Three months ago I wrote: “Markets Looking for the Big Excuse”.
I’m steadfast in my belief that so many asset classes are in remarkable bubbles, just ready to burst.
Well, since then, a piece of art sold for $450M, (some believe the work to be a fake), Bitcoin has moved up another 125% to trade this morning at a new high of $9700 and global equity markets in general are at new highs, again.
So WTF gives?
I have tried and tried to come up with scenarios that justify this incredible escalation in asset prices. Nothing I can come up with makes any sense except that this whole rally, globally, is being fuelled by mostly “fake” money and instruments issued, sold, pledged and traded by the Chinese banks.
The Chinese are masters in making fakes. Fake University credits, fake iPhones, fake luxury goods, deadly fake milk, fake news, fake data, fake doctors and the list goes on and on. The culture rewards being sneaky and cutting corners. Bribery and corruption are rampant and mostly accepted as a cost of doing business. And anytime the East can stick it to the West, it’s a big celebrated victory.
The Chinese economy is driven by one thing only – pure profit, at any cost.
Could it be that China’s Central Bank has orchestrated the biggest Ponzi Scheme ever? I strongly believe this to be the case.
What proof do I have to substantiate such a preposterous claim? At the moment, none.
In 2007 I wrote a little piece in Good Magazine called the “Biggest Game of Ring Around the Rosie Ever” referring to the US equity and real estate markets and that they had valuations that were simply nuts. I gave an example, a true story, of my pool cleaner who was long 5 homes at the time “worth” about $1.5M. He had no equity riding on any of the properties. He eventually got blown out and lost much more than just his homes.
I don’t know when the Chinese markets will get hammered, but I do know the longer this game goes on, the more resounding the collapse will be. And yes, it will affect all global markets significantly.
If you have been long this market, you have done very well.
Time to take your profits and thank Santa for the early gift.
P.S. I have never visited the Far East – definitely on my bucket list.
P.P.P.S. Great response and feedback on the Nightfood bars for those late night cravings. Order a box or two and let me know how they worked for you. (Taped Investor Call Nov 21 with Nightfood CEO Sean Folkson – 26 min, a great listen)
And last but not least, our report on Ethema Health ($GRST) will be ready later this week. If CEO Shawn Leon is able to execute like we think he can, the shares in our opinion have 20x upside.