Gyroscopic Investing

Grantham piece worth reading....GME is only another piece of evidence to support the thesis that we are witnessing another massive bubble forming. Who knows how much further this one can expand before it eventually pops...

https://www.gmo.com/americas/research- ... t-dance/

Bump! Any tea leaf readers care to comment on the feels they are getting from the market lately?

tomfoolery wrote: ↑Thu Jan 28, 2021 1:26 am let the workers unite

That sounds familiar

tomfoolery wrote: ↑Thu Jan 28, 2021 1:26 am and take our country to the next logical step

Can send you some, every school here has a lot of those collecting dust in basements.. Actually the sign on below says "Workers grab the weapons!"

Maybe.. exporting communist artifacts to US might be profitable business, indeed..

Ok, that was an interesting tangent. Lol

Perhaps it's my fault and I invited the confusion not recognizing that a piece by Grantham would inspire so much anti communist ire! I should have posted the article in the stock section. Any chance a moderator could slide it over there?

Okay. It scares me to say this but I do see stock going down now.

Social media is now not being allowed to buy GME.

If they are not allowed to buy the stock they want. Why buy any stock at all?

I think silver will be the winning asset this year.

doodle wrote: ↑Wed Jan 27, 2021 8:30 pm Bump! Any tea leaf readers care to comment on the feels they are getting from the market lately?

Following in the path of Jesus when asked about paying taxes to Ceasar I'll tell you when you tell us why you have a picture of Karl Marx for you avatar.

I always personally thought the Marx avatar was just doodle's way of getting under Tech's skin.

P.S. MUSCLE BARBIE FTW

ALSO:

pp4me wrote: ↑Thu Jan 28, 2021 3:48 pm

doodle wrote: ↑Wed Jan 27, 2021 8:30 pm Bump! Any tea leaf readers care to comment on the feels they are getting from the market lately?

Following in the path of Jesus when asked about paying taxes to Ceasar I'll tell you when you tell us why you have a picture of Karl Marx for you avatar.

Tom wanted me to change my name to resident marxist....this was the best I could do to fulfill his wish. I have a problem with always trying to please people.

That said, I do think Marx was about 200 years ahead of his time. I think capitalism will eventually be a stepping stone once AI gets fully online.

I'm a communist in the way that the plebes on WSB freely organizing amongst one another to take a predatory hedge fund down are all communists. I see no difference between what they did and Amazon workers organizing to push for higher wages

doodle wrote: ↑Thu Jan 28, 2021 4:36 pm

pp4me wrote: ↑Thu Jan 28, 2021 3:48 pm

doodle wrote: ↑Wed Jan 27, 2021 8:30 pm Bump! Any tea leaf readers care to comment on the feels they are getting from the market lately?

Following in the path of Jesus when asked about paying taxes to Ceasar I'll tell you when you tell us why you have a picture of Karl Marx for you avatar.

Tom wanted me to change my name to resident marxist....this was the best I could do to fulfill his wish. I have a problem with always trying to please people.

That said, I do think Marx was about 200 years ahead of his time. I think capitalism will eventually be a stepping stone once AI gets fully online.

I'm a communist in the way that the plebes on WSB freely organizing amongst one another to take a predatory hedge fund down are all communists. I see no difference between what they did and Amazon workers organizing to push for higher wages

I believe Marx's major error was in thinking that the workers of the world would unite in common cause and create a worldwide movement. History seems to have proven that out so far but I can't speak for 200 years from now. I think he was wrong because "workers" are motivated by self-interest just like "capitalists", a term he coined. He never held a real job in his life so what would he know?

Although he never ran a country or an empire, his take on philosophy/economics is still at the heart communism responsible for far for more deaths than the German National Socialists so I take anything you post in the same vein as though you had a photo of Hitler instead of Marx.

I thought this was a good article. He's making the case that people should be paying heed to the first rule, "Don't lose money." I have the same mindset as him. Which is probably strange, since I've never invested in a bear market (I started in 2010). He thinks you should invest in different stock sectors, I have a more diverse opinion, obviously, but I appreciate his thinking.

doodle wrote: ↑Wed Jan 27, 2021 6:12 am
Grantham piece worth reading....GME is only another piece of evidence to support the thesis that we are witnessing another massive bubble forming. Who knows how much further this one can expand before it eventually pops...

https://www.gmo.com/americas/research- ... t-dance/

Finally read it! I second your definitely worth reading....and I'll end with putting the concluding paragraphs from this long article here...

