due to inequality, or perhaps some freak event triggering a collapse in the system (I think most here see the flaws, but given the last 10 years don't see the reason to fight it since there seems to be no change)?

[Lim]

I’m reading a book on MMT at the moment. The gist seems to be that size of deficit is a more a matter of political will than of fiscal limits.

And there is much will right now, and covid spending is making most deficits seem like chump change.

One on the one hand, it seems to be good for the poor as debt is inflated away and they benefit from investment in the hidden recession, that might not have occurred otherwise.

My question is what disincentive is there for stimulus to flow straight into stocks? Defeats the point surely if the money is not spent?

[NRS]

Lim said:

I’m reading a book on MMT at the moment. The gist seems to be that size of deficit is a more a matter of political will than of fiscal limits.

And there is much will right now, and covid spending is making most deficits seem like chump change.

One on the one hand, it seems to be good for the poor as debt is inflated away and they benefit from investment in the hidden recession, that might not have occurred otherwise.

My question is what disincentive is there for stimulus to flow straight into stocks? Defeats the point surely if the money is not spent?

The issue is the poor see very little of the benefits currently, as the inflation we see is in assets. Being poor means you won't have any/will only have minor amounts of assets. So you get left behind, and stuff like houses continue up in price away from you (your wage inflation is basically non-existent so you're not getting more money to keep up with the house price). Eventually this means you destroy any hope their have of improving their life, and so you get extremes of politics as they try and change the system. Or direct violence etc.

Another problem is what happens when society as a whole gives up on money, as effectively it becomes an imaginary thing. Of course many know this is the case already, but not on a large scale. We use it as enough people believe it has a value. If you have people believing money doesn't have a value where do we go? If your salary means absolutely nothing as the day after the government could print so much money that it was immediately worthless?

In addition what point is there in investing money to create real growth? If you can hold an asset and it is the safest way to grow your money and keep your wealth there is no reason to put that into companies for them to invest in people and real growth. You see a lot of companies using share buybacks, as the "growth" in a company share price is viewed as a better option than investing it in the company to increase production etc. If real growth due to a lack of capital investment stops what happens then?

[DonkeyApple]

NRS said:

Lim said:

I’m reading a book on MMT at the moment. The gist seems to be that size of deficit is a more a matter of political will than of fiscal limits.

And there is much will right now, and covid spending is making most deficits seem like chump change.

One on the one hand, it seems to be good for the poor as debt is inflated away and they benefit from investment in the hidden recession, that might not have occurred otherwise.

My question is what disincentive is there for stimulus to flow straight into stocks? Defeats the point surely if the money is not spent?

The issue is the poor see very little of the benefits currently, as the inflation we see is in assets. Being poor means you won't have any/will only have minor amounts of assets. So you get left behind, and stuff like houses continue up in price away from you (your wage inflation is basically non-existent so you're not getting more money to keep up with the house price). Eventually this means you destroy any hope their have of improving their life, and so you get extremes of politics as they try and change the system. Or direct violence etc.

Another problem is what happens when society as a whole gives up on money, as effectively it becomes an imaginary thing. Of course many know this is the case already, but not on a large scale. We use it as enough people believe it has a value. If you have people believing money doesn't have a value where do we go? If your salary means absolutely nothing as the day after the government could print so much money that it was immediately worthless?

In addition what point is there in investing money to create real growth? If you can hold an asset and it is the safest way to grow your money and keep your wealth there is no reason to put that into companies for them to invest in people and real growth. You see a lot of companies using share buybacks, as the "growth" in a company share price is viewed as a better option than investing it in the company to increase production etc. If real growth due to a lack of capital investment stops what happens then?

This is my general view. We've had two emergency events in just over a decade that have pumped vast amounts of money into the system to combat the basic reality that not enough people have sufficient savings or wealth to survive without benefits. A society will always have an element of the population that need help but for twenty years we've been at an insane and dangerous point that even middle income earners and above need benefits. This is as a result of those people over spending as well as the absence of viable wage inflation. I would in fact even lay the blame of people over spending on the absence of wage inflation as consumer and property credit was specifically relaxed in order to synthesise wage inflation to avoid having to have real inflation.

The rise of the super wealthy wasn't the intention but the byproduct of easy credit and releasing millions to spend more etc.

