Quick Market Survey of South African Traders

Do you trade ? Please participate in this Trader Survey

If you are a current trader in electronic trading, or a wannabe trader, or a financial speculator of sorts, or if you buy and sell on financial markets in your own private capacity (i.e. not in capacity as an institutional trader or a broker or through a stockbroker), or maybe you see yourself as the next George Soros - you are invited to please complete the following survey:

http://bit.ly/SAtradersurvey  

Regardless if you associate with being called a day trader, position trader, swing trader, scalper, want to be a momentum trader, a technical trader, a fundamental trader, a options trader, become a bitcoin speculator, whether you feel bullish or bearish, have taken out butterfly spreads - if you know what long and short means, whether you work on 1 hour time frames or 1 week time frames - please complete the survey

The survey is specifically aimed at collecting information from South African or regional based traders or wannabee traders/speculators/investors of any of the following:

• Shares (listed)
• Indices 
• Options / Futures
• Bitcoin or similar
• Forex 
• Binaries

The objective of the survey is to informally collect information from traders for market assessment purposes.  Please also pass on to other local traders to complete.

http://bit.ly/SAtradersurvey 

Former or rehabilitated traders are also welcome to participate.

Depending on responses this survey should be open for a couple of weeks starting today.

Thanking you for your time! 

The next bubble - Chinese Property & Construction Debt ?

If you haven't heard of it, try to get your hands on Project X. It is a movie about teenagers plotting to throw a house party while the parents are away. And what they actually pull off is beyond huge ... it is a party of epic proportions. The kind you wish you had, that turns you into an instant local hero in the eyes of your fellow party monsters for years to come. 

But so too is the fall out and hangovers afterwards - epic. Warning - if you have kids, you might decide to preemptively lock them up for good after seeing this. 

It seems like the party might soon be over for Chinese property developers too.   Available information seems to point out that until recently Chinese construction was like a Project X type house-party of epic proportions. Everybody has had a ball of a time, building ghosts cities and constructing new developments all over the place like there is no tomorrow. 

Source: http://www.ibtimes.co.uk/china-ghost-town-city-441932

Read more about it:

• here and watch the video clip
• here
• and here- and watch the video clip
• and here

But as with all good things in life, it seems like that part of the house party where everybody were having a blast, might be over. The party music is not pumping that loud anymore, the bottomless beer is starting to run out, the pretty people don't look that pretty anymore, and head aches are setting in. 

The first cracks in the wall started appearing. In the last 2 or so weeks the first debt defaults on Corporate Bonds started happening - sit tight and read the Bloomberg article here

It is interesting to note that during the previous (East) Asian collapse (which coincidentally also had an exceedingly optimistic construction growth spurt in places like Thailand), the first rumbles of collapse also started with default on bonds issued by construction companies - read more about that here. 

Read these two articles by Zerohedge for further information:

• Article 1 - Zerohedge
• Article 2 - Zerohedge

Obviously one cannot keep on kicking the can down the road and borrow money like there is no tomorrow. At some stage somebody has to pay the Pied Piper. 

And undoubtedly, other people would have made brave decisions on where to invest your money.  At this stage it is anybody's guess how much (international?) investment might be tied up in these bonds - and what exactly will be extent of contagion this time? How will it impact the economy? What about global markets?

But what is clear, is that barring a small miracle, the epic house-party just might be over.

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Is it time to look at the Rating Agency model ? TED talk by Annette Heuser

For years Fitch, Standard & Poor's and Moody's have been ruling the roost in the Rating Agency industry. These 3 Rating Agencies (and other smaller players) have the power to rate companies, banks, and even countries.  

Courtesy: The Economist

Investors, corporates, banks, and even countries rely on the work of the Rating Agencies and base their own decisions on the inherent risks of a potential investment on the ratings provided by these agencies. 

