Four stocks collapsed by over 90% from highs. Others not far behind. SPAC-hype-boom leaves trail of SEC & DOJ investigations and class-action lawsuits.
By Wolf Richter for WOLF STREET.
The SPAC hype-boom that started taking off in 2020, along with a whole bunch of other ridiculous wealth-transfer schemes, has been imploding more broadly, not limited to EV SPACs. These Special Purpose Acquisition Companies raised tons of money, often involving celebrities that hyped this crap in the social media so that the dumbest retail investors would swallow it hook, line, and sinker. After the SPAC started trading publicly, they bought startups at huge valuations. The merger caused the start-up to be the publicly traded company. Insiders made a killing in this process no matter what happened.
This scheme of going public via SPAC dodges many of the disclosure requirements and other requirements that classic IPOs are subject to. Soon, a number of these companies were being investigated by the SEC and the Department of Justice. And the fleecing of retail investors has been swift and spectacular.
All of the nine EV makers and EV-battery makers featured here are losing enormous amounts of money. All of them compete with the hugest companies out there: global auto, truck, and battery makers. The shares of four of them have collapsed by over 90% from their highs. The one that collapsed by the least was still down 60%. Some of them will likely go to $0.
|EV SPACs & IPOs||Price $||% from peak||Date of peak|
These are not small amounts of dollars either. For example, Nikola, one of the minus-90%-ers, was once worth $34 billion. Now it’s worth $3.2 billion – over $30 billion gone up in smoke.
Nikola went public via merger with a SPAC. The deal was approved by shareholders in March 2020. The post-merger stock started trading in June 2020. In November 2020, the company disclosed that it and its founder Trevor Milton were being investigated by the SEC and the Department of Justice after a short-seller caught them lying to investors. The company did some housecleaning and swept out the founder. In December 2021, it settled the SEC investigation for $125 million.
Investors that bought into the hype have gotten massacred. On Friday, shares closed at $7.79, down 90% from the peak in June 2020 (all stock data via YCharts):
Lordstown Motors went public via merger with a SPAC, a deal that was announced in October 2020. In March 2021, the company disclosed that it was being investigated by the SEC. In July 2021, the company confirmed that now the Justice Department was investigating its business, its SPAC deal, and its reporting of vehicle pre-orders. The company threw out its CEO and CFO.
Its stock closed on Friday at $3.04 a share, down 90% from the peak in February 2021:
Romeo Power, which is developing batteries for EVs, announced in late 2020 that it would be acquired by the SPAC RGM Acquisitions. The deal was approved by shareholders in December 2020. The SPAC shares then started trading under the new ticker in January, 2021. The share price more than tripled from about $10 before the initial announcement to $34 a share on December 24, 2020, at the time of the approval of the merger by the SPAC’s shareholders. Then the collapse began amid investigations by class-action law firms of its announcement prior to the merger of ridiculous growth projections that have fallen apart.
On Friday, shares closed at $2.06, down 94% from the SPAC-hype-boom peak in December 2020.
Workhorse went public via merger with a SPAC on October 22, 2020. Its shares shot up to nearly $43 on February 4, 2021, and then collapsed. In November 2021, the company confirmed that it was being investigated by the SEC and the Department of Justice for stock trading issues and accounting issues. On Friday, shares closed at $3.23, down 92% from the peak in February 2021:
QuantumScape, which is trying to develop solid-state lithium metal batteries for EVs and counts among its investors Bill Gates and Volkswagen, went public via merger with a SPAC in November 2020. It is now tangled up in class-action lawsuits, alleging that the company lied about the potential of its batteries, including that the company may never be able to scale them for EV purposes.
After spiking to the ridiculous hype-boom peak of $132, shares collapsed by 88% and on Friday closed at $15.87, about $48 billion having gone up in smoke in 14 months.
Faraday Future went public via acquisition by a SPAC and a private investment in public equity (PIPE) on July 22, 2021. Then short-seller allegations surfaced. In November, the company launched its own internal investigation about “inaccurate financial disclosures” and delayed the release of its Q3 earnings report. On February 1, 2022, the Committee released the results of its investigation. Among other things, it had found that the originally hyped report of over 14,000 reservations its vehicle was “potentially misleading” because “only several hundred of those reservations were paid, while the others (totaling 14,000) were unpaid indications of interest.”
