It’s getting hot up here! Equities are toast. We are ringing the bell on the global equity markets on the first day of TWTR: NYSE listing.
We love the Internet, Social Media, Gaming, and software applications designed to run ‘ideas’ on smartphones and tablets. We love their creativity and productivity but we don’t love the public valuations of their stocks. They have entered into the ‘APP’mosphere.
What has driven these stocks higher – the power law of internet adoption rates, corporate debt growth, and credit availability are the first factors that spring to mind.
Markets are where buyers and sellers simultaneously agree on price but disagree on value. There is subjective value and then there is objective value. Subjectively we object to these values. This is an excerpt for the coming HindeSight Investor Letter November 2013 Equities – A Rarefied ‘APP’mosphere.
Welcome to the 90% club, membership is free but you don’t want to join.
Ben Davies, CEO of Hinde Capital is featured on the cover of Futures Magazine, the industry journal for traders and investment managers since 1972. Hinde Capital is honoured to receive this recognition of their growing expertise in the investment industry.
Previous covers include industry legends such as T-Boone Pickins of oil fame, William Eckhardt, the founding father of systematic trading and more recently Pimco’s CIO Mohamed El-Erian.
To view the full article “Midas Shrugged” click here
Over the past four decades the global economy has largely experienced prolonged imbalances, with countries running large current account deficits in symbiotic relationships with those running large surpluses. In our recent HindeSight Investor Letter – Top of the BoPs we revisit our long held belief that the current monetary order as defined by a constellation of exchange rate arrangements between the major global currencies, and which maintained these imbalances artificially, has led to excessive global liquidity and credit creation. This in turn drove a litany of asset price bubbles.
Since 2011, gold is down over 35% while US equities are up 44%. That is a sizeable move in asset classes which you could argue currently both require QE money printing for support.
The media will tell you that there has been a “great rotation” into stocks and gold investors have sold all their holdings. They will tell you that this is because of the “economic recovery” in the US. One look at the ISM Manufacturing index will tell you that hugging the 50 line is hardly a stellar recovery.