Due to the weight the ratings carry, one would expect the ratings agencies to be very objective, accurate and truthful under all circumstances - right ?  Apparently not so - The FINAL REPORT OF THE NATIONAL COMMISSION ON THE CAUSES OF THE FINANCIAL AND ECONOMIC CRISIS IN THE UNITED STATES after the 2008 financial meltdown found that the 3 key players:

• "were essential cogs in the wheels of financial destruction" (page XXVV), and 
• that the "mortage -related securities at the heart of the crisis could not have have been marketed and sold without their seal of approval". 
• The Report continues to say that "this crisis could not have happened without the rating agencies"  (emphasis author's own)

Blind faith in the objectivity and accuracy of Rating Agencies has previously lead to billions of $ losses internationally in the wake of the Subprime financial meltdown. Worldwide thousands and thousands of jobs have been lost. Various countries are faced with crippling debt and economies struggling with recession.

This begs the question - who is providing oversight and rating the performance of the Rating Agencies?   Is the answer more competition, or more oversight? A different operating model? Can a rating agency with a strong regional and or political bias really be objective or is it simply pushing a specific geo-political agenda?  

Read the Economist's article here

The EU has in the wake of the crisis passed legislation to start the change - watch this BBC news clip 

So how about a completely different approach - Watch this thought provoking talk by Annette Heuser on TED talks

http://www.ted.com/talks/annette_heuser_the_3_agencies_with_the_power_to_make_or_break_economies.html

Your thoughts ?

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Further reading:

http://www.gpo.gov/fdsys/pkg/GPO-FCIC/content-detail.html 

http://en.wikipedia.org/wiki/Big_Three_(credit_rating_agencies)

http://www.treasurers.org/node/3168

http://www.yourarticlelibrary.com/business/6-important-functions-of-the-credit-rating-serve/1441/

How to identify a bubble - as featured on Slideshare

How to spot a bubble 

My 2014 Bubble Spotting Omnibus has been featured on Slideshare !

Will this be you during the next market crash ?  Wait, what market crash, when ? Where?

Judging by current market conditions, we might be in for an interesting ride....

 If you have been following my blog, you may have noticed that I have been doing a bit of reading up on market bubbles  - how do they form, which conditions are present, what happens in the process of building up, and what happens after the bubble bursts.

In the process of doing this research I discovered some fascinating information on the topic. I decided to put all the info in presentation format - this is so anybody who may be interested in this topic, can have a look. 

The Bubblespotting 2014 Omnibus presentation starts with one of the earlier recorded (and completely man-made bubbles) which was the Tulip Bubble in the Netherlands. It furthermore then covers (in a easy readable and quick summary format) a number of major economic bubbles in different markets around the world which have taken place since. These examples cover a diverse range of bubbles up to and including the Subprime crisis, which was the most recent very big bubble that popped. 

Also incorporated are some present-day pop culture examples, which, even though not strictly classifiable as a typical financial bubble (by a long shot), still interestingly enough display some of the same attributes.

The presentation furthermore covers some of the key characteristics and highlights commonalities between these various investment bubbles (apart from some of the more spectacular market meltdowns) - in the process identifying a number of conditions / characteristics which appear to be present in the build-up and blow down phases. 

In order to keep the theory interesting, it is explained with the use of memes and a bit of humour. 

Bubble Spotting Omnibus 2014 

Read it and see if you can recognize anything familiar happening in your neck of the woods?

Hope you like it - comments welcome.

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Property and housing bubbles

For those of you interested in the property market and property investments - I have just discovered a blog on Property Bubbles - and it covers a host of different aspects and various countries:

You can read all about it on http://www.torontocondobubble.com/2013/08/ultimate-guide-to-housing-bubbles.html

Photo courtesy of http://www.torontocondobubble.com/2013/08/ultimate-guide-to-housing-bubbles.html

The Subprime crisis - another contagion case study

Below is a short presentation that summarizes key aspects of the Subprime crisis - factors causing and contributing to the bubble, and what happened in the aftermath of this #bubble.

Bubble spotting - Sub-prime crisis / Housing bubble 2007-2008 from Benjamin Van As

The Subprime crisis (for at least the second time in recent history - the other being the Asia debt and currency crisis in 1997), showed the massively devastating effect that contagion can have on the financial markets on a global basis.  Whilst the crisis (at least on the surface) appeared to have its original in one market (being a specific portion of the residential housing market), it quickly proved that it was not an isolated problem, as the problem spread into various other local and international investment markets.  

