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Sunday, October 21, 2012

Grant Williams: Extraordinary Popular Delusions And The Madness Of Markets

Whether its new-fangled Japanese stocks, hi-tech internet company valuations, multi-colored flowers, or mansions made affordable by criminally lax lending standards, Grant Williams notes that a bubble is a bubble is a bubble; and citing Stein's Law: "If something cannot go on forever; it will stop." In this excellent summary of all things currently (and historically) bubblicious - whether greed-driven or fear-driven - Williams concludes it is never different this time as he addresses the four phases of the classic bubble-wave: smart-money, awareness, mania, blow-off (or crash) and explains how government bonds are set to burst and gold is only just about to enter its mania phase. This far-reaching and entirely accessible presentation is stunning in its clarity and as he notes, while bubbles are always easy to spot ex-ante, understanding how they come about and why they are popped gives the few an opportunity to profit at the expense of the madness of crowds. From tulips to tech-wrecks, and from inflation to insatiable stimulus, the bubble in 'safe-haven flows' that currently exists has all the characteristics of a popular delusion.

1 comment:

  1. That's the same old story. If you're smart enough you can make a profit. That's all they ever think about and that's why the freaking world is in a mess. What's highy esteemed among men is abomination in the sight of God. God can meet everybody's needs, but he isn't going to.
    Luke 4:25 But I tell you of a truth, many widows were in Israel in the days of Elias, when the heaven was shut up three years and six months, when great famine was throughout all the land; 26 But unto none of them was Elias sent, save unto Sarepta, a city of Sidon, unto a woman that was a widow. 27 And many lepers were in Israel in the time of Eliseus the prophet; and none of them was cleansed, saving Naaman the Syrian. 28 And all they in the synagogue, when they heard these things, were filled with wrath,