Z B: Market bubble

Today the music stops

Today’s the day.

After months of preparing financial markets for this news, the Federal Reserve is widely expected to announce that it will finally begin shrinking its $4.5 trillion balance sheet.

I know, that probably sound reeeeally boring. A bunch of central bankers talking about their balance sheet.

But it’s phenomenally important. And I’ll explain why-

When the Global Financial Crisis started in 2008, the Federal Reserve (along with just[...] Click here to continue reading

Advice from the trader who made $1+ billion in 1929…

[Editor’s note: This letter was co-written with Tim Price, co-founder of the VT Price Value portfolio and editor of Price Value International.]

In the late spring of 1720, Sir Isaac Newton decided to sell his stocks.

Newton had been an investor in the South Sea Company, a famous enterprise which effectively commanded a trading monopoly with South America.

The investment had already made Newton a lot of money, he was up more[...] Click here to continue reading

Bubble? Tech companies “express themselves” through architecture

On August 2, 2004, Bank of America broke ground on its 2.2 million square foot, NYC headquarters – the Bank of America Tower.

The all-glass tower would rise 57 stories above midtown Manhattan, with a giant spire taking the height to 1,200 ft. It’s currently the fourth-tallest building in New York City, and it cost $1 billion.

The next year, investment bank Goldman Sachs broke ground on its $2.4 billion headquarters in downtown[...] Click here to continue reading

China lets some air out of the ICO bubble

Earlier today the government of China banned ICOs-- initial coin offerings.

We talked about ICOs last week-- it’s the latest application of cryptofinance technology for companies to raise capital without having to rely on traditional methods like banks, brokers, and venture capital firms.

Through an ICO, any company can raise money by selling ‘tokens’ to investors, who typically pay with cryptocurrency like Ether or Bitcoin.

And those tokens normally represent shares in[...] Click here to continue reading

The average American had a bigger savings account… in 1997!

Quite literally as a I write these words to you, the heads of the world’s largest central banks are packing their bags and heading home after a three-day symposium in Jackson Hole, Wyoming.

Central bankers aren’t exactly mega-celebrities, so their conferences don’t make international news outside of financial circles.

But if people understood what was at stake, they’d probably pay more attention.

Central bankers wield totalitarian authority over their nations’ interest rates.
[...] Click here to continue reading

“The universe is under no obligation to make sense to you.”

In 1999 my colleague Tim Price had front row seats to the first Internet bubble.

He tells a great story about being a private client portfolio manager at Merrill Lynch in London at the time, and describes how clients were clamoring to buy technology stocks.

‘Giddy’ doesn’t really do the mania justice. ‘Insane’ comes closer to describing the popular mood.

James Glassman and Kevin Hassett had just published a book, Dow 36,000[...] Click here to continue reading

Uber burned through almost as much money as NASA last quarter

Uber reported yesterday that its NET LOSS totaled more than $700 million last quarter, despite pulling in a whopping $3.4 billion in revenue.

(This means they spent at least $4.1 billion!)

That’s the latest in a string of massive, 9-figure quarterly losses for the company.

The only question I have is-- how much cocaine are these people buying?

Seriously, it’s REALLY HARD to spend so many billions of dollars.

You[...] Click here to continue reading

1999 called, they want their stock bubble back…

File this one away under “Completely Obvious...”

Last night the parent company of Snapchat reported a quarterly loss of more than TWO BILLION dollars.

Snapchat, of course, is the photo-focused social networking app that’s adored by tweens and adults who still live with their parents.

(Talk about a lucractive demographic.)

The company IPO’d just a few months ago with a market capitalization of $30+ billion despite slowing growth and a history[...] Click here to continue reading

Do you own any ETFs or mutual funds? Read this

A few days ago I spoke to a finance professor at Columbia University here in New York City who has been doing a deep dive on the financial management industry.

His results were pretty concerning.

One of the things that he said was that fund management fees have been dramatically declining over the past few years.

At face value this sounds like a good thing.

All mutual funds and ETFs charge[...] Click here to continue reading

This bubble finally burst. Which one’s next?

Like so many other high-flying Silicon Valley startups, Clinkle was supposed to ‘make the world a better place’.

Founded in 2011 by a guy barely out of his teens, the company picked up early buzz after proclaiming they would disrupt mobile payments. Or something.

Silicon Valley venture capital firms were apparently so impressed with the idea that they showered the company with an unprecedented level of cash.

(Given that investing in an[...] Click here to continue reading

Just a quick reminder: the Federal Reserve is almost insolvent.

September 10, 2008 was one of the last “normal” days in the world of banking and finance.

That afternoon, the US Federal Reserve published its routine, weekly balance sheet report, indicating that the central bank had total assets worth around $925 billion.

Just a few days later, Lehman Brothers filed for bankruptcy, kicking off the most severe economic crisis since the Great Depression.

And almost immediately the Fed launched a series of[...] Click here to continue reading

This new bubble is even bigger than the subprime fiasco

In 1988, a bank called Guardian Savings and Loan made financial history by issuing the first ever “subprime” mortgage bond.

The idea was revolutionary.

The bank essentially took all the mortgages they had loaned to borrowers with bad credit, and pooled everything together into a giant bond that they could then sell to other banks and investors.

The idea caught on, and pretty soon, everyone was doing it.

As Bethany McLean[...] Click here to continue reading