Animal Spirits, Bubbles, Mania’s and Market Peaks. Daniel Mankani

December 24, 2017

Dynamictrader.com/24/12/2017/ Daniel Mankani

Animal Spirits is a late stage market event in which bubbles created by a herd mania in a collective illogical intuition {cognitive bias} culminating into market peaks and eventually its bust.

Animal Spirits.

There comes a time when rational thought takes a backstage and excessive risk-taking behaviour trumps, Alan Greenspan first referred to this as “Irrational Exuberance” in the 1970’s, although he may have got it wrong this first time around.

Today this has now become an important part for all students of Behavioural Finance.

For the most part, Humans are expected to be rational in the management of their affairs. They plan and coordinate their affairs to the best of their abilities for self-preservation and thereafter their goals are enhanced further for even better positive potentials and outcomes by the deployment of their self-capabilities.

This risk-taking behaviour is inherent in all of us. A parent takes the risk to provide for a baby, an entrepreneur does the same when he goes into business and A trader wages his bet based on his own statistical understandings with attempts to tweak outcomes to his advantage.

“Nothing infuriates a man more than the sight of other people making money.”

Yet, there comes a time when all rationality is lost. Driven by either fear or greed, intuition begins to drive decisions of oneself, which in itself is without any conscious reasoning and simply an output and/or recollection of cognitive bias.

With participants overestimating self-capabilities and potentials, a deviation from the norm occurs and rationality in judgement takes centre stage, whereby inferences from other people and situations are drawn upon in an illogical fashion.

Humans like Animals find safety in collective thoughts, a sense of stability prevails within the herd and like every herd headed to the slaughterhouse, the leader of the pack has to be in confirmation or else he loses his position as a leader, he is bounded by this collective thought and the pact follows him as a means to collective bias.

Animal Spirits is a late stage event that occurs in every market and in 1998 we documented the story of the Internet boom and its subsequent bust. It’s a very interesting read and demonstrates how irrational collective herd behaviour leads to the slaughterhouse.

Bubbles.

The Federal Reserve has consistently fed one bubble to another since the start of the millennium and just like in 1998 with the bailout of “Long-Term Capital Management”, resulting in the Nasdaq rallying from the lows near 1000 into 5000 all in a matter of fifteen months.

I know the price I am paying is absurdly high, but somewhere out there is a greater fool than I am. Who will when the time comes pay an even higher price.

LTCM Bailout, Market bottoms and huge rally, the greedy george soros also turns long.

This upturn was all that what was required to bring all the naysayers of the times into compliance and once the greatest fool of all has gone long, the market peaks and ends in tears for all those without rational thoughts, herds into the slaughterhouse.

More importantly what was missed out then and is valid even today is the times prior to the March 2000 Peak. The bust of “1997 Asian Financial Crisis” had very little positive economic growth, present were the depression-like conditions with negative GDP’s across the Asian region, elsewhere Russia was facing pressures on its sovereign debt and Europe was in the midst of adjustments welcoming the Euro.

All these culminated into capital and resources pouring into the “Technology Bubble” as a be it end all.

Bankers quit their jobs to join start-ups, Underutilized resources such as “Office Spaces” were offered to start-ups for a share of their equity, Companies added an “E” or “I” to their business names, everything technology related became a buy. Irrational Thought driven by Greed or Fear became prevalent all across the board. See the chapter Greed.

All those without any understanding of the inner workings of technology were now on board. Today its no different, there are Parallels in the economy, mathematical relationships and equations we can draw upon.

A bubble is created when irrational thought and outright stupidity are visible to the naked eye and yet it remains as a doubt not to be questioned due to the collective bias of the herd, while the herd in itself is together for the very same reason and illogical intuition drives human behaviour to confirm. Today we have bitcoin.

Manias

Most Market Mania’s have almost universally similar characteristics, Beginning with this time is different and easy money mentality. There is almost always no underlying valuation attributes or anchoring to any fundamentals. Early participants overestimating everything with overblown claims of growth stories and infuriating those who have yet to participate, a fear of missing out prevails greatly. 

Then out of sudden a period of Irrational Exuberance prevails with a decline in credit standards leading many to borrow with Ponzi Financing fueling the bubble to unsustainable levels. In a self-fulfilling prophecy, higher prices bringing in even more participants leading to even higher prices, eventually surprising even the early participants, who then refuse to reinvest their Rich returns and proceeds. Finally culminating into the bubble bursting where the latecomers almost always end up holding the baby.

