4 ms·

Yup. Exactly this. Some measures suggest the current bubble is even bigger than the one in 1999. Or at least more broadly carried, in the sense that in 1999 th

Yup. Exactly this. Some measures suggest the current bubble is even bigger than the one in 1999. Or at least more broadly carried, in the sense that in 1999 the bubble was limited to a fairly narrow range of tech stocks. This time it's all over the place. It's not limited to a few stocks. It's not even limited to the broader stock market or to subprime credit. Today even government bonds are in a very special place. PS: it's also very interesting that so many people here in these comments think that shaving a penny off on order flow is all there is to say about HFT. And the comments also make me wonder about the staggering popularity of ETFs. ETFs are much bigger than in 2007. In themselves a sound idea, I do wonder how things like the 3x Inverse Synthetic Foobar ETF consisting of 99% bond meat with 1% mystery spices will fare during a real panic.

pembrook 9y ago
The difference however, is that interest rates were 5.5% in 1999. They currently sit below 1% (and it's been almost 10 years where they've been below that level). Interest rates are lower for longer than they've ever been in US history. And interest rates are extremely influential.
- unknown_apostle 9y ago
  That's what I mean by government bonds being in a special place; like a balloon pushed underwater by the ever escalating central banking interventions of the last decades. And it's not just in US history, we may be talking about all of history. And not just on the short end. In 2016, a country like Belgium, where the government has huge unfunded liabilities, was able to borrow on 10yrs for around 0.2%. Japan is even worse. The price of all credit ultimately relates back to these bonds. That's why the entire financial market is setting new records, for the 3rd time in 20 years. That's why in some sectors being profitable is once again not being considered as important as various metrics of "growth potential". And, to get back to Robinhood, that's why they can offer margin trading rather cheaply to the masses. It's a massive bubble, and some comments here reflect that. The only thing we can't know is when it finally pops and where the epicentre will be this time. (My guess would be somewhere in the nexus between ETFs and the bond market. Throw in bipolar, on/off liquidity and high volatility-of-volatility caused by modern versions of program trading-style hedging and HFT and you can have a panic with a whole new look and feel.)

pembrook 9y ago

The difference however, is that interest rates were 5.5% in 1999. They currently sit below 1% (and it's been almost 10 years where they've been below that level). Interest rates are lower for longer than they've ever been in US history. And interest rates are extremely influential.

unknown_apostle 9y ago
That's what I mean by government bonds being in a special place; like a balloon pushed underwater by the ever escalating central banking interventions of the last decades. And it's not just in US history, we may be talking about all of history. And not just on the short end. In 2016, a country like Belgium, where the government has huge unfunded liabilities, was able to borrow on 10yrs for around 0.2%. Japan is even worse. The price of all credit ultimately relates back to these bonds. That's why the entire financial market is setting new records, for the 3rd time in 20 years. That's why in some sectors being profitable is once again not being considered as important as various metrics of "growth potential". And, to get back to Robinhood, that's why they can offer margin trading rather cheaply to the masses. It's a massive bubble, and some comments here reflect that. The only thing we can't know is when it finally pops and where the epicentre will be this time. (My guess would be somewhere in the nexus between ETFs and the bond market. Throw in bipolar, on/off liquidity and high volatility-of-volatility caused by modern versions of program trading-style hedging and HFT and you can have a panic with a whole new look and feel.)