Vinny


Nothing in investing perfectly repeats. Certainly not investment bubbles. Each form of irrational exuberance is different; we are just looking for what you might call spiritual similarities. Even now, I know that this market can soar upwards for a few more weeks or even months – it feels like we could be anywhere between July 1999 and February 2000. Which is to say it is entitled to break any day, having checked all the boxes, but could keep roaring upwards for a few months longer. My best guess as to the longest this bubble might survive is the late spring or early summer, coinciding with the broad rollout of the COVID vaccine. At that moment, the most pressing issue facing the world economy will have been solved. Market participants will breathe a sigh of relief, look around, and immediately realize that the economy is still in poor shape, stimulus will shortly be cut back with the end of the COVID crisis, and valuations are absurd. “Buy the rumor, sell the news.” But remember that timing the bursting of bubbles has a long history of disappointment.

Even with hindsight, it is seldom easy to point to the pin that burst the bubble. The main reason for this lack of clarity is that the great bull markets did not break when they were presented with a major unexpected negative. Those events, like the portfolio insurance fiasco of 1987, tend to give sharp down legs and quick recoveries. They are in the larger scheme of things unique and technical and are not part of the ebb and flow of the great bubbles. The great bull markets typically turn down when the market conditions are very favorable, just subtly less favorable than they were yesterday. And that is why they are always missed.

Either way, the market is now checking off all the touchy-feely characteristics of a major bubble. The most impressive features are the intensity and enthusiasm of bulls, the breadth of coverage of stocks and the market, and, above all, the rising hostility toward bears. In 1929, to be a bear was to risk physical attack and guarantee character assassination. For us, 1999 was the only experience we have had of clients reacting as if we were deliberately and maliciously depriving them of gains. In comparison, 2008 was nothing. But in the last few months the hostile tone has been rapidly ratcheting up. The irony for bears though is that it’s exactly what we want to hear. It’s a classic precursor of the ultimate break; together with stocks rising, not for their fundamentals, but simply because they are rising.

Another more measurable feature of a late-stage bull, from the South Sea bubble to the Tech bubble of 1999, has been an acceleration3 of the final leg, which in recent cases has been over 60% in the last 21 months to the peak, a rate well over twice the normal rate of bull market ascents. This time, the U.S. indices have advanced from +69% for the S&P 500 to +100% for the Russell 2000 in just 9 months. Not bad! And there may still be more climbing to come. But it has already met this necessary test of a late-stage bubble.

It is a privilege as a market historian to experience a major stock bubble once again. Japan in 1989, the 2000 Tech bubble, the 2008 housing and mortgage crisis, and now the current bubble – these are the four most significant and gripping investment events of my life. Most of the time in more normal markets you show up for work and do your job. Ho hum. And then, once in a long while, the market spirals away from fair value and reality. Fortunes are made and lost in a hurry and investment advisors have a rare chance to really justify their existence. But, as usual, there is no free lunch. These opportunities to be useful come loaded with career risk.

So, here we are again. I expect once again for my bubble call to meet my modest definition of success: at some future date, whenever that may be, it will have paid for you to have ducked from midsummer of 2020. But few professional or individual investors will have been able to have ducked. The combination of timing uncertainty and rapidly accelerating regret on the part of clients means that the career and business risk of fighting the bubble is too great for large commercial enterprises. They can never put their full weight behind bearish advice even if the P/E goes to 65x as it did in Japan. The nearest any of these giant institutions have ever come to offering fully bearish advice in a bubble was UBS in 1999, whose position was nearly identical to ours at GMO. That is to say, somewhere between brave and foolhardy. Luckily for us though, they changed their tack and converted to a fully invested growth stock recommendation at UBS Brinson and its subsidiary, Phillips & Drew, in February 2000, just before the market peak. This took out the 800-pound gorilla that would otherwise have taken most of the rewards for stubborn contrariness. So, don't wait for the Goldmans and Morgan Stanleys to become bearish: it can never happen. For them it is a horribly non-commercial bet. Perhaps it is for anyone. Profitable and risk-reducing for the clients, yes, but commercially impractical for advisors. Their best policy is clear and simple: always be extremely bullish. It is good for business and intellectually undemanding. It is appealing to most investors who much prefer optimism to realistic appraisal, as witnessed so vividly with COVID. And when it all ends, you will as a persistent bull have overwhelming company. This is why you have always had bullish advice in a bubble and always will.

However, for any manager willing to take on that career risk – or more likely for the individual investor – requiring that you get the timing right is overreach. If the hurdle for calling a bubble is set too high, so that you must call the top precisely, you will never try. And that condemns you to ride over the cliff every cycle, along with the great majority of investors and managers.

What to Do?
As often happens at bubbly peaks like 1929, 2000, and the Nifty Fifty of 1972 (a second-tier bubble in the company of champions), today’s market features extreme disparities in value by asset class, sector, and company. Those at the very cheap end include traditional value stocks all over the world, relative to growth stocks. Value stocks have had their worst-ever relative decade ending December 2019, followed by the worst-ever year in 2020, with spreads between Growth and Value performance averaging between 20 and 30 percentage points for the single year! Similarly, Emerging Market equities are at 1 of their 3, more or less co-equal, relative lows against the U.S. of the last 50 years. Not surprisingly, we believe it is in the overlap of these two ideas, Value and Emerging, that your relative bets should go, along with the greatest avoidance of U.S. Growth stocks that your career and business risk will allow. Good luck!

