All Posts Tagged With: "bubble"

The commercial real estate crisis may be the most anticipated crisis in history. But just because it’s widely anticipated doesn’t mean that the crisis won’t be destructive for REIT shares.

There must be some dark corner of Hell warming up for modern, mainstream economists. They helped bring on the worst bubble ever…with their theories of efficient markets and modern portfolio management.

Here is a quick answer: no. We’re still a long way from gold’s ultimate destination. Our ‘Trade of the Decade’ was to buy gold on dips and sell stocks on rallies.

The unconventional wisdom is that the Fed has learned nothing from the last bubble – or is so scared of deflation it’s willing to gamble on another bubble in asset prices. The trouble , the eventual bust in asset prices has to be reckoned up. And the Fed, along with all central banks who key off the Fed’s policy, are just kicking the can down the road, hoping asset values improve.

Now, there is a very good reason investors are reducing their allocation to stocks. As we’ve said before, we think the equity premium – what people are willing to pay for stocks – is regressing to the mean. It was so high for so long because corporate cash flows in the second half of the last century benefitted so much from low interest rates and globalisation.

Noooo… We’re talking about a worthy correction…a real correction…a noble and distinguished correction…a correction that can hold its head up in public.

Imagine how disappointed lenders will be when these loans default. And then, imagine how American investors will feel when a new wave of mortgage defaults and foreclosures is hits the commercial property market.

‘The Singularity’ is an idea from Ray Kurzweil. The gist of it is that computers will soon be smarter than humans; by the middle of this century they’ll be smart enough to figure out how to get smarter and smarter, faster and faster.