A couple of weeks ago, I wrote suggesting that investors should beware the end of December.
Why? The UK stock market peaked on 30 December 1999 and took more than a decade to recover, having halved in value over the following two or so years.
Then I note this morning's news in the Guardian saying:
and:
It seems that fools and their money are still being parted. I still think this will end in tears. These prices are evidence of the exuberance of money seeking returns from speculation rather than purpose, and every such bubble in history has burst. There is no reason to think it will be different this time.
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China will begin restricting silver exports on the 1st of January. This could start the slide everybody is now expecting and burst the “everything bubble”.
More on this here:
https://substack.com/home/post/p-182775552
I’m not sure that this will end in tears. That would only be for the rich fools who voluntarily parted with their money and lost a substantial wedge of it. The amount lost would unlikely be 50% as using the 1999 comparison that could only happen if you bought at the peak and sold at the trough. But that would be sad for them and if you know such people you can only advise.
But if you listen to progressive writers on economics there is a causal link between reduced wealth inequality and societal well being. In the word of MT the logical response is “Rejoice”
I will not rejoice at jobs lost and austerity.
When the crash happens share prices will decrease significantly. The 1% and above may lose money but it will not affect their day to day lives. I have little sympathy for them. Reducing inequality will be beneficial to society as a whole and, I think, even to the wealthy. But, sadly, a crash will not only affect the 1%, it will also affect the real world, the rest of us.
One way a crash will affect us is by reducing the wealth apparent stored in defined contribution pensions. For many people, under 55, most of their pension wealth is stored in shares. They are told, incessantly, everywhere, that, long term, shares will rise even if there is a temporary dip, so they should not worry about a crash. Well, in the long term we are all dead and a “temporary dip” may last decades. Someone in their thirties of forties, who is already suffering from lack of job opportunities, extortionate housing costs, excessive taxation (in the form of student loan repayments and so on), will also see a considerable part of any savings they have in their pension lost. Not just their current well being is poor, but they will not even have a pension to look forward to.
There is no guarantee, in fact quite the reverse, that the stock market will continue to increase despite what savers are told (by the chancellor, the mainstream media, financial advisers, uncle Tom Cobley and all). Demographics, our current fertility, of 1.4, is way below replacement rate, mean that the population will become skewed to the more elderly and will eventually decline. This may happen, according to some estimates, as early as the 2050’s. When that happens, more money will be drawn from defined contribution pensions than is added. And the inevitable effect is that stock prices will greatly decline. If this is combined with a crash today, the stock market may never again reach the peaks it is reaching at the moment.
I suggest a crash will be serious for everyone.
Agreed
I am reading Cory Doctorow’s “Enshitification”. The book is useful but gets somethings wrong: specifically IBM and the cloning of the IBM PC BIOS – you can copyright expression (code within the BIOS) you cannot copyright basic computer functions – which was why the BIOS could be cloned – a point Doctorow did not seem to understand (for the avoidance of doubt on this – I was closely involved with the original EU Software Copyright Directive”). Also his rationale for the design of the IBM PC is incorrect – the IBM board were by 1980 fed up with projects taking too long & getting gold plated. Hence the approach taken (to use outside suppliers). He also omits to mention DR.DOS, in the 1980s, a much superior product to MS.DOS.
Anyway, the money extraction machines which are Google, Apple etc – rests on so-called “intellectual property” – IP (the points about Apple’s “walled garden” app money making machine – are well made). The share prices of all the big dot-com stocks rest on the IP legitimising large-scale money extraction. If this ceaces for any reason – the share prices for those companies affected will tank. I’m rather surprised that China or Ruzzia has not taken a pop at this, e.g. hosting app farms that offer products which destroy many/most/all of the controls that Apple etc implement to extract money. As for Apple’s walled garden – even in the early 1980s this was the case & it is no surprise that this “approach” has been extended to applications (which you never own – & are only licensed to us). IP erosion is, in my view, a case of when, not if. Once it starts, goodbye Apple share price, ditto Google etc & global financial crash – for the dot-coms & perhaps some others.