Stock market is a "fully-fledged epic bubble" and will burst
Discussion
You make China sound like North Korea. However there is another side to China. The largest consumerism in the world. Designer labels sell more there than any other country with ever growing affluent middle class.
All this fueled by being the largest exporter of goods in the world. Meanwhile they are acquiring foreign land for its minerals and natural resources to secure its power and dominance for the future generation.
All this fueled by being the largest exporter of goods in the world. Meanwhile they are acquiring foreign land for its minerals and natural resources to secure its power and dominance for the future generation.
leef44 said:
You make China sound like North Korea. However there is another side to China. The largest consumerism in the world. Designer labels sell more there than any other country with ever growing affluent middle class.
All this fueled by being the largest exporter of goods in the world. Meanwhile they are acquiring foreign land for its minerals and natural resources to secure its power and dominance for the future generation.
Yeah for his all his problems Trump knew this but the people didnt want to hear it and believed in a we can all get along future world ala star trek not command and conquer generals... All this fueled by being the largest exporter of goods in the world. Meanwhile they are acquiring foreign land for its minerals and natural resources to secure its power and dominance for the future generation.
NowWatchThisDrive said:
I don't tend to follow China too closely as it's a bit too macro and outside the circle of competence for me, but speaking to some who do their concern seems to be that it's simply the first of many, with several other similarly troublesome developers in the area overly reliant on ST debt. Some of the anecdotes around the scale and pace of asset growth and residential markets in places like Shanghai certainly make for pretty astounding reading.
I find it will be one of those things that turns into an avalanche. We only know about evergrande which was never really a secret over the last couple of years but its unwinding now and usually when there is one bad player in a space there are many that have followed. the effects of this will ripple... Chamon_Lee said:
NowWatchThisDrive said:
I don't tend to follow China too closely as it's a bit too macro and outside the circle of competence for me, but speaking to some who do their concern seems to be that it's simply the first of many, with several other similarly troublesome developers in the area overly reliant on ST debt. Some of the anecdotes around the scale and pace of asset growth and residential markets in places like Shanghai certainly make for pretty astounding reading.
I find it will be one of those things that turns into an avalanche. We only know about evergrande which was never really a secret over the last couple of years but its unwinding now and usually when there is one bad player in a space there are many that have followed. the effects of this will ripple... Gullwings said:
Chinese authorities warning of the imminent failure of evergrande, it doesn't look like they'll be getting much of a lifeline
Thursdays interest payment was missed...
I think they have 30 days until it's in actual default (not sure of the correct wording, but that's what I think I heard mentioned). So might just be playing it to the wire?Thursdays interest payment was missed...
I have always felt the Chinese are far ahead of us in their planning - they are looking at 2030, we're still reacting to February. Could this be a neat way for them to implode Western economies that are already swamped in debt and flattened by the reaction to Covid? The counterpoint was always "ah but they hold huge amounts of US debt". Do they care? Or is that just numbers on a screen to them?
If Western shopaholics slow down their debt fuelled binging on outsourced Chinese tat then the Chinese economy implodes and tens of millions of rural immigrants to the urban labour camps will only be returning to their parent's fields to borrow pitch forks. The whole Chinese economy is built upon the foundation of Western shoppers buying crap they don't need with money they don't have. The last thing they want is for an internal property slump to trigger a Western property slump as it is the value of Western property that has created the tat mania the whole of modern Chinese society is built upon. For one Chinaman to buy a Chinese EV or Chinese apartment box they need 1.000,000 Westerners to each buy a barbie doll or battery powered arse wiper. 
DonkeyApple said:
I like that addition. Would you mind if I formally added it to my standard consumer quote?
As long as I can still use the phrase for any online shop I may or may not create in the future 
In the interests of full disclosure - I heard the full phrase on YouTube, from an American who sold his business and retired to Thailand..
Unknown_User said:
DonkeyApple said:
Unknown_User said:
Non essential tat? I assume you're posting from a computer/tablet or smart phone? Any idea where that device is made?
And all that 'tat' is gobbling up raw materials that is causing price inflation and material shortages in the UK.
I'm posting from a disposable device which was assembled in China for a few quid while all the major profits were banked via offshore name plates controlled by UK chipmakers and US designers and the domestic retailer. And all that 'tat' is gobbling up raw materials that is causing price inflation and material shortages in the UK.
It's not so much the manufacturing but where the profits are banked, which is in the West. If you take something like a £1000 iPhone very little of that £1000 is ever seen by the location that screws them together followed by the locations that manufacture the parts. The vast bulk is retained where the IPs are held, the parent located and where they are sold, along with where all the taxes are paid.
