Highlights from June — Third Wave Finance on Twitter
As discussed in Why Monetary Policy Continues to Fail Society / We’re at “Full Employment” & Why No One Cares, unemployment rate doesn’t capture the full employment/wage condition & central banks continue to “drive via the rear-view mirror” by using failing economic models.
As discussed in Stock Market Bubble Valuations, viewing the current stock market bubble from several different angles can be helpful. Some updates, comments, and charts showing that, based on the more-reliable valuation metrics, the current S&P500 bubble has:
(1) passed the extremes seen during the housing bubble
(2) is in line with the bubble during the roaring twenties (or has passed it, depending on the metric used; see below)
(3) is now at extremes that have typically only been seen during the dot-com bubble.
Grantham, Mayo, & Van Otterloo (GMO) 7-Year Asset Class Real Return Forecast (i.e. the expected returns for various asset classes from 2017 to 2024)
Quotes on the boomerang effect of financial crises and development of asset bubbles.
Comments and chart on the relationship between interest rates and stocks.
Great charts regarding several topics discussed in articles under the Economic Environment tab and/or in the post MacroVoices Interviews Lacy Hunt: unproductive debt, velocity of money, wealth disparity, etc.
Update on the bond market “panic” of 2016, and articles & charts on persistent misinterpretation of the current economic environment.
Comments on the strategy being used today by indexers, “long”-only fund managers, and the exploding group of “do-it-yourself” investors…
Comment on cryptocurrency trend.
Comments & charts on elevated stock risks due to financialization (topic further discussed in The Road to Financialization).
Ask Friedrich’s global stock analysis by country & region.
Economic update from the Economic Cycle Research Institute (ECRI).
Clarification of a common misunderstanding of “shorting”: While a “short” position is typically a negative investment in a company or group of companies (i.e. against the company or group), the position also simultaneously has a positive alignment with all potential competitors that may profit from the loss of the “shorted” company or companies. And while a “long” position is typically a positive investment in a company or group of companies (i.e. in support of the company or group), the position also simultaneously has a negative alignment with all potential competitors that may suffer from the gain of the “longed” company or companies.