Author - Don Martin, CFP®

1
Is Alibaba IPO a Sign of Bubble Top?
2
Has Silicon Valley Reached a Top?
3
Today’s Federal Reserve’s Press Conference
4
How to Detect The Next Crash
5
Low EM Growth Rates To Keep Global Growth Low

Is Alibaba IPO a Sign of Bubble Top?

  Today Alibaba had a huge IPO and sold at 44% over its official IPO price resulting in a PE ratio of 62 (a normal ratio is 15, which implies, ignoring any growth factor, that the firm is selling at roughly four times its true value). Meanwhile the financial press ignored the divergence between small cap versus large cap stocks which is a tipoff of an impending crash. One wonders if the bubbly IPO is a symbol of market top. I have been more bearish than most advisors. Yet in looking back at my opinions during the non-recession years of… Read More

Has Silicon Valley Reached a Top?

  With the retirement of Larry Ellison of Oracle today, the IPO for Alibaba to happen tomorrow, and the news story in the WSJ about Bill Gurley about the Venture Capital industry bubble on Sept. 15, 2014 it seems the tech industry has reached a top. Gurley said far more people today are working at weak, unprofitable tech companies than during 2000 tech bubble top. The implication is that someday quite suddenly these companies could lose their Venture capital or IPO funding and the workers would lose their jobs with no other place to go to. My opinion is that… Read More

Today’s Federal Reserve’s Press Conference

  Today Janet Yellen, the Federal Reserve Chair, held a press conference after today’s policy meeting. The press conference had considerable obfuscations and evasions and didn’t reveal any significant new changes. I think they have no evidence the economy will suddenly get better in two years yet their forecast for raising rates over the next two years back to normal implies that they think the economy will somehow suddenly get better. The problem is that the economy suffers from a lack of demand rather than a lack of liquidity or a lack of low interest rates. The low interest rate… Read More

How to Detect The Next Crash

  The best trading idea is to assume when the next crash occurs in 1.5 or 2 years it will start with a meltdown in high yield corporate junk bonds. This asset class has been the most abused during the current recovery cycle. Investors fantasize that a bond, being a promise to pay face value, is somehow a low risk asset but this is only true with investment grade bonds. During an abusive part of the credit cycle when bond investors forget about credit crashes and start to dream that the only risk is inflation and duration risk that is… Read More

Low EM Growth Rates To Keep Global Growth Low

  For 15 years Emerging Markets (EM) countries grew much faster than Developed countries which greatly helped global growth and helped offset the effects of the 2000 tech crash and the 2007 real estate and mortgage crash. See the Economist article and WSJ article. But now the EM growth rate has slowed down to match the low growth rate of the Developed world just at a time when the EU and Japan are getting much weaker. Thus the rest of the world will dampen any potential growth in the U.S. to very low levels. U.S. growth, now at 1.8%, is… Read More

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