Further Reading.
Signs of the Euphoric. The Bust is almost near!
BITCOIN – A Fraud and Ponzi in a Disillusioned World

Get to know us.

technopreneurship_Daniel-Mankani

Technopreneurship – The Successful Entrepreneur in the New Economy – Daniel Mankani. Published 2003. Pearson Education Asia – All rights, copyright reserved Daniel Mankani { ISBN0-13-046545-3 }

Chapter The Greed >>> Technopreneurship-The Successful Entrepreneur In The New Economy.

LINKS
Disclaimer. http://ul3.com/L30qH
Back to the Beginning. http://ul3.com/aeVUG
BTAMSC – http://ul3.com/vAqdH
BITCOIN – A Fraud and Ponzi in a Disillusioned World: http://ul3.com/35fH1
The Greed: http://ul3.com/pUDgd
The Hope: http://ul3.com/CuC7d
The Ignorant, Zombies: http://ul3.com/PP8Ez
Perception vs Reality: http://ul3.com/UcYb1
History: http://ul3.com/1rCFA
Chart Patterns: http://ul3.com/ate6A
Introduction to Technical Analysis. http://ul3.com/kcYCE

Writings.
INTRODUCTION TO FINANCIAL MARKETS & TRADING OPPORTUNITIES IN COMMODITY, CURRENCY, & FINANCIAL FUTURES. http://ul3.com/dAFWj

Revolutionary Transformation Ongoing. http://ul3.com/kcYCE
– Global Economic Collapse January 18, 2016


Signs of the Euphoric. The Bust is almost near!

November 22, 2017

Signs of the Euphoric. The Bust is almost near! – Daniel Mankani.

These activities cannot continue, Euphoria with Fear is taking hold.

Its called. FOMO! Fear of Missing Out.

Time and time again, we have witnessed the repeat of similar patterns.

There comes a time where irrationality takes hold and common sense has no holding, the two most talked about tech trends for the year 2017 is blockchain and artificial intelligence.

There are genuine concerns to what man has become in its evolution and we may very well be at the very early beginnings in the making of the zombies.

Artificial Intelligence drives human behaviour and thought, which in turn motivates processes.

This is leading many to develop illusionary perceptions and making one live “Imaginary Illusionary Life’s”.

Albeit temporary, {Perception vs Reality: http://ul3.com/UcYb1}

Facebook, Twitter, Instagram, Netflix, Apple and Google as the gatekeepers into these realms.

Kingdom’s of Imaginary Secondary Life’s we call them. Each manipulating human thought in their own selfish interest to survive!.

Unbeknownst to them about their creative actions is leading many into zombies world.

The concerns of many are genuine, what if, just what if, someone gets stuck inside VR for a month.

What will become of such person? and yes the web is 70% porn and paedophilia rules elites minds, pizzagate they call this.

Guccifer 2.0 recent hacks into the DNC one of many, Elections Swinging, Panama Papers, USA Cables, Snowden and WikiLeaks.

They all Exist yet none is talking about this in “MainStream!”. What doesn’t fit into the narrative is referred to as “Fake News”.

Human Consciousness has to evolve above the machines and it will when it has too. Take a look at this.

 

As Alan Watts Rightly Explains;

We as Humans have to agree to disagree collectively.

Our evolutionary speed has caught up with us and will soon drive us in the mode for self survival.

Humans have to collectively evolve both ruled and rulers.

The technology revolution is underway. Its not hard to see the affects of the current trends.

  1. Awakening of human consciousness and the risk to established order.
  2. The non presence of any international law and order. US Supremacy is been questioned.
  3. A new global transformative economy largely driven by technology.

2012 was just the beginning of such awakening and now we are picking up speed and momentum.

Capitalism and the need for power has always lead to Cannibalism.

Humans on the other hand tend to evolve at rapid speed only at the precipice of change.

We are complacent beings otherwise, we don’t prepare for exams next year but when it arrives.

Its only with pain that we change. This time will be no different.

A revolutionary change is upon us in the manner we conduct Life’s and Society.

At no time in History, we see so many changes around us.

