# Madness of Crowds 2020



## Garpal Gumnut (8 October 2020)

We are certainly seeing what appears to be a blowoff top occurring in world markets. 

Volatility reigns. 

When major stocks stocks such as AAPL can near triple in value in six months and then lose 20% in value in one month, correcting again by 10% in a week we are not in anything but extraordinary times. 

And we are now in October, a madman decides the daily moves of stock price, rules the free world, is stricken by an illness which is deadly and paints his face orange. 

Next month an ageing opponent with early dementia is set to replace him, maybe, in an election whose voters are by any stretch of the imagination capable of rationality in choice. 

Around the globe Europe, the UK, the Middle East and Asia are set to erupt once the above two old men take their medication or toddle off the stage. 

China of all places is now being touted as the centre of rationality and economic safety.

I have decided to quit this madness and await something tangible, such as Santa Claus, in whose belief it makes more sense than any fundamental analysis and claptrap I have been reading recently.

gg


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## bux2000 (8 October 2020)

Garpal Gumnut said:


> We are certainly seeing what appears to be a blowoff top occurring in world markets.
> 
> Volatility reigns.
> 
> ...





Time is running out for all the Boomer You tube Channels ..........It is taking a long time for Those waiting for Trump and his team of Boomers to lock up all the bad guys and introduce a monetary systems that stops all the banks screwing us so we can live happy ever after.

I am told I don't understand, there is not going to be a recession and we will just carry on our Merry Way.........that is what our Jacinda is telling us as well. Looking after the Health of the Nation is foremost at all costs and it looks like she is going to have another 3 years as NZ's PM to prove it  (if the polls are anything to go by).    I guess we will know Saturday week the answer to one question anyway.

It is a relief to know it is not just me who thinks the world just absolutely    Stuffed in so many ways?

All the best

bux


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## Smurf1976 (8 October 2020)

bux2000 said:


> It is a relief to know it is not just me who thinks the world just absolutely Stuffed in so many ways?



As a broad observation, think of all things you'd associate with the 1980's and 90's.

Globalisation.

Anti-discrimination on the basis of race, gender, age, religion and so on.

Acceptance or at least tolerance of unconventional ideas.

Leaders and institutions held in mostly high regard. Prime Ministers and Presidents, organisations like NASA, the CSIRO, churches, universities, even things like electricity and gas utilities were commonly held in high regard by most.

A general public and political enthusiasm that the future was going to be better.

Broadly speaking we're now seeing the opposite of all that.

Globalisation is in retreat that's very clear.

Discrimination is back to the point that barely a day goes by without someone in the mainstream media or politics mentioning race, gender or age as a basis for decision making.

Unconventional ideas are shot down without further analysis and "cancelled". Change and progress is all but impossible as a result.

A general disdain toward institutions. A perception that politics has lost its way and that there's a lack of real leadership. Scientific institutions are hobbled, churches are disgraced, universities have lost the respect they once had, utilities are now about profit not serving the public, etc.

A general sense of having lost control dominates and there's little if any public discussion about the future other than the very short term and in a mostly negative context.

2020 is basically the opposite of what became increasingly normal and dominant through the 1980's and 90's. That is the case in every way economically, politically and socially.


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## frugal.rock (8 October 2020)

Garpal Gumnut said:


> I have decided to quit this madness and await something tangible, such as Santa Claus, in whose belief it makes more sense than any fundamental analysis and claptrap I have been reading recently.



Does this mean that you are predicting a Santa rally?

It's only doom and gloom if you watch the news...


Smurf1976 said:


> As a broad observation, think of all things you'd associate with the 1980's and 90's.



Smurfs mainly, started noticing Smurfettes later in the 80's...


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## Dona Ferentes (8 October 2020)

I took the 20c (or was it 3d?) that the tooth fairy gave me, and invested it. Still got it. So I believe in that, at least. And other compounding, of course. Like C2H5OH.

I thought it was _*Wisdom *_of _Crowds  _?


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## Smurf1976 (8 October 2020)

Dona Ferentes said:


> Like C2H5OH



For drinking I assume?


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## Garpal Gumnut (9 October 2020)

frugal.rock said:


> Does this mean that you are predicting a Santa rally?
> 
> It's only doom and gloom if you watch the news...
> 
> Smurfs mainly, started noticing Smurfettes later in the 80's...