The big question is how, in a global economy do you actually have wage inflation at the lower end when there are vastly less expensive pools of labour just a click away in other corners of the world. But that is the long term solution. We have to push wage inflation while simultaneously reducing consumer credit if we are ever to leave the trap we currently find ourselves in or more importantly stave off the inevitable civil unrest that it always ends in. The warning signs of the latter already being clearly upon us with the rise of extreme politics, the Brexit event which was a people's revolution against the status quo and the meteoric rise in gambling etc.

[anonymous-user]

DonkeyApple said:

The big question is how, in a global economy do you actually have wage inflation at the lower end when there are vastly less expensive pools of labour just a click away in other corners of the world.

The British solution is to "take back control", embrace some "sovereignty" and simultaneously have "new free trade deals". Clearly those concepts don't fit together.

Biggest "risk" to markets at the moment is IMO Covid. Not the disease itself but the vaccination program. Sure, the vaccine appears to work in individuals but will it work well enough on a global basis to actually get the disease under control and in a sensible time frame? Any serious wobble on that front and things could drop like a stone.

[DonkeyApple]

At some point the reality will dawn that the disease is here to stay and that regular vaccinations are just a means to bring it under enough control that people can return to work. There is no total cure.

Hopefully, what is also here to stay is the return to basic manners such as not coughing or sneezing in people's faces, washing hands and generally not being a peasant. All these activities were part of society because of disease but in recent decades people have discarded them because of the arrival of antibiotics and the weird belief that manners are what the people they don't like do to pretend to be superior humans.

The big economic failing in the UK started under Thatcher as a failing to replace lost industrial employment in the regions. Then under Blair the whole thing was turbo charged as those people were stuffed into easy credit to make them feel better without fixing the underlying issue and then making the whole UK completely London centric further depleting the regions of its best workers as ever more were forced to migrate to the South East.

The fundamental cure to the UK has nothing to do with leaving or remaining in the EU or liking or disliking people from outside your own 'village' but instead lies in redistributing employment from the South East to the regions. For the first time modern tech can easily permit this but it still needs massive and forceful pushing from central Government.

The South East needs depopulating while the regions need repopulating and the only way to do that is to push employment out of the South East.

The first thing that I would do would be to relocate the political
capital outside of the financial capital. Move Westminster out of London to the North. That is the only major mechanism that can be relocated easily. The workers in Westminster May despise the reactions that they ran away from but sending them all back is the single largest and clearest message that can be made. And keeping them 100 miles away from the people with yachts and nice holiday homes would also be hugely beneficial.

It would also help stop the insanity of regional devolution. Covid has highlighted the total incompetence of the devolved regions when it comes to wiping their own arses. These devolved positions only exist as a superficial, marketing sticking plaster to the issue of a nation too focussed around one city.

There are plenty of examples of first world nations where the political capital is in a different location to the financial capital and if we are to break the London centric nature of Great Britain then the seat of government needs to be moved. London doesn't need Westminster and the people inside Westminster can't act with clarity for the better of the nation while they remain so close to free champagne, discounted prostitutes and all the vices that they are addicted to.

Once parliament is moved then you will see other elements of London based industry move and that can be incentivised by tax breaks. And now is the perfect time to do this as London employers due to Covid have seen first hand the massive benefit of not dragging the best and brightest out of the regions but in leaving them there and not having to pay huge salaries and deal costs etc.

You can't specifically give the people wage inflation by increasing salaries as it will just increase the exporting of employment overseas but the way to increase wages is to move quality and white collar employment back out to the regions where those salaries will be spent locally and create local business opportunities beyond vape stores, council offices and debt collection or management services.

[anonymous-user]

DonkeyApple said:

The South East needs depopulating while the regions need repopulating and the only way to do that is to push employment out of the South East.

The first thing that I would do would be to relocate the political capital outside of the financial capital. Move Westminster out of London to the North.

Well, that's certainly a point of view but I disagree 100%.

DonkeyApple said:

It would also help stop the insanity of regional devolution. Covid has highlighted the total incompetence of the devolved regions when it comes to wiping their own arses.

In this case I agree 100%.

Post-Covid it will be interesting to see how things go. Having piled heavily into North America back in 2016 the question becomes where to invest next. Sadly I remain sceptical about the opportunities for UK in attempting flat-out competition with India, Far East and the Americas. There's just too much baggage and too much cost built into UK economy. Benefits culture, an ageing population and and a completely "free" NHS are millstones around the nation's neck. And all of this taking place against a background where "cash money" no longer has any value in terms of an investment return. It's going to be an interesting 2-5 years. It may or may not turn out to be an epic bubble but either way, hold tight for the ride!