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1.Market Observations, 2.Strategy, 8.Was Sticky

11 Oct 2016 (AFR) – Beware the bond-market ‘bubble’ – Something’s got to give in bond market

(11 October 2016, AFR, p32, by Philip Baker)

‘It’s sometimes said that investors fail to remember, but markets never forget.’

‘As 2016 draws to a close it could well turn out to be the year of another nasty tutorial for newish investors and a reminder for older ones about the role of the bubble and what happens when they finally burst. While they are in full swing there is always a reason why the bubble can keep going and why it’s different this time. As one old timer used to say: “In a strong wind, even the turkeys fly.” It can be tulips, talk of peak oil, debt-fuelled stocks in the lead up to 1987, how Australia can be the food bowl for Asia, the tech boom or the boom in all the credit products linked to the US subprime housing markets.’

‘Whatever it is, despite the narrative that it’s wrapped up in, it always comes to an end and the end is always nasty.’

Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

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