  1. Chaos in more than 50 countries around the world.
  2. Loss of faith in Government and Money. Blockchain, Bitcoin and Crypto currencies.
  3. Unprecedented central bank stimulus policies and malinvestment in financial markets.
  4. Ongoing wars and regional political disputes in the Entire Middle East.
  5. Massive amount of migration across borders changing local landscapes with economic migrants and war refugees.
  6. Populism is on the rise in the west due to economic insecurity. Nationalism for others seeking concentration of power.

From the evolution of thought came the questioning on the validity of Money, the reflection of which is fear and greed driven, see crypto currencies, especially bitcoin.

Bitcoin and Crypto currencies are adopted by many questioning central banks accountability on the results of their excessive printing of government fiat money, unprecedented as it, its unaccountable to a much certain degree and one of the main reasons of malinvestment {ˌmalɪnˈvɛstm(ə)nt/ } across many sectors.

Hence tapering has begun and the singing tunes of interest rate hikes.

The problem is in the narrative, that indeed the economy has recovered completely and whether human life is in any better conditioning, than before, it’s not.

Over the last decade since the great financial crisis, wealth inequality has grown, climate change is much more evident, economic transformation is ongoing, whereby we move away from manufacturing jobs into the service economy, which in turn is forecasted to be largely “digitally driven” , this mass shift has resulted into disastrous affects on employability and depression like conditions in many parts of society.

“HAVE” and “HAVE NOTs” have grown, leading into another set of disastrous clearly visible evident conditions, threatening established order across all sectors. Sometimes it feel’s like no one is in charge.

 

Are we in bubble territory yet?






It’s just not mathematically possible to continue down this path or else big revolution is coming for the elites. This is history! Patterns and cycles repeat, if true a massive culling of the herd without one there can be no sustainability. We will run out of resources sooner or later, expansion can never be to infinity, yet our billionaires are euphorically looking to mine asteroids in space. If this is not pure insanity then what is?

Global Wealth Disparity. The Pyramid!

Share of top shareholders global wealth.

The Top of the Pyramid.

Sooner or later income disparity will lead to little in disposable income and next comes the bust in the consumer driven economy.

Global Wealth Pyramid.

Regional membership of global wealth.

Number of dollar millionaires, % global total.

Change by country.

Ultra High Net Worth.

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technopreneurship_Daniel-Mankani

Technopreneurship – The Successful Entrepreneur in the New Economy – Daniel Mankani. Published 2003. Pearson Education Asia – All rights, copyright reserved Daniel Mankani { ISBN0-13-046545-3 }

Chapter The Greed >>> Technopreneurship-The Successful Entrepreneur In The New Economy.

LINKS
Disclaimer. http://ul3.com/L30qH
Back to the Beginning. http://ul3.com/aeVUG
BTAMSC – http://ul3.com/vAqdH
BITCOIN – A Fraud and Ponzi in a Disillusioned World: http://ul3.com/35fH1
The Greed: http://ul3.com/pUDgd
The Hope: http://ul3.com/CuC7d
The Ignorant, Zombies: http://ul3.com/PP8Ez
Perception vs Reality: http://ul3.com/UcYb1
History: http://ul3.com/1rCFA
Chart Patterns: http://ul3.com/ate6A
Introduction to Technical Analysis. http://ul3.com/kcYCE

Writings.
INTRODUCTION TO FINANCIAL MARKETS & TRADING OPPORTUNITIES IN COMMODITY, CURRENCY, & FINANCIAL FUTURES. http://ul3.com/dAFWj

Revolutionary Transformation Ongoing. http://ul3.com/kcYCE
– Global Economic Collapse January 18, 2016


BITCOIN – A Fraud and Ponzi in a Disillusioned World – Daniel Mankani

November 5, 2017

First things first lets understand this “The World is Disillusioned with Social Media Imaginary Lives” Ongoing Economic and Monetary Systems Transformation and there is indeed a whole lot of confusion on how the world tomorrow will evolve.

There are many questions and many responses to this but one thing for sure, its Bitcoin is not money nor its a stored value of an asset, it will never replace currency nor its has any of the attributes of Gold or Currency.

In the midst of all this Bitcoin has emerged as the best performer across various asset classes to which its compared against and now been told it will replace the means of transacting across borders and its value to continue increasing in a case of be it all and end all.

