Amerika

How To Spot A Bubble That Is Ready To Pop

The last thousand years in the West have been a prole party. Liberated from the chains of natural order and natural hierarchy, the proles have run amok and in doing so, destroyed the West. It is over, and we are living in the wreckage.

A consequence of the prole party is herd behavior. Having no direction of their own, people are dependent on the Crowd for guidance, and so the herd finds itself rushing toward one gold rush or the other, leaving destitution in its wake.

Consider the Great Depression. People invested too recklessly, assuming that the stock market was a magic slot machine that just produced winners. Even worse, in an attempt to seem intelligent, they all copied one another, creating over-investment in properties that produced “false value” based on demand-side value instead of production value. As a result, the economy had to recapture that false wealth, creating a crash as massive amounts of value were simply deleted.

History repeats itself. The new cycle can be seen through an inversion in one measurement of fear in the markets:

Wall Street’s “fear gauge” has tumbled to its lowest level in more than two decades after the expected but welcome French election victory of Emmanuel Macron helped vaporise US stock market volatility.

The Chicago Board Option Exchange’s Vix index — which measures the expected short-term turbulence of the S&P 500 implied by stock options — closed at 9.77 on Monday, the lowest level since December 1993, as markets jumped over the geopolitical hurdle posed by Sunday’s French presidential victory. The gauge has only been lower on three days since its inception in 1992.

This tells us that, at this point, value is based in the confidence of buyers instead of the actual value of what is being sold. As a result, we have a bubble, which is what occurs any time the herd rushes after one investment or another and, in doing so, devalues it through greater demand than it is worth.

A correction is coming.

In trends, a few innovators get there and seize the gold. Everyone else, hearing about this down the line from newspapers or pub chatter, then rush in and imitate what the successes did. This is encouraged by the first few waves, who just want to buy something low and sell it high, escaping the inevitable crash.

The least savvy investors are the ones who end up holding the worthless investments. In the case of post-collapse West, the smart money has moved on to the future, while the brainless herd continues chasing yesterday. Dumb investments include anything demand-based or vested in the current social and political system.

So what are the smart investments? To know that, we have to ask, “What is coming?”

Clearly the current system was never designed to last. Like its architecture and consumer products, it is disposable. Its governments have spent themselves into debt, imported people who hate them, and generally sabotaged every institution possible. Its people, without guidance, have wrecked everything else.

History does not follow a pendulum pattern of swinging from extremes so much as a cyclic pattern where a working state is degraded by human entropy and then gradually restored. The future belongs to this restoration. This includes a focus on what is national and local, and therefore capable of being measured by productivity instead of demand.

Smart investors are currently looking for, instead of the “one big score” of Google or Apple stock, partial ownership in concerns which will always be vital because they create products necessary for local consumption.

Tags: , , ,

|
Share on FacebookShare on RedditTweet about this on TwitterShare on LinkedIn