On Friday, shares closed at $4.59, down 78% from February 1, 2021:
Canoo went public via merger with a SPAC on December 22, 2020. In May 2021, it disclosed that the SEC is investigating its merger deal with the SPAC and its “operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics, along with the recent departures of certain of the Company’s officers.”
On Friday, shares closed at $5.85, down 74% from the peak in December 2020:
Rivian didn’t use a SPAC to go public, but a regular IPO, at $78 a share, on November 10, 2021. It raised $12 billion in the IPO. Amazon and Ford were big early investors. A week later, shares hit $179 and the sky was the limit. By the end of December, shares were down 41% from the peak, at $103.69.
Ironically, Amazon and Ford booked huge gains in Q4 for their Rivian shares that they had purchased as early investors at much lower prices, and that for Q4 financial reporting purposes were valued at the end-of-quarter share price. For Ford, this worked out to be a paper gain on its Rivian shares of $9.1 billion.
Alas, those shares have now collapsed an additional 43%, to $58.85, and if they stay at this level through Q1, Ford faces a multi-billion-dollar write-down of its shares in Rivian. Similar for Amazon. Shares are down 67% from the peak three months ago and are well below the IPO price.
Lucid Motors went public via merger with a SPAC in July, 2021, raising $4.5 billion. On December 6, 2021, it disclosed that its SPAC deal along with “certain projections and statements” were being investigated by the SEC. Shares had been tanking for a week before the disclosure. On Friday, shares closed at $25.84, down 60% from the peak. A strange-looking chart of a double-hype-double-implosion in a short time:
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> “ridiculous growth projections”
Unlike the normal, regulated process, a legal loophole allowed the promoters to sell absurd, made-up “projections.” But we will see how much of a loophole it proves to be. There is still common-law fraud if not securities fraud, though I’m sure the drafters included all sorts of disclaimers. This is another example of the exploitation of the “we are outsiders” pitch. Being outside the guardrails means just that. At least SPACS did have some ability of the punters to get their money back at some stages. But he incentives for promoters to do a deal, any deal, and cash in, was there.
I’m watching DWAC intently too. Interesting that a possible future US president would be the central promotional figure.
It’s a Ponzi scheme. Just read the prospectus.
I agree that these things were just made-up nonsense… but they were not Ponzi schemes… Ponzi schemes rely on continuously getting new investors to pay off the old ones. These were not that: They issued shares saying they were going to find something to buy with the invested capital, then when they started trading they went up and down due to normal market forces: crazy but not a Ponzi scheme
It’s a close call, but I think these SPACs definitely qualify as Ponzi schemes (early investors being paid with future investor money).
WHAT ACTUALLY HAPPENS: When a SPAC happens, the creators of the initial “empty” SPAC are immediately paid off; the famous celebrity sponsor is immediately paid off; the owners of the piece of crap target company are immediately paid off; the promised follow-on PIPE money may never actually arrive; speculators then do a “pump & dump” on the piece-of-crap target company.
WHY IT’S A PONZI: Speculators (day-1 “investors”) are immediately paid off as slower, stupid follow-on investors pile into the declining stock. Thus, initial “investors” are paid off by future “investors”. This type Ponzi just happens VERY FAST.
At no point in time are any of the initial SPAC predators at real financial risk.
Maybe more like a chain letter?
Are these “real” investors or are these complex money laundering operations?
Who has multiple 30 billions to throw away in these companies?
PE firms can’t be that stupid and the gullible investors don’t have that kind of money.
I suspect this is how printed trillions are liquidated to private hands.
I feel like I have been magically transported back to the Conglomerate Fads of the 1960′.
Every fad that was old is reborn in a new costume.
Darn. No auto correct.
1960’s not 1960.
Just because the market capitalization of a SPAC is $30B does not mean anybody invested $30B.
Market cap is total shares outstanding times the last closing stock price on the stock exchange.
Contrived example to illustrate the point:
Company X has 1 billion shares on day-0:
o On day-1, all shares of X were purchased for exactly $1/share. At the end of day-1, MARKET CAP is $1B, and the total amount paid by all shareholders is $1,000,000,000.
o On day-2, a single share is sold to some idiot for $30/share. At the end of day-2, MARKET CAP is $30B, and the total amount paid by all shareholders is $1,000,000,030.