A Santa rally after an October crash would not be outwith my expectation. If one had to invent circumstances which would lead to a crash one could not be better placed than today. 

A rampant virus, political division spilling in to violent confrontation on the streets, a madman leading the USA and threatening not to relinquish power if defeated electorally, fascist organisations in the USA such as ProudBoys arming soon to be followed by a resurgence of Antifa, Government and Central banks with little room to move fiscal or monetary policy in a meaningful or realistic direction, and pre-existing social division. And that is just in the democratic West.

This scenario leaves out the nutters and maddies outside of the West, the Middle Eastern godbothering idiots, Russia, China, North Korea, and the less mad cousins in Europe and the UK. 

I don't watch the news outside of the financial reports, the latter though are increasingly giving me information of the state of mind of ordinary people, and it ain't nice. Fear and greed rule. All it needs is an over-correction in one market and the house of cards will topple. 

gg


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## UMike (9 October 2020)

Generally all old men of each generation seems to think the world is going down the gurgler. Only to progress in many ways

However this time I'm with the elders.

I fail to see much good come out of this before a great pain is felt.


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## cutz (9 October 2020)

My thoughts too..

 Problem is I'm getting sucker punched wrestling with these index shorts !!


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## MrChow (10 October 2020)

I project we'll have a 6+ year economic recovery.

Fed is only projected to start rate hikes in 2024 and it typically takes 3 years of tightening to create recessionary pressures which takes us to 2027.

In that context knowing that accountablity and fundamentals are unlikely to create a day of wreckoning any time soon  means momentum style investing can go on for some time yet.

Fed / RBA is at 0% rates so if a company / investment is projected to make 10% p.a over 6 years that equates to about 80% compounded total, compared to 0%.  So instead of leaving 80% of the table for future buyers investors are bringing that forward by rationalising that driving up prices for immeditate returns is justified as future buyers can still buy at 40% overvalued and make 40% over 6 years, still significantly more than interest rates.


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## jbocker (10 October 2020)

MrChow said:


> I project we'll have a 6+ year economic recovery.



Interesting thought. How much recovery will be in ICU (Intensive Care Unit) I fear the patients are running off SELF discharging without outpatient service, its all OK for now cause drip is still attached.


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## So_Cynical (10 October 2020)

We have at least a half decade of ridiculously low interest rates to look forward to and ultra low inflation, a housing correction, new smart toys and EV's to play with, genuine energy policy, a big tax cut and cannabis is pretty much legal in Canberra - all good.

And the crowds of madness are really only the vocal 30 or 40% of bogans, red necks, nutters, deniers and old men.


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## Garpal Gumnut (10 October 2020)

So_Cynical said:


> We have at least a half decade of ridiculously low interest rates to look forward to and ultra low inflation, a housing correction, new smart toys and EV's to play with, genuine energy policy, a big tax cut and cannabis is pretty much legal in Canberra - all good.
> 
> And the crowds of madness are really only the vocal 30 or 40% of bogans, red necks, nutters, deniers and old men.



Interesting thoughts and may be closer to the truth than many although yea or nay depends on the Orange Fool.

My doctor reckons this weekend is vital for The Orange one's health, his own doctors' and his own estimates notwithstanding. He states he has stopped his steroids so my doc feels a deterioration quick and brutal may occur in the next 48 hours. 









						Trump returns to his usual programming — but his health remains a mystery
					

The president took questions on topics his doctors and White House officials have repeatedly avoided addressing but stopped short of offering concrete details.




					www.politico.com
				




The market is now pricing in a Biden victory with increasing prices on opposite policies to the Orange Fools. A blowoff imo opinion beckons as how can one price in the same result on opposite inputs. 

My doc who uses valuable medicare minutes prognosticating on Trump reckons the market will go gangbusters. I read somewhere though that doctors are lousy investors. 

Anyways someone will be correct. 

"Where ignorance is bliss, 'tis folly to be wise"

gg


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## againsthegrain (10 October 2020)

So_Cynical said:


> We have at least a half decade of ridiculously low interest rates to look forward to and ultra low inflation, a housing correction, new smart toys and EV's to play with, genuine energy policy, a big tax cut and cannabis is pretty much legal in Canberra - all good.
> 
> And the crowds of madness are really only the vocal 30 or 40% of bogans, red necks, nutters, deniers and old men.




