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Are We in a Bubble?

June 2021 in Review Why Gold and Bitcoin are popular Are we in a Bubble? June 2021 Performance TSX June 2021 2.5% Year-To-Date 17.3% S&P 500 June 2021 2.3% YTD 15.3% MSCI World June 2021 4.0% YTD +9.9% Gold June 2021 -7.0% YTD -6.5% Silver June 2021 -6.5 % YTD -0.8%


Bubbles, John Authors, Bloomberg Jeremy Grantham, founder of Boston-based fund management group GMO and for decades a respected market theoretician, most contentious position at present is his call from the turn of the year that we are in an old-fashioned stock market bubble. "The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000." But the most serious issue is whether it’s possible to spot the bursting of a bubble in real time. On this, history suggests some worrying parallels. The more exciting investments tend to peak before the less exciting ones. This is what happened to the S&P 500 and the much more exciting Nasdaq-100 at the top of the frenzy in 2000. Bitcoin has risen more than once already, just as Amazon.com Inc. did after the spectacular implosion of 2000. But if cryptocurrency is the best analogy to the dotcom mania, it suggests risk appetite is in abeyance. Has this given us fair warning of a 2000 repetition, as Grantham seemed to be warning back in January?



Crypto supporters look for long-term gain past short-term pain Andrew Ross Sorkin, New York Times After a torrid few days for Bitcoin, which has lost about 20 percent of its value over the past week, traders are muttering about death crosses, hashrates and the Chinese province of Sichuan. Let us explain: The “death cross” is a technical pattern in which the 50-day moving average drops below the 200-day average. Some chart watchers think this portends trouble — why else would it have such an ominous name? Bitcoin’s hashrate is a measure of the computing power devoted to processing the cryptocurrency. It too has fallen sharply, which many believe is related to Chinese authorities’ cracking down on the huge computer farms that “mine” the currency in regions like Sichuan.

And also from John Authors....ARE WE IN A BUBBLE? The impassioned debate over whether we really have an investment bubble saw a surprising new entrant this week when Rich Bernstein, who heads the eponymous Richard Bernstein Advisors LLC, published a piece listing his five customary tests, and found that the current market passes all five. I take Bernstein’s views on this seriously because he was a prominent and consistent bear in the years leading up to the implosion of 2007-08 when he was a senior strategist at Merrill Lynch (then still an independent investment bank). Subsequently, he was persistently and consistently bullish about asset prices in the long and dissatisfying recovery that followed. He cannot be dismissed as a perma-bear, and the last time he made a bubble call he was right. Magazine covers below are from 1997 and 1999!



And highlights from past newsletters...

Stanley Druckenmiller: "The greatest investors make large concentrated bets where they have a lot of conviction" You can also listen to this interview on Spotify, Apple or your favorite podcast player. *** Stanley Druckenmiller is widely considered one of the greatest investors ever. Born in Pittsburgh in 1953, he studied English at Bowdoin College before starting work towards an Economics PhD at the University of Michigan.

This article is quite long but if you have any interest in learning about the possible future of gold and bitcoin it is worth the time. Why Gold And Bitcoin Are Popular Alternative monies like gold and bitcoin generate more controversy than most other asset classes. This article sheds light on why a sizable minority of people like them.

STATEMENT DEFINITIONS Some of the most regular questions I get are about statement definitions. Here are the most common ones. If you have others please let me know!

  • Book Value: The amount of your account that you have paid tax on. OR the amount deposited plus the amount you have paid tax on. It's not a very relevant number inside a registered account like an RRSP as all income is taxable. It is more applicable to non-registered accounts. It will represent the amount you can take out of these accounts tax-free.

  • Net Invested: This is the amount of money you have deposited to your account. BE AWARE however that in some circumstances if multiple fund changes occur this number may look excessive as it can be double and triple counted and make it appear you've invested more than you actually have.

  • Market value is simply the value of the account as of the last day the markets closed.

  • Gain/loss is the dollar value of the amount of money made or lost for the period in question.

  • RoR is the percentage rate of return for the period in question.


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Cryptocurrencies explained by John Oliver. Best explanation I've heard yet! Warning, offensive language!