Davey Day Trader

Bubble popping cartoonIf you think there’s something a bit curious about a frothy and pricey stock market existing simultaneously with a global pandemic, Depression-level unemployment, GDP and corporate earnings collapse, freeze-up in world trade, riots by anarchist mobs, devastation of small businesses, and corporate bankruptcies, you might just be thinking that we’re seeing a classic asset bubble blown by the injection of unprecedented amounts of “money” created out of thin air by central banks.

One characteristic of financial bubbles, particularly in their late stages, is a massive pile into the market by small “retail investors”, who bet their modest savings in the belief that “stocks only go up” and “this time is different”.  Another sign of a bubble is the emergence of financial gurus, often with unusual backgrounds, proclaiming this “new wisdom for a new era” to their enthusiastic followers.... [Read More]

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Market, Schmarket

During the Spanish flu pandemic of 1918-19, the US stock market barely noticed. This pandemic was global in extent, had a case fatality ratio of 2 to 3% (the same numbers bandied about for COVID-19), and killed anywhere between 10 and 100 million people globally at a time the Earth’s population was about one quarter of today’s. In the US, 28% of the population was infected, about half a million of whom died. Scaling to today’s population, that would be 1.5 million deaths.

... [Read More]

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Tesla Melts Up

Bubble popping cartoonTesla, Inc. (TSLA:NASDAQ), as I noted in a comment a few days ago, then had market capitalisation (stock price times number of shares outstanding) more than three times that of Ford Motor Company (F:NYSE), despite Ford’s revenues being more than seven times those of Tesla and Ford’s FY 2018 earnings of US$ 3.7 billion being somewhat greater than Tesla’s loss of US$ 69 million for FY 2019.

What a difference a few days make!  There now appears to be a cataclysmic short squeeze and/or buying panic in Tesla stock.  Here is a ten minute chart for the last few days.... [Read More]

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