Financial Bubbles | timiacono.com

Given the remarkable increase in the number of stock trading accounts and soaring margin debt in China over the last year or two, stories such as the one below about a farmer losing his life savings (and then some) should be expected, but, after seeing this man’s distress and learning of the dollar amounts and approach involved, it is a little surprising.

Investing his entire stake of $164K in one company and then being extended $1 million in margin probably weren’t the best moves Yang Cheng could have made.

Clearly, the government should have provided some basic instruction about investing in stocks when they began their effort to promote stock ownership. Maybe they did and he thought he knew better – the only thing missing from this sordid tale is the claim that Yang Cheng at one point was worth $4 million, or something like that.

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The Yellen Term at 18 Months

The body-less images at about the 30-second mark notwithstanding, this is a pretty good recap from the folks at Marketwatch of how the current and former Federal Reserve Chairs have fared during their first year-and-a-half on the job.

Interestingly, there’s the potential for the Presidential election cycle, Fed chairman cycle, and financial crisis cycle to line up again at the eight year mark. Recall that Bernanke was appointed in 2006 and had smooth sailing for a while, then the election cycled heated up in 2007, and then the wheels fell off of nearly everything in 2008.

Interregnums are particularly good times for financial crises…

Stocks, the Fed, Mr. Creosote, and a Mint

As the Federal Reserve brain trust gathers in Washington, Art Cashin talks about what a wacky year it’s been so far on Wall Street with what are, historically, the most volatile few months for equity markets yet to come.

I’m sure others have already pointed out how a rate hike this fall might be like “a thin mint” for Mr. Creosote in Monty Python’s classic The Meaning of Life, but, here are a couple of links just in case – Youtube, Wikipedia.

U.S. Housing Market Heating Up

After yesterday’s five-year high in existing home sales and fresh record high in median sales price, here’s a quick look at where home values are rising the quickest and where bidding wars are common via this WSJ story from a couple days ago.

California is sure running hot (Silicon Valley) and cold (Central Valley, a notable exception being Merced). Interestingly, Zillow puts the value of our California home about $20K higher than what we sold it for about 10 years ago (and we sold a couple years prior to the peak).

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