Week in review…

Johnny.304-300x300(above image is far better indicator of impending economic disaster than any chart)

 Once again, this is my non-wall street opinion. With the market pissing its pants this week and being this far advanced into a bull market, lots of people are scared we are headed for disaster. While things will definitely stay rocky, I don’t see disaster on the horizon. There are a bunch of heavyweights sharing my view, but I certainly don’t want to get stuck in an elevator with Jeff Gundlach justifying myself. I’ve lived through two solid financial disasters. Looking back, there were several things that clearly stood out before the hammer dropped that I don’t see.

  • Ridiculous consumption
  • Massive uneducated speculation

The first disaster I had the joy of experiencing was the tech bubble. It’s very hard to relay the enthusiasm that entailed buying dog food online with a 56k modem connection (through an AOL phone line!). While the 15 minutes it took for a website to load may not have been as fast as jumping in the car and buying it, the novel-ness of the approach made any stock with a “.com” ending seem like you were one-upping Pablo Escobar’s cocaine business for ROI. People that wouldn’t know a tulip from a tweet joined the melee and seemed perfectly content to put their money in the dot-com equivalent ending of the movie “Thelma and Louise”.

The second bubble/GFC was a bit more recent and easier for me to see the writing on the wall. People that had barely paid off their cars owned real estate portfolios. These people then traded amongst each other over vacant McMansions requiring 2-hour commutes to jobs that could pay enough to justify their price tags. Somewhere between the trends of gold dental grills, spinning rims, and rappers pouring champagne on the floor…it was obvious there was too much money going around.

Personally, things look like a correction to me than the start of a serious recession. Everyone is prepared for the volatility and nobody is pouring champagne on the floor (certainly not the Saudis!). While it’s anybody’s guess what the future holds, if Zygna were up at 100 a share right now, then I’d be running for the hills…

*Sidenote: the two things I don’t see here (ridiculous consumption and massive uneducated speculation), were pretty obvious in China. My hope is that with everything much rosier in the US, the world will decide to park its money here. I’m sure things stay volatile. Thanks to everyone whose been reading the blog. If you like it: share it with a friend.


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