This is a contrived example that particularly applies to companies whose stocks rapidly increase in value.
excellent point Doc. Would you be willing to take Garland’s job?
Sorta like “Fractional Investing”, a relative of Fractional Banking?
No wonder I can’t read (make that HATE reading) financial crapp except here.
Along that line, how SOON are the big index funds and ETFs obligated (or choose) to add these new IPOs to their fund?
There are a relatively few people betting (I mean “trading”), and probably getting rich on insider info, and all these millions of index fund 401k/pension people are just along for the ride, dumping their 5% or whatever in out of each paycheck. Would they take some of the loss on this stuff in the article, or do their fund managers have ways to spare them some of the loss…..if they are skilled enough?
That always seemed wrong to me. People were forced into the stock market and it wasn’t just the FEDs fault. Unless one is in one of the few Unions left, forget your damn pension!….go bet for it!
These SPACs are the equivalent of the dot-coms and CDO-squareds of the prior 2 bubbles.
The fun part for those buying them now is that even though they’re down 90%, you can still be just like the original buyers – and lose all of your money!
Right. If you bought a stock for $100 and it crashed to $10, you just lost 90% of your investment. If it drops to $1 from there, you’ve only lost another 9% on that original investment. But the people who loaded up at $10 just lost 90% on the move down to $1, like you did on your first amputation from $100 to $10. Buying dips can be every bit as ruinous.
Look at the bright side: now you can own $132 shares for just $3 per share. At least that’s what they told me down at the bucket shop.
Has the bucket shop talked to you about the wisdom of “averaging down”?
You can save yourself a lot of trouble by investing only in companies that have a consistent earning and dividend history, have a strong balance sheet and business you can understand. Run it through a dividend discount model with conservative assumptions and don’t overpay. At least you will get a lot of your investment back even if you make a mistake
Earnings, strong balance sheets, and dividends (the reason people invested in Olden Tymes) are now naughty words except for crazy old geezers. Funny thing is the old geezers are still standing after the occasional crash which allows them to invest more when the world is coming to an end.
The trouble is that most people don’t understand the difference between investing and speculating because they’ve been trained not to understand.
BUY THE DIP !!!!!
Seriously, how frigging stupid do you have to be to invest in a blind fund (SPAC)?
The inherent danger of doing so speaks for itself – it isn’t that far away from handing $5000 cash to some door-to-door salesman you have never met before in your life, selling trips to the moon.
in fact, the stupidity level is so high, and the amounts raised sufficiently large, that I really wonder if some perfidy isn’t being worked on the buyside too.
Perhaps corrupt financial “advisors” are pumping $ into SPACs from essentially unmonitored trust accounts (ancient widows, crippled children, paint huffing “non profits”). Such advisors would do so for indirect kickbacks (early exit SPAC shares?).
I wonder what the “institutional holding %” numbers are for SPACs…if it is much above 1%, then there likely *is* some weird hidden dynamic going on. And the amounts raised by SPACs do seem sufficient high that *some* institutional invt must be going on.
Just another example of a stupid investment fad that seems so transparently doomed that it is impossible not to ask, “Who buys this sh*t?”
I wonder if there is any academic research involving post mortems of various invt fads/scams and the classes/types of “investors” most likely to hand over their hard earned money.
In the age of Google it seems almost impossible for any sizeable number of “investors” to be this ignorant, without some ulterior motivation.
It’s OK. These people are too stupid to have money. They might cause harm to themselves or others. Taking money from them is a good thing, like not allowing drunks to drive.
Wonder where crapto is going to end up!
Not so sure this applies f it widows/orphans being betrayed by “advisor” or if my state employee/hired voter pension fund is buying this absolute shite.
Have kinda assumed that institutions stayed away from such obvious crap, but the SPAC numbers got so high/so fast that now I wonder.
On the other hand, maybe brokers/advisors have essentially perfected the art of serial “kill boxes” – sequentially ripping off the smallish percent of client winners for any given invt fad/crap pile and repeating the cycle over and over, until all that is left is a flock of denuded sheep.
