This is a syndicated repost published with the permission of oftwominds-Charles Hugh Smith. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.
Is that a red flashing light on the control panel of “the man behind the curtain”?
Among the many “interesting” (a safe word to use in perilous times) signs and portents swirling around us, here are five financial tidbits “of interest.” What do they mean? The answer is of course nothing. There are many “interesting” things with no discernible meaning. Being “interesting” is enough.
1. Just like in 2000, proponents claim “this time it’s different.” Back then, the claim was that since the Internet would be growing for decades, dot-com stocks could go to the moon and beyond.
The claim the the Internet would continue growing was sound, but the prediction that this growth would drive stock valuations into a never-ending bubble was unsound.
Once again we hear reasonable-sounding claims being used to support predictions of a never-ending rise in stock valuations. Some observers find this “interesting.”
2. Similarity in 2000/2021 stock charts. Technical analyst Sven Henrich posted charts of Cisco Systems in early 2000 and Tesla in early 2021: Clear and Present Danger. The similarity is, well, “interesting.”
3. Similarity in 2000/2021 NASDAQ volume spikes. Technical analyst Tom McClellan posted a chart of NASDAQ volume in a ratio with New York Stock Exchange (NYSE) volume. Extreme Point for Nasdaq Volume. Notice the recent spike into dot-com era territory. Hmm, “interesting.”
4. Financial assets as a percentage of Gross Domestic Product (GDP) hit an all-time extreme. Note that in the “Glorious Thirty” postwar years (1946-1975) of broad-based prosperity, financial assets were around three times GDP. Now financial assets are over six time the GDP.
This ratio increased with every one of the three bubbles since the mid-1990s: the dot-com bubble in 1999-2000, the Global Financial Meltdown in 2008-09 and now the bubble of 2020-21. That financial assets are now six times the size of the “real economy” (GDP) is an “interesting” data point
5. Despite assurances that “this time it’s different,” all speculative bubbles pop because they are based in human emotions. We attempt to rationalize the bubble by invoking the real world, but bubbles are manifestations of human emotions and the feedback of being in a herd of social animals. I’m not sure if this even qualifies as “interesting” or not; perhaps it’s too “obvious” to be “interesting.”
Is that a red flashing light on the control panel of the man behind the curtain?Probably nothing, pay no attention….
If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
My new book is available!A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts (Kindle $7, print $17, audiobook now available $17.46)
Read excerpts of the book for free (PDF).
The Story Behind the Book and the Introduction.
Recent Podcasts:
https://youtu.be/9XRUyTGcBVM Jay Taylor: The Fourth Estate’s Role in Thrusting America into Fascism (27 minutes)
My recent books:
A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).
Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic($5 (Kindle), $10 (print), (audiobook): Read the first section for free (PDF).
The Adventures of the Consulting Philosopher: The Disappearance of Drake$1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)
Money and Work Unchained $6.95 (Kindle), $15 (print)Read the first section for free (PDF).
Become a $1/month patron of my work via patreon.com.
Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.
