Financial Double Takes Week Of Date (September 10, 2018)

Grant Davis |

Financial Double TakesWeek Of Date (September 10, 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:

  • “In 2015, the total worldwide gap in pension funding was $70 TRILLION according to the World Economic Forum. That is larger than the twenty largest economies in the world combined.

    The WEC said that the worldwide pension shortfall is on track to reach $400 trillion by 2050.” – Sovereign Man

 

  • “In 1980, Shenzhen was a fishing village of 30,000 people. Today, it produces 90% of the world’s electronics and is home to over 12.5 million people. It has 3 million registered businesses. It is compounding its growth at over 12% a year, doubling in the last six years. The size of this region is hard to comprehend. With nearly 70 million people and $1.5 trillion GDP, it is economically bigger than Australia or Mexico. Guangdong (the mainland China part) alone exported $670 billion in goods last year. Three of the world’s ten busiest container ports are in the region. It will be Silicon Valley on steroids.” – John Mauldin, Mauldin Economics (China’s Command Innovation)

 

  • “By end of 2017, 3,418 Chinese VC funds were launched within the year, raising a combined $243 billion USD or 1.61 trillion RMB. Of the $154 billion worth of VC invested in 2017, 40 percent came from Asian (primarily Chinese) VCs. America’s share? Only 4 percentage points higher at 44 percent.” -John Mauldin, Mauldin Economics (China’s Command Innovation)

 

  • “Last week, the world’s largest offshore wind farm opened off in the Irish Sea off England’s northwest coast. The Walney Extension is made up of 87 wind turbines manufactured by Siemens Gamesa and MHI Vestas and it covers 55 square miles, an area roughly equivalent to 20,000 football fields. 

    The UK is a global leader in wind energy and according to the Global Wind Energy Council, the country hosts 36 percent of installed global wind energy capacity.” – Statista

 

  • Roughly one out of every six issues in the global bond universe still has a negative yield, according to Deutsche Bank Research. (From Mauldin Economics, Over My Shoulder)

 

 

**Here’s our Financial Double Takes for the week of September 3, 2018.

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