Stock market is a "fully-fledged epic bubble" and will burst
Discussion
Mr Whippy said:
The USA FRB isn’t buying MBS any more.
Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
Not sure if I’m maturing as an investor or getting more stupid, but whenever I read these I just think “priced in.” I feel fairly relaxed in 100% equities. Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
ooid said:
DonkeyApple said:
our property market is considerably less leveraged. Only 30% of U.K. properties have a mortgage assigned to them and more than half will be in the final years of that mortgage so irrelevant in any meaningful sense. We probably have fewer than 5m mortgages open in the U.K. where their cost would have a material impact on the holder and of those it's probably fewer than 1m that would be considered 'at risk'.
.
In a way, we should also thank crapto bros. What happened in the last decade with nearly 0 interest rates, a huge tumour has been created (As Taleb put it nicely .
) which is crypto. Thanks to them, another housing bubble avoided as they kept pumping their money on crypto platforms, instead of property.As someone highly well-known in the industry told me once: When your junior interns buy their BTL flats by paying the deposit with their credit card, and paying their porsche PCP with their overdraft you can definitely be certain that housing crash is coming.
Not really dared ask about him recently.
Digga said:
One of the lads I mountain bike with knows a chap from his village who sold his family home a year or two back, to rent a house and invest ALL of it in crapto.
Not really dared ask about him recently.
Yikes.Not really dared ask about him recently.
I've a mate who is approaching 50, quit his main job near enough a decade ago but been doing largely unpaid work in a family business (so no rent or bills, but very minimal income, if any) and mainly living off savings, but is starting to panic about no pension. Met him a few weeks ago for the first time since before lockdown - telling me all about crypto, how its the future of money, hugely enthusiastic, even though it had lost him 3k so far...
bmwmike said:
Digga said:
One of the lads I mountain bike with knows a chap from his village who sold his family home a year or two back, to rent a house and invest ALL of it in crapto.
Not really dared ask about him recently.
Yikes.Not really dared ask about him recently.
I've a mate who is approaching 50, quit his main job near enough a decade ago but been doing largely unpaid work in a family business (so no rent or bills, but very minimal income, if any) and mainly living off savings, but is starting to panic about no pension. Met him a few weeks ago for the first time since before lockdown - telling me all about crypto, how its the future of money, hugely enthusiastic, even though it had lost him 3k so far...
I really don't want to ask about any of them.
bmwmike said:
Digga said:
One of the lads I mountain bike with knows a chap from his village who sold his family home a year or two back, to rent a house and invest ALL of it in crapto.
Not really dared ask about him recently.
Yikes.Not really dared ask about him recently.
I've a mate who is approaching 50, quit his main job near enough a decade ago but been doing largely unpaid work in a family business (so no rent or bills, but very minimal income, if any) and mainly living off savings, but is starting to panic about no pension. Met him a few weeks ago for the first time since before lockdown - telling me all about crypto, how its the future of money, hugely enthusiastic, even though it had lost him 3k so far...
It ever was thus and this type of person won't ever listen, won't tollerate any questioning, will think they're smarter than other fellow investors and certainly smarter than non participants.
But at least they have. British passport and will have some form of roof and meal supplied by everyone else when the inevitable occurs. I think what's different about crypto is the global reach where these things are usually just Western folk sucked in and self rinsed but this one is running across the globe.
DonkeyApple said:
This is a pretty good article: https://towardsdatascience.com/the-xiv-meltdown-1b...
In incredibly simple terms and the way that I look at VIX is that it's not an actual market. There's no spot because there is no actual product, no tangible or physical object linked to the instrument. It's effectively a futures contract that is the future of nothing. When the contract expires you aren't going to be taking physical delivery of a VIX as there is no such thing. DHL won't be knocking on your door with 100 barrels of VIX that you need to store in the living room.
