Market Musings

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Howdy all! And a Happy Valentine’s Day.

Ooo and hugs and kisses goes out to my personal Valentine aka MrsFrugalSamurai.

She made me feel very special indeed with a uniquely composed card and personalized message.

Although I could only decipher two thirds of her writing, the love and warmth shone through.

Received with thanks MrsFS.

As for my present? Well, that’s for her eyes only of course (truly, otherwise Crime Stoppers would be called).

But today’s not about love and chocolates and naked bloggers – no, today’s post is a bit of social commentary regarding what I’m seeing in the markets, or rather the market participants.

Following on from my earlier post, where I wrote about how making money seems to be so EASY these days – I wanted to highlight some further examples of disconnect in this current environment.

“What is a good benchmark return?”

This is a common question which I have been seeing across the social mediums.

And increasingly I’m seeing some crazy answers being posted, and more worryingly accepted.

Comments like:

I am expecting 60% p.a.

I have made 16x last year, I don’t see why I can’t aim for 50%-100% p.a.

I am starting to consider putting all my savings into shares. I hate that they only give you 1% in the bank, when I could be getting 50% plus growth.

“Scratches head”.

The only investor at that level of consistent returns is Renaissance Technologies’ Medallion Fund – but they all kinda have PhDs and awards in something called mathematics.

“I have $X to invest, what should I buy?”

As with every bull cycle, there are multitudes of new market entrants chomping at the bit, eager to find the next 10-bagger.

And I’ve also noticed this with increasing regularity – especially since the start of this year.

More concerningly though, is that people just want a hot tip.

No one really cares about fundamentals, or what the company profits or prospects are like.

Their debt levels? Who cares!

Revenue drivers? Hire an Uber!

EBITDA? Too many letters!

Nah, this year – probably THE most common question which I have seen is a variant of:

“I have $X to invest, what should I buy?”

Which cues a flurry of stock quotes and company names that covers half the investing universe.

We’re talking about investing again

Ain’t it funny that during a bear market, no one really mentions how low the stock market is, or where the next future real estate growth corridor is? And how Cryptocurrencies are a scam and the only safe place for your money is cash?

Nowadays however, we all know someone who’s “done well” from Crypto.

Or our mate Bob who’s made 16x from stocks last year.

Or a “friend of a friend” (my favourite), who made so much money from stocks they were able to buy a house debt-free.

And this gets us talking.

Because hey I know Bob. And he’s the same as me, in FACT, I’m better than him.

So if he can make 16x, why can’t I?

FK BOB!

Which gets us excited about investing, and then we talk to more people about it, and ask questions like “I have $X to invest, what should I buy?”

And we make a little money, and this gives us confidence.

“FK U BOB! I’M COMING FOR YOU”

And then we think it’s so EASY.

So we ask questions like “What is a good benchmark return?”

And then see 50% p.a. is a conservative minimum.

~~~

Of course, I am being very facetious in what I think is a very serious issue.

The market is completely disconnected from reality in my eyes, but I feel like a broken record with how often I have said this both in private and on this blog.

Will markets continue going up? Or is there a crash imminent?

I don’t know, nor do I care.

I mean, the bearish signals are there.

Grab any financial history textbook, you’ll see it.

Problem is, they’ve been there for a loooong time.

You could be wrong and make a lot of money, or you could be right but go broke waiting for it.

That’s the conundrum we face in this low interest rate world.

It could be worse of course.

Like catching some random personal finance blogger in the nude.

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