ZIRP inflated markets maximize the pool of sucker assets on the front end, to be sequentially shorn down.
I bet that type of rationalization is used often, maybe by the two bit land lords here….and of course the really rich.
Hedge funds,pension plans ,insurance companies
Federal Reserve reckless liquidity.
They hold the gun on this.
I think of the Fed as multi-generational syphilis – they may not kill directly, but they are the poisoned seed behind seemingly distant evils.
“In the age of Google it seems almost impossible for any sizeable number of “investors” [NOT] to be this ignorant … “
Ok, you got me; I had to look up “perfidy”.
However, the answer to your question is HELL YES.
I suspect that most EV makers and other “new technology” producers are Ponzi schemes or scams of other types. Just the fact that Evergrande is now focusing on its EV “business” when it is not an established producer is an indicator that the whole area is full of scams. See “China’s Evergrande plans to prioritize EV business” in automotive news Europe. Clearly, creating EVs is a fad like EFTs (or the digital coins) and represent a quick way to get cash from the gullible.
“Clearly, creating EVs is a fad…”
You need to distinguish between the stocks of EV SPACs and the actual vehicles that the industry produces.
In terms of the vehicles, it’s a huge and booming industry that cannot produce enough to satisfy demand. All the global automakers are all over it because they understand that this is what customers want. ICE vehicle sales have been spiraling lower meanwhile. So EVs are not a fad.
What is, or rather was, a fad is the EV-startup SPAC craze discussed here.
The governor of California just proposed a bill outlawing gasoline driven lawn machinery. There is some electric replacement equipment already, but most of it is light weight, and California is obsessive about weed abatement. Maybe some smart guy will figure out how to rig up his EV PU with an pull behind electric motor head on a blade. When they built my house in the 50s they built in outdoor 240 volt outlets which might come in handy again. I just wonder if the 200 amp service I upgraded to a few years ago is really enough. Take away the Briggs and Stratton and your whole world changes.
While EVs are not catching on as quick in the U.S. as elsewhere, the latest move by Ford will radically change that within a year.
The adoption rate of EV vehicles in Europe is irrefutable evdence that EVs are definitely not a “fad”. It is the gas guzzlers that are going the way of the dodo bird as they are rapidly replaced by the exponential EV adoption curve.
All these Headlines are from the past two weeks:
Electric Car Market Grows To 29% In Europe As EV Sales Explode!
First ride: 2022 Ford F-150 Lightning adds finesse to America’s bestselling truck
XPeng expands presence in Europe, establishing sales and service partnerships in Netherlands and Sweden
Renault Group, Valeo, and Valeo Siemens eAutomotive join forces to develop and manufacture a new-generation automotive electric motor in France
Toyota commits multimillion-dollar investment to further expand production of electrified vehicles
True that. Of course, whether powered by batteries or by hydrogen fuel cells, EVs are clearly the future. However, it seems like everyone and his brother is getting into manufacturing EVs, which EV-manufacturing is a fad among manufacturers due to investors wanting to buy the next Amazon at its inception, because most new EV makers will likely fail.
I just hope current, decent, US automakers like Ford are not among the failures. (Tesla will very likely be very successful over time, but its stock is just still overvalued with its Yahoo-reported 175 price earnings ratio, albeit it less overvalued now. Interest rate raises will make more such stocks’ relatively low earnings look less and less desirable.)
EVs are not what customers want.
The government with its policy is forcing people to buy EVs.
It is almost impossible to buy a car with an internal compbustion engine with no turbo charger/supercharger or isn’t hybrid.
And finding a manual transmission is almost impossible nowadays as well.
“The government with its policy is forcing people to buy EVs.”
Bullshit. NO ONE is forcing you to buy an EV. Maybe in the future, but that day is far away if it ever comes. Right now, there is big demand and not enough supply of EVs because people WANT to buy them. I should delete these effing lies.
I hear you about limited choices in terms of ICE power trains and transmissions. Time has moved on. You don’t get that old 3-spreed stick shift anymore.
But try a 10-speed shiftable automatic. Pretty sweet. standard now on every Ford F-150.