Human Greed knows no bounds especially so if its a subject out of disillusioned minds.

In the era of Fake News and Deregulated markets where accountability takes backstage coupled with a over educated under utilized millennium generation, Bitcoin is more of Fraud and a Ponzi and you may call it the revenge of the nerds.

Driven by fear of missing out and with various superior looking scientific yet false justification of “i know its better but I don’t know how, this has fueled Bitcoin’s Market Valuation and Price.

Its Greed and Fear Combined, Perception of disillusioned minds. A fraud of no other kind and a Ponzi at the same time.

In 2017 alone. Bitcoin meteoric rise has seen its total market value rise to over 100 billion dollars. Click to enlarge.

Bitcoins 100 Billion Dollar Valuation obtained in a shortest period of time. Click to enlarge.

For any asset to remain as a stored value and become one as a currency, it needs to have three key attributes without which its just another Fraud and a Ponzi at the same time.

 

It needs to have an UNDERLYING to give its stored value, It needs to have a UTILITY without which there is no demand to hold and lastly it needs to have LIQUIDITY which is non volatile.

 

Attributes which Bitcoin doesn’t have.

Underlying Resource: An underlying resource of some kind is necessary to give any derivative its value against which the derivative is bench marked, US Treasuries and even Fiat Currency for example have an underlying asset class to back them up, Government revenues and Taxes are the underlying for every currency where economic growth and monetary management defines the currency value.

Gold is the perfect hedge in an stagflation environment in which we are currently in and Bitcoin is not gold, It has no underlying of its own to  compare with to gold or to a currency and such perception is very much flawed.

It is wrong to say that Bitcoins Energy Consumption gives its underlying. It does not. Click to enlarge.

It is wrong to say that Bitcoins Energy Consumption gives its underlying. It does not.

Just cause someone found out a water front property and build on it an exclusive luxurious home, spending huge sums of money to make it beautiful and comparing its construction costs as input of value and then comparing it to the prices in demand and further speculating that if just a tiny bit of demand comes from there, the prices will escalate to those levels in a fancy of disillusioned minds.

You can’t compare an sparsely populated island in the pacific to that of one which has demand and it’s no matter on how much money you spend in making it luxurious, its a waste of effort and time.

Bitcoins hash rate, efficiency of mining determining input costs. Click to enlarge.

As the difficulty increases in mining of coins in order to make it a finite resource, more energy is consumed as efficiency drops and it then becomes scarce, this is the mathematical equation behind bitcoins miners and developers illusion, assuming that the input costs are part of the underlying, when its not.

Bitcoin Energy Consumption to determine underlying replacement costs. Click to enlarge.

Bitcoin uses more electricity than Uraguay, Kyrgyzstan, and Paraguay, yet what is the productivity use or value created out of this?

Bitcoin-Energy-Consumption-vs-Ranked-Countries. Click to enlarge.

Gold is a finite resource with utility which makes it of asset of stored value of no other kind.

Bitcoin-vs-Gold-Total-Annual-Energy-Consumption. Click to enlarge.

While it only takes 1.4 barrels of oil equivalent to produce an ounce of gold, it takes 10.1 barrels of oil equivalent to produce one Bitcoin.

Bitcoin-vs-Gold-Total-Energy-Consumed. Click to enlarge

Therefore as per the Maths.

Bitcoin-Production-Cost-Bevand-as per May-31-2017. Which today is closer to 1800 per coin generated and rising. Click to enlarge.

Hence, anyone investing in Bitcoins needs to understand the total dynamics behind them and understand which asset if behaving more like a bubble.

Bitcoin-vs-Gold-Cost-vs-Market-Price, Click to enlarge.

Now if we are in agreement on input costs and the underlying just been a waste of valuable energy resources to output a single coin, lets look for the second most important attribute of that of Its value creating UTILITY and you will find there is none except for illegal money laundering, and stashing of hidden wealth from which Bitcoin has benefited enormously from the chaos and collapses of various economies across the world.

In fact Bitcoin founding and origination is mired in Mystery with rumors of the founder himself owning a million coins and we have various reports from a couple of years ago where sites which accepted Bitcoins in its infancy were gifted hundreds and thousands of coins.

