Superbubbles and Struggles

07 Sep Superbubbles and Struggles

Image by Alexa from Pixabay

“Famed investor Jeremy Grantham — known for predicting several asset bubbles in the past — says the S&P 500 is in a ‘superbubble.’ But peering inside his portfolio shows how he’s positioning as the ‘worst is yet to come.’ … ‘If history repeats, the play will once again be a Tragedy. We must hope this time for a minor one,’ he said.”
–https://www.investors.com/etfs-and-funds/sectors/sp500-jeremy-grantham-bets-10-stocks-will-protect-him-from-superbubble/?src=A00220

If history doesn’t repeat, at the very least, it rhymes. I’ve said before that I feel like I am watching another act of the same play I witnessed in 2008. And I agree that it will again be a tragedy– I’m just no so sure it will be a minor one this time around.

There was a woman on LI who went out of her way to disconnect with me because I dared to ask the question, “Whatever Happened to the Middle Class American Dream?” I thought of Marlon Brando on The Dick Cavett Show discussing the Oscars. Cavett referred to Brando’s Oscar rejection as “desecrating their cathedral” and Brando replied that the Hollywood to-dos thought “this moment is sacrosanct and you’re ruining our fantasy with the intrusion of a little reality.” Touché. If someone cannot handle a simple question about the economy, they’re prolly not gonna make it, IMO.

Meanwhile, let’s have another injection of reality:

“Parents struggling with inflation: ‘I left that $25 backpack for my preschooler at the checkout.'” from CNN.

“Like Longmore, many parents — regardless of income — are finding their back-to-school dollars aren’t going as far as they once did. Inflation is at levels not seen in decades, with prices spiking for groceries, gas, home goods and just about everything needed to run a household.

The Longmores earn more than $100,000 a year, well above the median US household income of nearly $65,000. But with five young children, the family’s expenses are also well above average, and Longmore said it’s not enough to keep her household running comfortably — a problem underscored in the back-to-school season as four of the couple’s children are of school age.” (emphasis mine)
–https://www.cnn.com/2022/09/04/business/back-to-school-expenses-struggle/index.html

This is an important point and it’s also made by Alissa Quart in Squeezed. The idea that a family making six figures is bound to be doing just great with 0 financial issues is just bullsh*t these days. Yet here we are in what I consider to be a pump-and-dump K shaped economy being told that everything is fine and there’s nothing to worry about.

Oh, and speaking of the pump-and-dump scheme, take a look at how many executives dumped their own stocks last month. There might be talking heads on TV encouraging you to “buy the dip” and scoop up those stocks, but the CEOs don’t want them anymore.

“Michael Burry’s Scion Capital Management dumped his entire stock portfolio in the second quarter as the ‘Big Short’ hedge fund legend stepped up his warnings about a looming stock market crash, a filing showed on Monday.

Scion sold off its long positions on 11 companies during the second quarter, including bullish bets on Google parent Alphabet, Facebook parent Meta, Bristol-Meyers Squibb and Nexstar Media Group, according to the company’s latest 13-F filing.”
–https://nypost.com/2022/08/15/michael-burry-dumps-stock-portfolio-after-market-crash-warnings/

This is another example where I think it’s wise to watch what the power brokers do rather than listening to what they say.