Right wolf, it’s not a fad, it’s a quasi religion/ cult and cultists don’t look at conflicting evidence. It’s a belief system combined with a free lunch. Living in San Fran freako does that to ya (I escaped decades ago).
I think the technology is cool but you and yours are heading for a rude awakening.
Ever seen a lithium mine? How about a cobalt mine or the child labor that digs it up. Ten years to get carbon neutral for a Tesla battery… if you don’t supercharge it. How much copper ya got? How much do ya need extrapolated out?
How’s your grid Frisco guy? Is your disfunctional state gonna be able to handle it?
Unicorns and free lunch, I’ll see ya at the uranium mine.
I get so tired of this copy-and-paste BS of ICE vehicle owners telling EV owners that their EVs don’t work and won’t ever work. This stuff is just braindead ridiculous.
Reality is EV sales are booming because people WANT to buy them, and ICE vehicle sales are spiraling down, and it doesn’t matter one iota that you think EVs will never work. You’ve been obviated by events. Take pride in it. Cheers!!
Oh, I forgot. Ever looked at a ranch that has a bunch of fracking wells on it? Ever looked at tar sands oil production (lots of great pics on the internet, very photogenic)? Ever looked at mountaintop coal mining operations? Well, obviously not. Energy is a dirty business, dude, no matter what you do. There are no free lunches with energy.
Right in your area (Southern California), there are HUGE lithium deposits. If there is enough demand, it will get mined via huge equipment and automation – not child labor. But the shirts that you wear are likely made by child labor. I hope you feel good about that.
Most of the time the best ideas will win out over time. There are a lot of good ideas but over time the ideas have to compete in the world of limited resources. Sure government puts their finger on the scale through regulation, but in the end the best cost effective technology will win out.
Too early to tell with EVs yet. We will probably find out the modern IC engine is pretty tough to displace on massive scale. I think we will hit a wall with mining materials for the batteries as it takes about 15 – 20 years to get a mine permitted and producing in developed world economies.
Just what in the hell is a “solid-state lithium metal battery”? A doped chunk of lithium that somehow gets a very large amount of capacitance?
A battery is just a big well designed electrolytic capacitor that is resistant to bleeding off.
Perhaps that is the limit of my electronic knowledge (as I am not fully current), although I suspect it is just playing with words…..e.g., A LIE.
Will anything happen to Gates for lending his “tech creds” (such as they are) to this? And through what method(s) did he get paid for it to make it worth his time?
Another defense for promoters is that their statements about the future are opinions, thus not statements of fact, thus not fraud. This was used by some credit rating agencies to elude responsibility for the horrific ratings that greased investor losses in the GFC.
But the regulators got after them and at least fined some of them, anyway.
“But the regulators got after them and at least fined some of them, anyway.”
In typical fashion, closing the barn door after the horses had already bolted. The SEC created this mess, back in 1974 by designating rating firms as NRSROs. Prior to that, bond buyers paid the bill. Bond issuers paying rating agencies is a gross conflict of interest, yet it remains.
“ridiculous growth projections”
The entire US stock market’s valuation is and has been based upon a complete fantasy. So are the market values of companies like Tesla and so are the market values of “industries” like crypto.
“The entire US stock market’s valuation is and has been based upon a complete fantasy. So are the market values of companies like Tesla and so are the market values of “industries” like crypto.”
This summarize the Crap show basically. So thank You.
And remember, once you remove the one vital element of a market function , you’ve removed them all!
No price discovery allowed!
No large companies allowed to fail!
Not allowing the market forces to find its equilibrium!!!
And.,. You can add your own here too:
And another thing , I am Not trying to take the piss ! and feel deep empathy with the average American citizen, but!
At what point does he/she not realizes that the continued erosion of his/her Freedoms, quality and standards of living is in huge part due basically to their own doings and choices.
The abrogations of one’s critical processing of events and surrounding phenomena , (be them in life in general or specific to the financial realm )and surrendering them to others is inviting trouble!
The empathy tank thus far empties!!
And I ask once more, how long will it take you folks to see and comprehend the truth?
Your “ Elected are NOT working for you”!
You have being dealt with as mushrooms, and fed a whole heap of the proverbial.
The economy is a slow motion train wreck. Impossible to stop, but easy to avoid. Set up your lawn chairs and get out the popcorn.
