Unusual Economics

The original bull trap assessment is well and truly dead I believe. If a down leg as part of a great depression type scenario were to have happened, it should have occurred by July and no later than the middle August. Coming to the view that COVID-19 was a mere interruption to the previously assessed larger trend.

The financial markets from many accounts appear to mostly now be sentiment (emotionally) driven and would not be at all surprised to see Asset prices continue to drive higher as a result of the FOMO affect (before possibly abruptly pulling back), helped along by Federal Reserve support and other interventionist (as opposed to classic free market) policies.

The ‘Efficient Market’ disciples can argue blue in the face that the markets are forward looking and the market is factoring in that things will drive back to normal before we know it, but this argument simply isn’t stacking up for me… at all.

I see a forming Technology bubble, driven by the likes of TSLA whose prices are being driven far beyond what facts, fundamentals and underlying data could ever justify.

While this certainly seems like a classic bubble with the usual tell tale signs including Taxi drivers talking about their gains in Property + stocks, and phases such as ‘Permanently high plateau’ + ‘This is a new paradigm!’ being banded about (i.e this time being “Modern Monetary Theory”), these bubble signs and anecdotes have been going on for an extraordinary long time, considerably longer than what would have normally occurred in a text book bubble. In fact, I’d go as far as to say that I feel the last secular bull run from 2009 to today is highly unusual.

Nothing can be said for certain as all I can see is that much of the information coming out to date is simply too poor to base any meaningful longer term decision making off of (have long held the view that Economics as a discipline is in disrepute), and that the markets in my view have most certainly been interfered with.

Current personal investment focus is towards NZ Farm Land where prices on average have not shifted a huge amount over the last decade (See Farm land price Graph at interest.co.nz and REINZ Rural + Lifestyle property data). How one might be able to partake in this may be through funds such as the Booster Private Land and Property Fund, however, the types of properties they appear to cover are rather limited. In regards to other investment related thoughts…

  • If you need a house to live in and have the means to finance it, then by all means, still consider buying a place. As an investor, I have no inclination to chase the current (New Zealand) house price trend upwards. The prices of which from all angles that I’ve analysed are ridiculous and will probably continue to become even more ridiculous as long as we have a global liquidity glut and dearth of any real investment opportunities.
  • Have (temporarily) stopped accumulating exposure in Bitcoin. Like NZ REITs, that boat suddenly sailed away as I was loading it up. I will perhaps have to seriously consider dispensing with the averaging in approach and just go in large(r) and more quickly the next time I identify an opportunity.
  • If I happened to be in the United states, I would be keen to start buying houses even though prices have already surged off their lows. If I was a shorter term speculator who was less risk adverse… Will also invest in TQQQ or other leveraged instruments and ride the current equity market euphoria up with the view of cashing out in a few months to a few years (how one would decide when to exit, I wouldn’t know).

Again, I reiterate, nothing here is financial advice. You, and you alone are completely responsible for your own investment decisions.



Unusual Economics

Leave a Reply

Your email address will not be published. Required fields are marked *