Youtube video start playing automatically after something else I watched:

Why Grantham Says the Next Crash Will Rival 1929, 2000
https://www.youtube.com/watch?v=RYfmRTyl56w

Feels like some great wisdom.

whatchamacallit wrote: ↑Sat Feb 13, 2021 12:46 pm ...
Why Grantham Says the Next Crash Will Rival 1929, 2000
https://www.youtube.com/watch?v=RYfmRTyl56w

Feels like some great wisdom.

I just shared this with my dad. He hasn’t played the video yet, but he informed me that he met Mr Grantham decades ago. Incredible. Why is he just telling me now?

whatchamacallit wrote: ↑Sat Feb 13, 2021 12:46 pm Youtube video start playing automatically after something else I watched:

Why Grantham Says the Next Crash Will Rival 1929, 2000
https://www.youtube.com/watch?v=RYfmRTyl56w

Feels like some great wisdom.

I listened to the whole thing. And interestingly, it was followed up by an interview with a lady who had nearly the opposite view.

The big problem I have is I could have listened to this Grantham video in 2010, 2011, 2012, .... 2020, 2021 and I would have said, yeah, that makes a lot of sense.

Yet here we are in 2021. Seemingly closer to a bubble top, but I would have 100% called it wrong for the last 10+ years by getting out.

5% in SCV and 5% in emerging markets in my stock portion anyway.

This is one of those times, if cash was paying 3/4/5%, I would consider moving some into cash. But there's nowhere left to go!

https://www.youtube.com/watch?v=KoviUV7jJn0 Have to watch again.

whatchamacallit wrote: ↑Sat Feb 13, 2021 12:46 pm Youtube video start playing automatically after something else I watched:

Why Grantham Says the Next Crash Will Rival 1929, 2000
https://www.youtube.com/watch?v=RYfmRTyl56w

Feels like some great wisdom.

I should point out that Grantham may not have repeated Milton Friedman’s quote in its entirety. I’ll have to go back and check, but i think he may have left out

so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud

Cortopassi wrote: ↑Sun Feb 14, 2021 1:46 pm The big problem I have is I could have listened to this Grantham video in 2010, 2011, 2012, .... 2020, 2021 and I would have said, yeah, that makes a lot of sense.

But has Grantham been sounding the alarm in those other years?

dualstow wrote: ↑Sun Feb 14, 2021 2:06 pm

Cortopassi wrote: ↑Sun Feb 14, 2021 1:46 pm The big problem I have is I could have listened to this Grantham video in 2010, 2011, 2012, .... 2020, 2021 and I would have said, yeah, that makes a lot of sense.

But has Grantham been sounding the alarm in those other years?

That would be a good answer to know. I have not checked.

Episode #286: Jeremy Grantham, GMO, “What Day Is The Highest Level Of Optimism? It’s The Day The Market Hits The Peak”

https://mebfaber.com/2021/02/08/episode ... s-the-peak

https://youtu.be/oE0dtr0iuKg

Cortopassi wrote: ↑Sun Feb 14, 2021 2:17 pm

dualstow wrote: ↑Sun Feb 14, 2021 2:06 pm

Cortopassi wrote: ↑Sun Feb 14, 2021 1:46 pm The big problem I have is I could have listened to this Grantham video in 2010, 2011, 2012, .... 2020, 2021 and I would have said, yeah, that makes a lot of sense.

But has Grantham been sounding the alarm in those other years?

That would be a good answer to know. I have not checked.

This most recent thought that the crash is weeks or months away was first put out in October,4 months ago.

https://www.advisorperspectives.com/art ... -or-months

Seems to have had a reasonably bleak view 3 years ago as well, and was pushing emerging markets at that time too.

https://www.institutionalinvestor.com/a ... y-grantham

Cortopassi wrote: ↑Sun Feb 14, 2021 2:27 pm ...
This most recent thought that the crash is weeks or months away was first put out in October,4 months ago.

https://www.advisorperspectives.com/art ... -or-months

Seems to have had a reasonably bleak view 3 years ago as well, and was pushing emerging markets at that time too.

https://www.institutionalinvestor.com/a ... y-grantham

Interesting. And who was the woman with the opposite viewpoint? i’d like to watch her interview, too.
Is it Cathie Wood? I see she has a Bloomberg front row interview and is something of a rising star. A family member of mine loves her ARK funds. She’s in the WSJ and on TV lately.

Harry Dent

https://youtu.be/74fYx1LPaVk

Pretty sure it was that Wood lady.

Harry Dent. Hasn't he called for crashes and low gold for like 30 years?

Since I have started the pp seven years ago, I stopped listening to all these prognosticators.