It’s possible and very probable that the ”propaganda/brain washing machine” envisioned by fascists regimes in the 1930s era is alive and well today Jack..
Do NOT under any circumstances look closely at the total propaganda being promulgated these days through the internet,,, and it was CERTAINLY that way for ”TELE – VISION” for several decades…
Don’t know if still true, ( maybe Wolf can advise ) ,,, but for a long long time USA was one of the very few nations that did NOT ban subliminal advertising on TV or Radio each of which were ”ON” all day every day,,, because, of course, ”advertising industry” would not allow it, and made sure it was not illegal through massive ”campaign contributions”,,, etc., etc.
Folks really need to understand that the VAST and clearly NOT regulated gazillionaires do WHAT they want and WHEN they want with absolutely NO regard to WE the PEONS… understanding that is key to understanding current SITREPs, etc.
Jack, what you stated is true. Thank you for saying it and voicing the question of why people don’t stop this abuse by doing what is best for them, rather than what the profit over people and planet greedballs dictate. As you surmised, ordinary propaganda is quite ineffective on people trained in critical thinking, but quite effective on those lacking critical thinking skills.
What I think has caused this lack if critical thinking skills in the general populace is the methodical application of Agnotology.
What don’t we know, and why don’t we know it? What keeps ignorance alive, or allows it to be used as a political instrument? Agnotology—the study of ignorance—provides a new theoretical perspective to broaden traditional questions about “how we know” to ask: Why don’t we know what we don’t know?
The essays assembled in Agnotology show that ignorance is often more than just an absence of knowledge. Ignorance has a history and a political geography, but there are also things people don’t want you to know (“Doubt is our product” is the tobacco industry slogan).
Google this for the full article on Agnotology:
Agnotology – The Making and Unmaking of Ignorance – Edited by Robert N. Proctor and Londa Schiebinger
Jack/Gelbert-still have to deal with the effects of the seemingly congenital Dunning-Kruger Syndrome, however…
may we all find a better day.
Don’t forget about APPH – Fox Business was pumping this one hard. Not in the EV space, I know, but still relevant.
Yes, there are tons of similar goodies out there. APPH is a very good goodie :-]
Forwarded this article to SEC, DOJ and US Administration directly also
Should your forward actually be seen by a living human being, he/she will be of the lower paid variety who will undoubtedly file it in the round file cabinet.
But if sending the message somehow makes you fell better ….
We need a good recession where every public market investment that isn’t generating positive cash flow goes to zero. I just read multiple wall Street banks had 50:1 leverage on some treasury position within the last few weeks.
It’s just become gambling for the majority of participants. Supposed to be about longer term capital investment and secure retirement investment vehicles..
The market, under the surface, is melting down. The issue keeping the indexes from revealing the destruction is the fact that the top few names, like Apple, Amazon, Google etc make up a very large amount of the capitalization of the indexes. IMO, They may be breaking soon.
Just one example of a former darling that is included in lots of growth portfolios…..Paypal…..far from a speculative hunk of junk that was pumped by most houses……peaked at 308 per share last summer and is now headed lower at 114. If you look at the earnings there has been no growth in the past year….so it might bottom at 30 or so.
At least it has earnings….most of the junk Wolfe is illustrating in his article were and are total hunks of junk pumped by your local financial advisor……..education and qualifications for a financial advisor…….none.
So as this market continues to narrow and the macro risks continue to grow…..don’t be surprised to see S&P 500 at 1500 some day. If it don’t make it….for most growth investors that are diversified….it might feel like it. If the Russians cross the border oil will jump 10 to 20 per barrel which will create one of those hard to wake up mornings in the market and drive rates down. The fed is going to have a real mess on its hand with the bond market, which they were counting on to do their jobs, stimulating while they are trying to slow……mean while oil will be driving inflation wild.
Of course if they don’t cross……..it will create enough uncertainty that the fed will not know what to do…..particularly considering this pack of crooks and morons have created a situation that is getting more dangerous by the day.
1500 on the S&P is only back where it was in October 2007 and March 2007. Even with a 66% loss from the peak, it would still be overvalued versus the historical norm.