Due to the increasing complexity of financial instruments these days, as well as the interwoven nature of markets and international cross-border transactions, going forward it is safe to say that it will become more and more difficult to isolate a sick patient (market experiencing a bubble) in time to prevent loss of money. 

Furthermore the current electronic age is aiding and abetting in both the ease as well as speed of transmission (infection).  The fall and or crash of a specific market on one side of the world will within minutes or seconds cause a ripple effect and spread to other markets. And one cannot stop this by quickly unplugging the computer after hearing the lightning strike or seeing the flash.

The risk of contagion will therefore in all likelihood pose very unique challenges in the financial world going forward.  One could argue that, as a minimum, the nature and extent of due diligence required prior to making any kind of future investment decision, would require some serious consideration. But not only this -  political as well as financial policy formulation can perhaps do with some rethinking as well. There seems to be not enough consideration or understanding of the potential cause and effect of proposed strategies or policies these days. And general ignorance about Newton's Laws. The words "unintended consequences" and "collateral damage" have become meaningless and empty rhetoric, used by those who have little intention of taking any responsibility for their decisions. 


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Interesting times ahead ...

This story that broke on Bloomberg yesterday is what I had hoped not to hear for at least another couple of months. The word "contagion" is generally not used lightly - read the story here:
http://www.bloomberg.com/news/2014-01-30/calm-broken-in-global-markets-amid-concern-of-emerging-contagion.html

Today everywhere is down except for American Markets - Source Bloomberg SAST 12:00  on
31 Jan 2014

Add to that that Europe markets seem a bit jittery.

And then the news that Emerging Markets lost $ 10 billion in the past week - which would explain why so many emerging currencies around the world tanked so dramatically in the last week or 2.  Also see which Emerging Economies are appearing most at risk ... now add to that the current situation in these countries:

• Brazil - construction strikes and anger over the amount of money spent on World Cup 2014
• South Africa - strikes in mining sector , service delivery protests  with a national election to be held within a few months
• Ukraine - serious political unrest, Prime minister resigning - see some of the tell tale photos here
• India, South Africa and Turkey increasing interest rates this week
• Thai stocks are reaching their most volatile levels since 2006 , and Thai political protests
• Problems in China

Ukraine - Photo courtesy of BBC News

Seems like we might be in for a bit of a bumpy ride ? 

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When will the Tech Bubble Pop ?

Business Insider feels rather strongly about the upsurge in Tech start-ups, apps and the likes

Evidence of a new Tech Bubble - by Jim Edwards

The following Graph is from Jim Edward's Story, and tells a pretty interesting story in itself

But he is not the only one saying this - I have also found this rather interesting infographic from Udemy (in case it doesn't load properly look here)

And Forbes' Jesse Columbo also says Bubble (read more here)

And here's an article from the Times' Curious Capitalist - Rana Foroohar  (read more here) 

But the Wall Street Journal says keep on dreaming - nothing to see, no bubble here

So who do we believe ?


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About

In case you were curious:

Linkedin profile

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About.me profile

Brandyourself profile

Re.vu profile

That sums it up nicely :)

I also have another blog - Digitaltoybox

How far away is the bubble? Does 2016 work for you ?

Now here's an interesting angle:

The bubble is still some way off, and the market is bound to increase between now and then ... but first it will have to take a teensy dip in the 3rd quarter of this year. Why?

Because:

This year is apparently a presidential mid-term year. "Since 1833, the average peak-to-trough fall in US stocks during a midterm year was -12.76%" - source quoted below

Read more about The coming market meltup and 2016 recession by Lance Roberts (STA Wealth)

China's Empty Cities - is this a property bubble ?

A fascinating look at the many ghost cities being built across China 

DotCom Bubble

The DotCom (dot.com / dot-com) bubble happened when I was a young professional, half way around the world from Silicon Valley.

Every so often (if you were tapped into the international news) you would hear about more young people (my age then, give or take a few years) launching successful enterprises, listing on the stock exchange, and living the high life. And to be honest, some of the business ideas were not all that brilliant (read about some of the businesses that folded http://www.cnet.com/1990-11136_1-6278387-1.html).