First things first, If you are investing in either Bitcoin or Gold, it’s important to understand which asset is behaving more like a bubble than the other and Bitcoin is clearly a bubble and a Ponzi which needs fake news to thrive on. 

Fake news, bitcoin is be it all and end all.

Bitcoin Flyer, more fake news.

Soon the USA Government

Bitcoin Bandit

Bitcoin will starve the banks fake news

Santa Claus is coming early this year.

Whipee its going up and up

 

bitcoin-money laundering activities.

Jimmy Loves Bitcoin. Jimmy needs to understand front running in unregulated markets leads to fraud and scam.

Listen to the audio file below to understand the meaning of front running, it happens a lot in bitcoin where the order fills are not in accordance to price. Exchanges and brokers are part of this scam, while people without any background and understanding are been suckered in.

More Fake News. Do you know Bitcoin is worth a Million and Why.

Bitcoin is still tiny, a sparsely populated island compared to the one in demand. If this is not scam than what is it?

More Fake News. Its going to a million and here is how?

For those who are unaware of a Ponzi which is also a bubble. Look up Tulip Mania.

Its unregulated and largely biased by the few who profit the most out of the high price. Caveat Emptor if you are invested.

Bitcoin needs a constant barrage of fake news and steady stream of new incomers into the scheme to justify high prices, if this is not a ponzi that what is? Its highly fraudulent by the misrepresentations occurring coupled with “Front Running” activities of brokers and exchanges in tandem with such activities.

Steve Wozniak misquoted, every statement is manipulated for higher price.

Bitcoin Fork. If Bitcoin is decentralized, then how come some minor parties, not majority, decided to create a fork and outputted a new coin? Isn’t decentralization on the basis that no single parties or minor group of parties members can control or direct outcome without the consent of the many.

Who benefits. The multiplicity of money. A revolution of no other kind.

                                 In Conclusion, Fools and their money part always fast.

Further Reading.

Federal Reserve Bank of Dallas
Globalization and Monetary Policy Institute  | 
Working Paper No. 292
Download: https://dallasfedcm.ws.frb.org/-/media/Documents/institute/wpapers/2016/0292.pdf
Does Bitcoin Reveal New Information About Exchange
Rates and Financial Integration?
* | G. C. Pieters | Trinity University | December 2016

[embeddoc url=”https://idealbroker.com/wp-content/uploads/2017/11/Feds-Dallas-Financial-Intergration.pdf” viewer=”google”]

Does Governance Have a Role in Pricing? | Cross-Country Evidence From Bitcoin Markets
Robert Viglione | Department of Finance | Darla Moore School of Business | University of South Carolina | September 2015

[embeddoc url=”https://idealbroker.com/wp-content/uploads/2017/11/Governance-pricing-2013.pdf” viewer=”google”]

 

Digiconomist’s work on Bitcoin energy consumption.



How Many Barrels Of Oil Are Needed To Mine One Bitcoin,

 

Marc Bevand: Electricity consumption of Bitcoin: a market-based and technical analysis)

Caveat Emptor,

We are attending WEB SUMMIT 2017 in Lisbon.
Get to know us.

technopreneurship_Daniel-Mankani

Technopreneurship – The Successful Entrepreneur in the New Economy – Daniel Mankani. Published 2003. Pearson Education Asia – All rights, copyright reserved Daniel Mankani { ISBN0-13-046545-3 }

Chapter The Greed >>> Technopreneurship-The Successful Entrepreneur In The New Economy.

LINKS
Disclaimer. http://ul3.com/L30qH
Back to the Beginning. http://ul3.com/aeVUG
BTAMSC – http://ul3.com/vAqdH
The Greed: http://ul3.com/pUDgd
The Hope: http://ul3.com/CuC7d
The Ignorant, Zombies: http://ul3.com/PP8Ez
Perception vs Reality: http://ul3.com/UcYb1
History: http://ul3.com/1rCFA
Chart Patterns: http://ul3.com/54VLV
Introduction to Technical Analysis. http://ul3.com/kcYCE

Writings.
INTRODUCTION TO FINANCIAL MARKETS & TRADING OPPORTUNITIES IN COMMODITY, CURRENCY, & FINANCIAL FUTURES. http://ul3.com/dAFWj
Revolutionary Transformation Ongoing. http://ul3.com/kcYCE
– Global Economic Collapse January 18, 2016