The US stock market has never been more overvalued in history. To some, it looks (somewhat) “reasonable” because of the bond mania (also the biggest ever) which inflates revenues from the fake economy, lowers interest expense due to yield suppression, and basement level dividend yields are supposedly “competitive” due to TINA.
For anyone who claims the dot.com bubble was worse due to the worthless P/E ratio, there was no bond mania, no real estate bubble, no fake economy, and no Bizarro World monetary policy in 2000. It was a mania but nothing close to now. It’s also the same mania, as it never really ended.
Also look at what happened to the US stock market between February 9, 1966 and August 13, 1982. The DJIA fell from 995 to 776, a 24% nominal loss but about 75% adjusted for price changes, excluding dividends. That’s 16 years of stagnation from the peak when the fundamentals were much better and though prices were historically high at the time, a “moonshot” from current valuations.
The S&P is going to fall a lot more than 66% from the January 5 peak or whatever peak it ultimately reaches when the next major bear market ends, likely several decades to half a century in the future.
The actual fundamentals underlying this market are mediocre to awful. It’s just not evident to most due to manic psychology. The (worst) bad news will come out during the strongest part of the decline and at the end, as it always does. It never does at the peak.
March 2000, not March 2007
The rich already profited. They are finding bag holders to buy their stocks before the stock market goes crashing down later this year. Remember to buy Dog coin at 75 cents because the news reporter dressed up seductively and told us to?
I expect the majority of the estimated 724 current billionaires to lose most of their fake wealth too.
If they are as smart as most seem to think, they will at least covert the predominant bag of hot air they currently own into something more tangible, even if it’s the shares
of a company that makes or sells something of substance that is somewhat less absurdly overpriced.
Look at CSCO. It peaked at 82 during the dot.com bubble. It closed Friday at $53+, a 35% loss after 20 years (excluding dividends) and this is during the biggest mania of all time.
The company has done very well since 2000 but the stock hasn’t. It’s a solid company making something actually useful but was hugely overpriced at the time.
Only a few of the currently most hyped stocks are going to do as well once this mania crashes and burns. Most of them are probably going to go bankrupt or lose over 95% of current value.
Let’s hope that the billionaires lose their net worth a bit. But I fear that for every dollar they lose, they lay off a thousand minimum wage workers.
The algorithms will still be able to front run the shorts;
It will be a slow long ride down with plenty of upward
bursts. The Peaks and valleys will be like the mountain ranges sloping downwards towards rivers of lost equity.
Excellent comment, and historically accurate.
Yet “crypto” makes these pump and dump schemes look honest. I mean, “Dogecoin?” LMFAO. A meltdown a comin’.
A VERY interesting read, another place consumers are sending big bucks to places and people and situations unknown, and bound to bring a LOT of consumer woes along the line:
What Happens If a Cryptocurrency Exchange Files for Bankruptcy?
You will need a pooper scooper for Dogecoin.
I believe Dogecoin was originally started as a joke.
Yes, but who was buying this crap? Who are the bagholders?
Not sure Joe Sixpack could muster enough total cash to make a dent. Pensions, widows and orphans funds? 401k’s?
Crush the Pesants!
“…Yes, but who was buying this crap? Who are the bagholders?”
1) drug dealers
2) money launderers
3) plus about 37 millennials
Wasn’t Nikola the one who supposedly had an electric 18 wheeler almost ready to go, but they found out the whole thing was one giant orchestrated fraud, kind of like Colin Powell and Co.’s “global weapons of mass destruction?”
Nikola had a promo video where their electrical truck was rolled down a hill.
So it does roll. Half way there. Added to my Tesla puts.
Everyone knows Sunday is the Crypto Bowl … anyone care to predict whether it will be a sell-the-news event vs a catalyst for further adoption?
I predict the Rams win it!
lol. Crypto Bowl. You said it. Literally.
Being played in the shiny new “So-Fi Stadium”, named for an “online personal finance company”, offering newbies an exciting array of online “investment” opportunities (including Cryptocurrencies starting in 2019), from the convenience of one’s very own phone!
(Naming rights for So-Fi Stadium at a then record $30 million per year for 20 years).
But not being much of a football fan, I’ll probably just watch the LA Lakers instead over at LA’s other sports venue recently re-named…wait for it…the “Crypto.com Arena.” Fans call it “The Crypt”, get it?
