Juggling Dynamite

A worthwhile hour-long discussion on our historic market bubble.

Jeremy Grantham is the Long-Term Investment Strategist and Co-Founder at GMO. We cover the three key signs of a bubble, why Jeremy believes we are in a bubble right now and how it’s being led by retail rather than institutional investors:

“This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

Here is a direct audio link.

Business Insider published 16 worthwhile quotes from the interview here.

Meanwhile, in the real economy, where companies with fewer than 100 employees are the largest economic driver, employing two-thirds of Canada’s private labour force, survival prospects are getting worse.  See Small businesses rack up loans to survive:

The Canadian Federation of Independent Business (CFIB) estimates that, based on a recent survey of its members, about seven in 10 small businesses have taken on new debt because of the pandemic, with an average debt of almost $170,000 each.

But there is a huge disparity between industries: Businesses such as restaurants and gyms, which have faced more operating restrictions to stop the spread of COVID-19, have taken on much more debt than those whose work can more easily be done from home. About nine in 10 businesses in the hospitality and recreation sectors said they incurred debt related to the pandemic, with average debt loads of more than $200,000.

“This doesn’t look like there’s going to be a quick recovery based on the amount of debt that businesses have taken on,” said Laura Jones, executive vice-president at CFIB. “Even if sales come back in the summer, they’re still worried about outrunning their debt.”

The 2-hour live stream with 97-year old Charlie Munger yesterday (youtube clip here) was slow-moving but still a breath of fresh air for the few remaining souls not intoxicated with speculative manias, brokers and investment bankers.  A couple of my favourite quotes:

“The investment banking profession will sell shit so long as shit can be sold.”

“[Commission-free trading] is not free.  When [you’re paid] for order flow you are probably charging your customers more in pretending to be free.  It’s a very dishourable, low-grade way to talk.”

Amen, brother.  There are few insiders willing to call bullshit on this mess.

In the clip below, CNBC’s Becky Quick recaps some of the highlights.

Berkshire Hathaway Vice Chair Charlie Munger sounded the alarm on the SPAC craze at Wednesday’s virtual annual meeting for the Daily Journal. Munger answered shareholder questions via a Yahoo Finance livestream. CNBC’s Becky Quick reports. Here is a direct video link.

In a Wall Street Journal interview today, Munger added:

“I hate this luring of people into engaging in speculative orgies, [Robinhood] may call it investing, but that’s all bullshit.”

“If you are selling them gambling services, where you rake profits off the top like many of these new brokers who specialize in luring the gamblers in, I think it’s a dirty way to make money, and I think that we’re crazy to allow it.  I think civilization would do better without it.”