Donations to Discovery

Sunday, June 14, 2015

Too much Money chasing Too few Goods......

Been thinking about this post for a while....

It begins with my interest in shows like American Pickers, Fast and Loud, Counting Cars, Pawn Stars and the plethora of other shows that have cropped up over the last 5 - 10 years that are all based on people buying some sort of junk and reselling it to someone else - the public - at a higher price.

It's just like the Tulip Craze in Holland in the 1600s - - which was probably not the beginning but certainly one of the best cases of the "Greater Fool Theory" -

I mean God Bless 'em, these guys on these shows are entrepreneurs, they know their business and they no doubt have put in their time through the hard times, but in the end....

They are Consummate Salesmen!

Peddling their wares to a Public that is flush with cash because of an Economic Recovery built on ZIRP - Zero Interest Rate Policy.

People have plenty of cash and they don't know what to do with it.... so they buy stuff they don't need.

Because it was the car they drove when they were in High School.... or the bike they rode back in the 50s.....  or they need it for their Man Cave or whatever.

The bottom line is that these are NOT items needed in everyday life.... they are luxury items being purchased with discretionary cash or by loans at low or no interest rate.

The Stock Market is at new highs..... Young Adults like my Son who started investing in a market that was at a generational low (2009) now think they are Financial Geniuses.... following some time honored investing strategy that had the shit shot out of it during my era of investing (1984 - 2009).

I hear people talking about how well they are doing in the Stock Market and how high their balances are and I remember several times in the past when this same thing happened....

In 1987 right before the Crash of 87.

In 1999 and early 2000... before the Tech Crash of 2000.

In 2007 and 2008 before the Crash of 2008.

In 2011 when Gold and Silver were at All Time Highs.

Am I predicting a Crash?

No.... Probably not.... Not yet.

There's still too much money out there chasing too few goods....

But there's an old adage that predicts what always happens in these situations.....

A fool and his money......

You know what comes next.

No comments:

Post a Comment