Prelude to a Bigger Short

by | Jun 16, 2021

Christian Bale played hedge fund manager Michael Burry in The Big Short. The actor’s portrayal of an eccentric loner with genius-like qualities was downright riveting. Of course, it was Burry, not Bale, who anticipated the implosion of the housing balloon. It...

The Pin That Pricks the Stock Bubble

by | Jun 9, 2021

You hear the stories in everyday life. A neighbor receives $75,000 up and above an astronomical listing price for a home. A friend boasts about making a killing in a crypto like Dogecoin or a meme stock like AMC Entertainment Holdings (AMC). The primary reason for the...

Minding the Bubble’s Skew

by | Jun 2, 2021

Is the stock market overvalued, undervalued, or fairly valued? One of the most popular metrics for making that call is the cyclically-adjusted price-to-earnings (CAPE) ratio. The CAPE ratio, also known as P/E10, has averaged 17.0 since the 1880s. It reached an epic...

Excessive Speculation Rarely Ends Well

by | May 25, 2021

Speculation drives market activity more today than it did at any previous moment in history. To wit, short-dated single stock option volume is now 5x greater than it used to be. Think about this for a moment. Rather than invest for a long-term stream of cash flows,...

Bearish on Bonds? Higher Rates Could Crush Stocks

by | May 18, 2021

The central bank of the United States, the Federal Reserve, creates digital dollar credits to buy bonds. If you buy bonds to depress interest rates and to inject money into the financial system, you get higher asset prices. Stocks. Bonds. Real Estate. Of course, the...