I have predicted nine of the last three downturns
Seriously - if the collective wisdom of investment companies, insurance funds and hedge funds armed with computer models (too large to run on my home pc equates) gives a yield the same as the FTSE - which of course it will, because they are the movers and shakers, I might as well follow them - so I drip feed in each month automatically the same sum each month regardless of what the market is doing - so I am tracking the market - following the wisdom of others - not a new idea of course but seems the most sensible to me
The weighting I place on stock market investments compared to other asset class is however based on my core belief that in the long term we are going to see artificial intelligence reduce a large amount of employment and therefore the consumerism which drives are economy will recede fuelling, regrettably, more job losses - with a growth in minimalism and hopefully (trying to be optimistic) an awakening of making/growing/repairing/preserving "stuff"
Seriously - if the collective wisdom of investment companies, insurance funds and hedge funds armed with computer models (too large to run on my home pc equates) gives a yield the same as the FTSE - which of course it will, because they are the movers and shakers, I might as well follow them - so I drip feed in each month automatically the same sum each month regardless of what the market is doing - so I am tracking the market - following the wisdom of others - not a new idea of course but seems the most sensible to me
The weighting I place on stock market investments compared to other asset class is however based on my core belief that in the long term we are going to see artificial intelligence reduce a large amount of employment and therefore the consumerism which drives are economy will recede fuelling, regrettably, more job losses - with a growth in minimalism and hopefully (trying to be optimistic) an awakening of making/growing/repairing/preserving "stuff"
Numpty with honours said:
Seriously - if the collective wisdom of investment companies, insurance funds and hedge funds armed with computer models (too large to run on my home pc equates) gives a yield the same as the FTSE - which of course it will, because they are the movers and shakers, I might as well follow them - so I drip feed in each month automatically the same sum each month regardless of what the market is doing - so I am tracking the market - following the wisdom of others - not a new idea of course but seems the most sensible to me
But that's the point.What wisdom?
At the end of a bubble before it bursts you are not following the clever money with their fancy tools. You are following the dumb money. Retail investors who start to believe everything goes up all the time. The smart money starts to exit and dumb money piles in. They are then left holding the bag.
The big investment firms like Vanguard can't start shorting because they only buy. They don't have a short fund. So every month they have to spend the money they get via investors like you continuing to invest in their whatever etf.
The smart hedge funds with their fancy computer models you mentioned may already have exited longs and be waiting to short or may be building their shorts now.
The market still believes everything goes up given a long enough time frame. Well maybe that's true and maybe it's not. It has been true up to now. But if the last 12 years have pushed valuations to ridiculous highs then yes we will have exceeded all previous highs. If the easy money stops and does not return for a reasonable length of time then we may never exceed this top during our life times. The money you drip feed in now may be net down for the rest of your life.
ATM said:
Numpty with honours said:
Seriously - if the collective wisdom of investment companies, insurance funds and hedge funds armed with computer models (too large to run on my home pc equates) gives a yield the same as the FTSE - which of course it will, because they are the movers and shakers, I might as well follow them - so I drip feed in each month automatically the same sum each month regardless of what the market is doing - so I am tracking the market - following the wisdom of others - not a new idea of course but seems the most sensible to me
But that's the point.What wisdom?
At the end of a bubble before it bursts you are not following the clever money with their fancy tools. You are following the dumb money. Retail investors who start to believe everything goes up all the time. The smart money starts to exit and dumb money piles in. They are then left holding the bag.
The big investment firms like Vanguard can't start shorting because they only buy. They don't have a short fund. So every month they have to spend the money they get via investors like you continuing to invest in their whatever etf.
The smart hedge funds with their fancy computer models you mentioned may already have exited longs and be waiting to short or may be building their shorts now.
The market still believes everything goes up given a long enough time frame. Well maybe that's true and maybe it's not. It has been true up to now. But if the last 12 years have pushed valuations to ridiculous highs then yes we will have exceeded all previous highs. If the easy money stops and does not return for a reasonable length of time then we may never exceed this top during our life times. The money you drip feed in now may be net down for the rest of your life.
However, I'm not a great subscriber to the belief that fund managers can easily find alpha. Most fail and this has been masked for some time by the relentless asset inflation. At the same time indices are self cleaning, they get rid of the weak, bring in the strong as well as naturally rebasing sectorially and the trackers built on them are ultra low cost.
In addition, while funds and trackers generally can't short, we can and my preferred means of targeting alpha is to hold a blend of trackers and in a clear downturn to simply short them and in a clear bull phase to use leverage to go over weight.
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