What that means is that if you issue a future on something that doesn't actually exist you can't hedge your risk in any underlying market. As an issuer of the futures contract I can't sit hedged with a 100 barrels of VIX or a deal with someone to deliver me 100 barrels of VIX. Instead I have to try and hedge with some other physical stuff such as futures written against real things like equities, things that actually exist. But that's enormously risky as there's no specific and certainly no guaranteed reason that the price of those real assets will track or respond as I need them to in order to mitigate my risk. And what I do know is that while such hedging might generally work in a benign market it could all fall apart spectacularly if things kick off.
In some ways you're attempting to hedge the value of a concept like 'god' with church pews. In benign conditions you can generally be right in an assumption that the more people there are who believe in God the more church pews are going to be needed. It's a nice hedge of an intangible with a tangible. However, the problem is when s
t falls apart. When it gets really bad you will have an absolutely massive increase in the number of people who believe in God but no demand at all for church pews because all the believers are driving around in pickups murdering non believers.
Brillant as ever...my colleague kept wittering on about "contango", which I remember as a weak squash sold in the 1980s.In incredibly simple terms and the way that I look at VIX is that it's not an actual market. There's no spot because there is no actual product, no tangible or physical object linked to the instrument. It's effectively a futures contract that is the future of nothing. When the contract expires you aren't going to be taking physical delivery of a VIX as there is no such thing. DHL won't be knocking on your door with 100 barrels of VIX that you need to store in the living room.
What that means is that if you issue a future on something that doesn't actually exist you can't hedge your risk in any underlying market. As an issuer of the futures contract I can't sit hedged with a 100 barrels of VIX or a deal with someone to deliver me 100 barrels of VIX. Instead I have to try and hedge with some other physical stuff such as futures written against real things like equities, things that actually exist. But that's enormously risky as there's no specific and certainly no guaranteed reason that the price of those real assets will track or respond as I need them to in order to mitigate my risk. And what I do know is that while such hedging might generally work in a benign market it could all fall apart spectacularly if things kick off.
In some ways you're attempting to hedge the value of a concept like 'god' with church pews. In benign conditions you can generally be right in an assumption that the more people there are who believe in God the more church pews are going to be needed. It's a nice hedge of an intangible with a tangible. However, the problem is when s
t falls apart. When it gets really bad you will have an absolutely massive increase in the number of people who believe in God but no demand at all for church pews because all the believers are driving around in pickups murdering non believers. More seriously, presumably, because of the risk to your counterparty, you can't buy any meaningfully long exposure to VIX/XIV, hence it is useless as an investment?
dmahu said:
Mr Whippy said:
The USA FRB isn’t buying MBS any more.
Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
Not sure if I’m maturing as an investor or getting more stupid, but whenever I read these I just think “priced in.” I feel fairly relaxed in 100% equities. Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
Serious money will only exit equities when there is somewhere better for it to go IMO
lizardbrain said:
Does anyone have a link to august RICs residential survey or is it embargoed?
For some reason there is no house prices thread in finance
Main house price thread here: https://www.pistonheads.com/gassing/topic.asp?h=0&...For some reason there is no house prices thread in finance
BorkBorkBork said:
The £ is getting hammered. The BoE postponing their meeting was a huge mistake.
It’s to help them justify the 75 or 100bps rise they’ll be doing, the latter of which the USA are likely to do in 5 days time also.The BofE have perpetually “worried” about causing a recession but the reality is a recession is a necessary part of the cycle end.
They surely know this, they’re just not wanting to be seen as the bad/evil bankers again.
They’re waiting for outside forces to “force their hand”, rather than act pre-emptively and cause a recession.
Their end goal is always the same, it’s about having socially acceptable reasons for doing what they do, despite them setting the chain of events in motion in the first place.
dmahu said:
Mr Whippy said:
The USA FRB isn’t buying MBS any more.
Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
Not sure if I’m maturing as an investor or getting more stupid, but whenever I read these I just think “priced in.” I feel fairly relaxed in 100% equities.Their QT will be a big inverse wealth effect on USA housing.
