Financial Double Takes Week Of Date (September 3, 2018)

Grant Davis |

Financial Double Takes

Week Of Date (September 3, 2018)

The world of finance and business is a fun thing to watch from the sidelines.

What makes it fun?

Well first let’s give a little context.

There’s a buyer and seller at the end of every transaction. Two people who value the same thing differently – aka subjectively.

The price depends on what the buyer is willing to pay. And what the seller is willing to give it up for.

One farmer may be willing to give up 20 chickens for one cow. Another farmer may be willing to give up 10. Another one may want to give up 100 chickens.

It’s not whether the farmer is “getting a better deal.” It’s what each farmer thinks the value of one cow is.

Multiply this simple example across millions of different assets.

Chickens. Cows. Dollars. Gold. Barrels of oil. Stocks. Bonds. Cars. Homes.

You name it. A market is always made between buyers and sellers.

But sometimes the value two parties see between two items turns into speculation. Which then turns into frenzy. This is where asset price bubbles can form.

Most bubbles form when buyers are willing to pay any price for an asset. All in hopes of selling it to someone else at an even higher price.

Whether it’s tulips in the 17th century. Tech stocks in the late 1990s. Mortgages in the mid 2000’s. Beanie babies. Pokemon cards. Anything.

Looking back… we wonder how people could have fallen victim to these bubbles.

But it all rolls back into what the buyer was willing to pay for it. And what the seller was willing to give it up for.

This is what brings us to our Financial Double Takes column.

It gives cadence to one of Mighty Trades’ favorite financial writers Grant Williams and his letter: Things That Make You Go Hmmm

Every week we’re going to post facts, articles, or tidbits in the markets that are fascinating. Some that are bullish. Some that are bearish. Some that remind us the sheer size of a company’s operations. Complete government recklessness. Financial bubbles.

Everything.

It won’t just pertain to stocks. It could private equity valuations. Housing prices too.

Really whatever we find that is a remarkable statistic in the world of finance. Good or bad.

There won’t be any personal bias or commentary.

Just the facts. Do with them as you please. 

So, without further ado… here’s a couple things that make us do a double take:

  • American Airlines raked in $289 million in baggage fees alone in Q1 2018. That’s $1.1 billion annualized.

 

  • “Homeownership rates have plummeted amongst the young — at roughly 39%, home ownership for millennials aged 25 to 34 is 8% lower than baby boomers at the same age, and 8.4% lower than Generation X, according to the Urban Institute. Moreover, three in five millennials lack stock market exposure.” 13D Report

 

  • The GDP of Japan is lower this year than it was 23 years ago (according to the Spectator Index). For reference, the Atlanta Braves won the World Series. Coolio’s Gangsta’s Paradise was Billboard’s Number One Hit Song. And these were the top technology gadgets in 1995. Yes, you’ll laugh at the list.

    • 1995: $5.45 trillion

      2018: $5.17 trillion

 

  • “More than 201 million additional passengers boarded U.S. airlines’ flights in 2017 than did so in 2005, according to the Bureau of Transportation Statistics, an arm of the U.S. Department of Transportation. But U.S. carriers actually operated 1.6 million fewer flights last year than in 2005.” (Forbes)

 

  • It took online retailer just 165 trading days to grow from $600 billion in January to $1 trillion (Wall Street Journal)

 

  • “Assets at BlackRock, Vanguard, State Street Inc. and Fidelity Investments have doubled since 2009, to $16.5 trillion. Vanguard brought in $1 billion a day of new money last year.” (Wall Street Journal)

 

**Here’s our Financial Double Takes for the week of August 27, 2018.