Financial Double Takes Week Of Date (September 24, 2018)

Grant Davis |

Financial Double Takes

Week Of Date (September 24, 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:

  • Innosight estimates 75 percent of the current S&P will be replaced by 2027.

    • The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027

 

  • About 70% of Americans are either overweight—having a body mass index (BMI) of 25 or greater—or obese, with a BMI of 30 or greater. (Patrick Watson’s Tech Digest)

 

 

  • “For years now, the price of natural vanilla has been rising. And rising fast. In 2013, a kilogram of vanilla seed-pods cost around $20. Today, the same amount of pods—most of which are grown in Madagascar—fetch close to $600. That’s more expensive than silver.” (Quartz Obsession)

    • “80%: Proportion of the world’s vanilla grown in Madagascar, one of the few countries with both a suitable climate and affordable labor. A handful of other countries, including Indonesia, Papua New Guinea, and Mexico, produce the rest.”

 

  • At least 1 million Chinese could be using 5G mobile networks by 2023 (Science Nature Page)

 

**Here’s our Financial Double Takes for the week of September 17, 2018.

**Here’s our Financial Double Takes for the week of September 10, 2018.