Their for sale housing stock is also sky rocketing.
Interest rates set to rise further.
Their housing market is going to go pop at this rate, and that will surely drag their markets down… alongside more interest rate rises and QT generally.
It’s definitely going down lower.
As I noted earlier, you have to remember a whole load of participants are buying indiscriminately, and as the price of particular equities goes up, you’ll end up buying more of it (!) in these global funds based on market caps.
Plus, the entire market isn’t rational.
And the price people, in aggregate, are willing to pay is based on sentiment as much as technicals, and sentiment is fluid.
loafer123 said:
gotoPzero said:
VIX has gone from 22 ish to 27 in the space of a week.
30 ish usually starts to see a sell off. Panic usually starts around 40. If we were to get into that sort of range it wont be good.
Someone once tried to explain to me why I couldn’t just buy XIV as an investment when VIX was high, and make lots of money when it inevitably calmed down again, but I couldn’t understand half of what he said.30 ish usually starts to see a sell off. Panic usually starts around 40. If we were to get into that sort of range it wont be good.
Any ideas?
loafer123 said:
markiii said:
what the hell is VIX?
It’s a traded measure of fear and volatility…VIX is high, everyone is panicking the world is ending….if it’s low, everyone is chilled.The interesting thing is, just like real life panic, it always subsides back to normal eventually.
So I think it’s measuring the volatility on prices of options on that exchange?
I assume that exchange has a lot of options to trade and so it’s meaningful… or maybe the particular index is a measure of stuff across many exchanges and types of investments?
Mr Whippy said:
Surely every equity bear market for the last 100 years was “priced in” and thus is just a figment of our imagination?
As I noted earlier, you have to remember a whole load of participants are buying indiscriminately, and as the price of particular equities goes up, you’ll end up buying more of it (!) in these global funds based on market caps.
Plus, the entire market isn’t rational.
And the price people, in aggregate, are willing to pay is based on sentiment as much as technicals, and sentiment is fluid.
S&P500 is already down by 20% for the year as all of this bad news has come to fruition. I think it’s the worst YTD since the 1960s, a bloodbath in some sectors. As I noted earlier, you have to remember a whole load of participants are buying indiscriminately, and as the price of particular equities goes up, you’ll end up buying more of it (!) in these global funds based on market caps.
Plus, the entire market isn’t rational.
And the price people, in aggregate, are willing to pay is based on sentiment as much as technicals, and sentiment is fluid.
There is no trader or investor on the planet who doesn’t expect to see more rate rises, quantitative tightening and a recession. Markets are forward looking and have had crystal clear forward guidance.
If there is another leg down it will be due to new information such as this weeks missed CPI reading, not because recessions finally show up, rates rise and the housing market dips.
Edited by dmahu on Friday 16th September 20:07
Mr Whippy said:
loafer123 said:
markiii said:
what the hell is VIX?
It’s a traded measure of fear and volatility…VIX is high, everyone is panicking the world is ending….if it’s low, everyone is chilled.The interesting thing is, just like real life panic, it always subsides back to normal eventually.
So I think it’s measuring the volatility on prices of options on that exchange?
I assume that exchange has a lot of options to trade and so it’s meaningful… or maybe the particular index is a measure of stuff across many exchanges and types of investments?
When pricing & trading options, you consider the "greeks" explanation here; https://www.investopedia.com/trading/getting-to-kn...
The one thing you have to assume in pricing an option is the "impled" volatility. Movement in this obviously affects the underlying price of the option, hence the importance of volatility & Vix index. As vol is implied, this can be seen as a fear index?
Now you are intrigued by financial options(?) Today is special. it ls triple witching day! https://www.investopedia.com/terms/t/triplewitchin...
This can lead to some interesting prices on the underlying future as indices and assets close above/below an options strike price.
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