Wouldn't all the govt stimulus and money printing increase inflation?  Also the govt is trying extra hard to keep propping up the re market. 
I am all for low inflation and housing correction so would like to see that happen.


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## tech/a (10 October 2020)

So_Cynical said:


> We have at least a half decade of ridiculously low interest rates to look forward to and ultra low inflation, a housing correction, new smart toys and EV's to play with, genuine energy policy, a big tax cut and cannabis is pretty much legal in Canberra - all good.
> 
> And the crowds of madness are really only the vocal 30 or 40% of bogans, red necks, nutters, deniers and old men.




Your certainly not alone in this thinking .


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## Smurf1976 (10 October 2020)

Garpal Gumnut said:


> A blowoff imo opinion beckons



Biden gets elected > widespread euphoria with the expectation of stability > reality sets in that the real issues have not been resolved and there's a lot of work to be done.

Overall though I'm broadly optimistic for the real economy.

Domestically we have politicians using the word "manufacturing" on a daily basis whilst it's quite some time since they uttered words like "level playing field". Seems like they've finally woken up to reality.

Internationally well the likes of Tesla are dragging the world forward to the next revolution in a way that just happens to fix rather a lot of problems from national security to the environment.

On the downside well looking at history it seems that at the absolute best we're coming up to the half way mark for the pandemic and quite likely it's got further to go than that. There's still more damage to be done with that one.

Also Australia's diplomatic relations with China are such that, one way or another, it's pretty much a given that Australia's exports are going to take a serious hit. China will do whatever it takes to dump Australia as a supplier and even if someone else costs twice as much they'll still go elsewhere for purely political reasons. On the plus side, the resultant forced economic diversification will be good in the long term albeit painful in the short term.

Just my thoughts and fully acknowledged I could be wrong.


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## qldfrog (11 October 2020)

For the big tax cut, we will talk again in 10y.... otherwise agree with the first part.


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## MrChow (15 October 2020)

FTSE has barely moved since announcing sweeping lockdown measures in the UK.

Have to think markets are pricing in a 95%+ chance of vaccine success and 0% interest rates in major markets for half a decade plus similar to the post-GFC playbook.


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## Garpal Gumnut (15 October 2020)

Smurf1976 said:


> Biden gets elected > widespread euphoria with the expectation of stability > reality sets in that the real issues have not been resolved and there's a lot of work to be done.
> 
> Overall though I'm broadly optimistic for the real economy.
> 
> ...



Great thoughts, @Smurf1976 , although I would disagree on China.

The comrades in the CPC have a huge population whose appetite for the good times needs to be sated. They will still rely on our Iron Ore, Coal and Agricultural products. 

As the virus reignites worldwide their reliance on Australia as a reliable supplier of food and building commodities will remain the same or even increase. 

I'm not too worried about China. We are yet to see an inevitable destabilisaton politically in "The Red Dynasty" as we have in all empires, the USA presently as an example. 

gg


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## bux2000 (15 October 2020)

Garpal Gumnut said:


> My doc who uses valuable medicare minutes prognosticating on Trump reckons the market will go gangbusters. I read somewhere though that doctors are lousy investors.




Probably better spending that time seeing if Sven has remembered any more gems ................(just saying)

Nice to have you back Digger

All the best
bux


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## Value Collector (15 October 2020)

UMike said:


> Generally all old men of each generation seems to think the world is going down the gurgler. Only to progress in many ways
> 
> However this time I'm with the elders.
> 
> I fail to see much good come out of this before a great pain is felt.




I am pretty positive about the future, but I think people just listen to to the negative stuff to much, and social media feeds are primed with negativity, because that is what gets views.


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## Value Collector (15 October 2020)

againsthegrain said:


> Wouldn't all the govt stimulus and money printing increase inflation?  Also the govt is trying extra hard to keep propping up the re market.
> I am all for low inflation and housing correction so would like to see that happen.




“inflation” only happens if the over all money supply is inflating faster than the supply of actual goods and services.

however, if the “money printing” inflation is only offsetting deflation in other areas then the two cancel each other out and there will not be over all inflation.


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## bux2000 (16 October 2020)

Hi Garpal,

I made a presumption that you were lucky enough to attend the Diggers and Dealers earlier this week, it looks like quite an event, apologies if  I was wrong. 

bux


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