Comments on: Blowing the Bubble Bigger http://alephblog.com/2008/05/24/blowing-the-bubble-bigger/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Fri, 19 Mar 2010 11:55:38 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: PaulinKansasCity http://alephblog.com/2008/05/24/blowing-the-bubble-bigger/comment-page-1/#comment-17650 PaulinKansasCity Sat, 24 May 2008 16:50:47 +0000 http://alephblog.com/?p=707#comment-17650 This was an excellent and insightful post. On real MOney there was a video from Dan Dicker and his view on oil prices; but in the context of the oil futures market being valued at $500 billion and global equities at $50 trillion a ton of capital can move into these markets. This was an excellent and insightful post. On real MOney there was a video from Dan Dicker and his view on oil prices; but in the context of the oil futures market being valued at $500 billion and global equities at $50 trillion a ton of capital can move into these markets.

]]> By: VennData http://alephblog.com/2008/05/24/blowing-the-bubble-bigger/comment-page-1/#comment-17649 VennData Sat, 24 May 2008 15:24:53 +0000 http://alephblog.com/?p=707#comment-17649 Geeks are advising pension funds to adjust their asset allocation strategy to include commodities, not nerds: http://www.nytimes.com/2008/05/23/opinion/23brooks.html?em&ex=1211774400&en=f1520c9aff7bc910&ei=5087%0A Investing in commodities is not a good idea since subtracting the carry, storage, fees etc, you've got a zero-sum game. It's purely speculative. If one thinks think one can ride it, then bail out, the historical data doesn't support that. That thinking flies in the face of aggregated market returns (however, you might be able to make money helping producers hedge.) It's worse to think of a house as an invest. Maintenance, fees, taxes, becoming automobile-dependent and the time one spends keeping house make the suburban lifestyle an extremely expensive luxury. To lever into it is really a bad move. The contemporary art market is another example. So maybe the nature of "the thing" has a bit to do with the bubble? Equities can only be in a temporary bubble, in aggregate, since what we see historically is that eventually prices catch up. Individual issues and sectors are a different story because those are more commodity-like. The nature of "the thing" that's bubbling is that it's really not a wealth-producing asset, like the collection of human-run economic actors (aka TSM, the total stock market) but a object sold by shills. Geeks are advising pension funds to adjust their asset allocation strategy to include commodities, not nerds:

http://www.nytimes.com/2008/05/23/opinion/23brooks.html?em&ex=1211774400&en=f1520c9aff7bc910&ei=5087

Investing in commodities is not a good idea since subtracting the carry, storage, fees etc, you’ve got a zero-sum game. It’s purely speculative. If one thinks think one can ride it, then bail out, the historical data doesn’t support that. That thinking flies in the face of aggregated market returns (however, you might be able to make money helping producers hedge.)

It’s worse to think of a house as an invest. Maintenance, fees, taxes, becoming automobile-dependent and the time one spends keeping house make the suburban lifestyle an extremely expensive luxury. To lever into it is really a bad move.

The contemporary art market is another example.

So maybe the nature of “the thing” has a bit to do with the bubble? Equities can only be in a temporary bubble, in aggregate, since what we see historically is that eventually prices catch up. Individual issues and sectors are a different story because those are more commodity-like.

The nature of “the thing” that’s bubbling is that it’s really not a wealth-producing asset, like the collection of human-run economic actors (aka TSM, the total stock market) but a object sold by shills.

]]> By: Steve Milos http://alephblog.com/2008/05/24/blowing-the-bubble-bigger/comment-page-1/#comment-17648 Steve Milos Sat, 24 May 2008 12:47:29 +0000 http://alephblog.com/?p=707#comment-17648 Hi David, So what is your view of oil's likely price path from here, and your view of oil equities as a result? I think it's due for a correction, anything parabolic scares me, but it's hard to know when or how much, due to the influence of these passive investors. Interested in your view, Steve Hi David,

So what is your view of oil’s likely price path from here, and your view of oil equities as a result?

I think it’s due for a correction, anything parabolic scares me, but it’s hard to know when or how much, due to the influence of these passive investors.

Interested in your view,

Steve

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