This apparent massive wealth building exercise made a huge impression on me - here was I working pretty hard for a monthly salary and it seemed like they were coining it, by virtue of just being there.

And then the DotCom bubble popped. As easy as it came, the money left again. In the US businesses crashed, Silicon Valley execs lost their cash cows and had to give back their Porches and Ferraris and mansions. Many average investors lost their jobs and livelihood and investments.

But that's not all. The fall out was in fact so huge, it hit us half-way around the world - Distance between Silicon Valley and Johannesburg 16 963 km / 10 540 miles (as the crow flies).  So how did it hit us, you wonder?

• Well, the DotCom fallout came with nice big teeth and bit a big chunk out of my still pitiful tiny little pension fund. But wait, there's more... 
• As if gobbling up a chunk of my hard earned savings wasn't good enough, it also caused our local interest rates to go up for months afterwards. Even though the increases were not as harsh as during the Asia Currency Crisis,  it is still not nice if you are a first time bond holder already eating beans on toast to afford your own house.

You can read about the DotCom Bubble here:

Bubble Spotting - The DotCom bubble (NASDAQ crash Mar 2000) from Benjamin Van As

Feel free to comment below, like or share, tweet if you must. Or add me to your circles Google+

History of bitcoin

This is a website dedicated to the history of bitcoin - drawing a very nifty time line of each and every major development

Have a look at it here: http://historyofbitcoin.org/

Singapore Bubble ?

Is Singapore heading for an economic melt-down like Iceland not so long ago ?

I was in Singapore less than 2 years ago. Its a really impressive city. Everything is modern, neat and tidy and runs like clock work. From the carpeted airport right down to the city streets and markets. Every creature comfort you can think of.

(Source: Pinterest Asia Expat Guides)

There are a (disproportionate?) noticeable high number of luxury vehicles on the streets. Various luxury hotels.  ( I stayed in one of these hotels (which shall remain anonymous) close to the Long Bar - I thought the service was pathetic .. but that is a story for a different day)

Behind this modern facade all might not not be well. Some experts think that an economic bubble might may be lurking in the background. +Jesse Colombo, a Forbes journalist and expert on bubbles gives his opinion - read here: http://www.forbes.com/sites/jessecolombo/2014/01/13/why-singapores-economy-is-heading-for-an-iceland-style-meltdown/

What do you think ?

The East Asian Currency and Debt Bubble

The next Bubble was the first to catch my attention growing up. This happened when I started out with my professional career

I can specifically remember a tv news report that the East Asian economies were growing at an enormous rate... So much so that students opened credit card accounts and used that to speculate with shares on the stock exchange. Due to rapid growth they could flip the shares before they had to pay the debt. I was tremendously impressed.

The the bubble burst and hit us over the couple of months.

This bubble is an excellent example of the massive damage that can be done with reckless speculation in the financial markets (specifically forex trading), and also illustrates the devastating impact of the power and damage that can happen once contagion occurred

Bubble Spotting - The East Asia Currency and Debt crisis of 1997 from Benjamin Van As

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Wall Street Crash of 1929

Yes, the Wall Street Crash of 1929 was a bubble.

Read for yourself:

Bubble Spotting - The Great Wall Street Crash of 1929 from Benjamin Van As

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British Railway Mania

But wait, there's more ...

In the 1800s there was a railway building craze sweeping through Britain. Just about every Tom, Dick and Harry opened their own railway company - resulting in the British Railway Bubble

You can read about it here - British Railway Mania

Bubble Spotting - British Railways Mania from Benjamin Van As

Comments or feedback welcome Google+

Market bubbles

For just about as long as I can remember, I have been interested in financial markets and investments.

So as part of my own investor education, I have decided to do a little research into market bubbles. What causes them, where do they come from, what happens, etc.

I have created a series of presentations on Market & Bubbles which I would like to share with anybody who may be interested.

Bubble Spotting - Dutch Tulip Mania from Benjamin van As

From time to time I will post relevant or interesting information on market bubbles and new developments.

Comments or feedback welcome

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