Wednesday, January 17, 2018

Bitcoin bubble has burst or will burst after the next big move up

Tuesday, January 2, 2018

2018 to see market leadership changes and downside volatility

"Asset markets enjoyed a superb 2017. It is doubtful that in 2018 all asset markets will appreciate in concert as they did in 2017." 

"Rather, I expect that some diverging trends among asset prices will emerge and that the expected change in leadership will bring about some painful downside volatility."

Related Article
Market Forecast for 2017 

via gloomboomdoom

Monday, January 1, 2018

China's success does Not come from stealing foreign trade secrets

Excerpt from Gloomboomdoom

Under the title E Pur Si Muove, Sam Altman who is a successful investor in new technologies wrote:

“Earlier this year, I noticed something in China that really surprised me. I realized I felt more comfortable discussing controversial ideas in Beijing than in San Francisco. I didn’t feel completely comfortable - this was China, after all - just more comfortable than at home.  
That showed me just how bad things have become, and how much things have changed since I first got started here in 2005. 
It seems easier to accidentally speak heresies in San Francisco every year. Debating a controversial idea, even if you 95% agree with the consensus side seems ill-advised. This will be very bad for startups in the Bay Area.” 

Altman further observed that, 
“Restricting speech leads to restricting ideas and therefore restricted innovation - the most successful societies have generally been the most open ones. Usually mainstream ideas are right and heterodox ideas are wrong, but the true and unpopular ideas are what drive the world forward. Also, smart people tend to have an allergic reaction to the restriction of ideas, and I’m now seeing many of the smartest people I know move elsewhere."

I am quoting Altman because there are so many people that believe China's economic success is due to its violations of property rights and the blatant theft of Western trade secrets. The fact is, however, that China as well as other countries have developed their own home bred technologies and knowledge based industries, which was a consequences of the multinationals' process of outsourcing.

Tuesday, December 26, 2017

Monday, December 4, 2017

Hints of a Cryptocurrency bubble

Excerpt below from Marc Faber's December 2017 Market Commentary


My friend Laeeth Isharc always sends me fascinating articles on just about any subject I can think of. The other day he sent me a piece which appeared in the New York Times by OP-ED writer Adam Grant entitled, "Kids, Would You Please Start Fighting?" 

Grant believes that if kids never get exposed to disagreement, we’ll end up limiting their creativity. 

He adds that, "We’ve known groupthink is a problem for a long time: We’ve watched ill-fated wars unfold after dissenting voices were silenced.….Teaching kids to argue is more important than ever. Now we live in a time when voices that might offend are silenced on college campuses, when politics has become an untouchable topic in many circles, even more fraught than religion or race. We should know better: Our legal system is based on the idea that arguments are necessary for justice. For our society to remain free and open, kids need to learn the value of open disagreement. 

If no one ever argues, you’re not likely to give up on old ways of doing things, let alone try new ones. Disagreement is the antidote to groupthink. We’re at our most imaginative when we’re out of sync. There’s no better time than childhood to learn how to dish it out - and to take it."

I fully agree with the views of Adam Grant. In my dealings with financial institutions I observed that fund management companies performed better if they had eclectic employees with completely different views about economic and financial trends than fund management companies whose senior staff members had homogeneous views and identical investment styles.

There are currently some interesting developments in financial markets. Momentum stocks such as Facebook, Amazon, Alibaba, Google, Microsoft, etc. seem to be under liquidation as investors shift their funds to other momentum markets. On both November 28 and November 29, when the Dow soared by 255 and 103 points respectively, most tech stocks were down.

It is entirely possible that the stock market continues to move up, but that the momentum stocks of 2017 fall by the wayside and underperform the overall stock market. It is not unusual that once a momentum sector goes out of fashion, the speculation moves to a completely different asset class.

In this context 2017 is a very special year. Not only has the speculation shifted to another asset class but to an entirely new asset class: cryptocurrencies.

With the advent of cryptocurrencies an important missing link in the final phase of the great asset bubble of 1981 to 2018 has been fulfilled: Heavy public participation towards the end of a major asset bubble.