Crypto.com agreed to pay a mere $700 million dollars! for 20 years of naming rights, versus the $120 million Staples Inc. had paid for the same rights for the same arena over the previous 20 years. Inflation!
But who cares? “New Normal!” Totally worth every penny.
Remember Enron Stadium?
Here, BTW, is another fraud defense even further down the gutter: the alleged fraudster asserts, “nobody would reasonably believe what I said.” Think about it: the fraudster is saying, “what I said was so ridiculous, the suckers who believed me (and whose money I took) are such fools, I did not commit fraud.”
This was actually raised by some lawyers and others who made wildly unsupported claims about the 2020 Prez election. They were admitting the science-fictional character of their claims and in effect mocking the folly of their followers, who still don’t get the joke, though many of them are going to actual jails at this point.
=Romeo Power, which is developing batteries for EVs=
=QuantumScape, which is trying to develop solid-state lithium metal batteries for EVs=
One gets the impression that the team of PhD MIT scientists spends sleepless nights inventing batteries which will change EVERYTHING 😀
It is not the case.All EV car batteries are pretty much the same – 1000’s of 18650 Li-ion batteries used in flashlights and vaporizers.Tesla Model S car battery consists of 7,104 18650 batteries.
Since Li-ion batteries are unpredictable and tend to self-combust,especially while being charged, without any reason – USPS imposed severe restrictions on shipping Li-ion batteries.
I understand that USPS Cliff Clavins are such scaredy cats running away from 1 burning battery…
But 7,104 burning batteries are quite a show.
“While they were asleep, their Teslas burned in the garage. It’s a risk many automakers are taking seriously.”
Also bear in mind that even if 1 of 7,104 batteries fails your Tesla dealer will recommend replacing the whole block.
15 gallons of gasoline igniting the entire vehicle is quite a show too. About 250 people a year die in ICE vehicle fires. Not fun. I’ve seen a few of those wrecks after they were done burning.
Yes, ICE vehicles burn to the ground, too. In fact Ram diesel trucks have had this feature for years, due to a host of different problems. For a while it was diesel fuel leaking in the engine bay, then catching the rig on fire. There are even some videos of duallies burning to the ground with big RVs still attached.
The latest one is a short in the engine bay which ignites after the vehicle is shut off, and burns down your truck and the house you’re sleeping in. They’ve asked people to “park outside” at this time.
But none of that takes away from the fact that Teslas like to burn to the ground, and much hotter than the typical ICE vehicle, so hot that fire departments sometimes have to let them just burn themselves down through the asphalt until there’s nothing left but a smoldering hole many hours later.
When we were young and stupid teenagers, we used to have keg parties out in the woods. We’d have massive bonfires fueled by free pallets. This is back when resources were plentiful. On a couple occasions, somebody threw a magnesium VW engine block on the coals late in the evening. It was “burning man” before Burning Man ever existed, because the white hot fire was something to behold, that is for sure.
On a related note, I once got caught behind a VW bus on a winding mountain road which was struggling mightily, then caught fire from overheating, and the entire thing burned to the ground right in front of everybody. Same store – white hot magnesium fire, but I digress.
Depth-would posit that resources have never been that plentiful, just that their mass consumption has been economically cheap/available for some and beneficial to others at a point in time. Meaningful reinvestment in planetary resources is something that has been historically avoided if possible, now leading to compromise of the planetary systems that allow our long-term human success…
may we all find a better day.
DC PLEASE stop lying to make a “good” story……VWs don’t have magnesium blocks. In fact, spend some research time (would be good for you instead of spouting off) finding cars that DO.
And 91B20…..saving the planet for our species is NOW the ONLY absolute mandate we have…..unless one didn’t enjoy their time as a hominid and figures others didn’t either…a pretty selfish assumption……..
NBay-am with you here, just at a lowered volume in hopes of getting through (could certainly be a fool’s errand on my part). Not excoriating earlier generations/societies for working under metaphysical directives (“…multiply and subdue the earth…”) coupled with or impeding the slow march of scientific understanding of the planet and universe (that raft’s gone downriver). See it more for the ‘now’ as a “…what did we know and when did we know it?…” situation regarding the very real issues of maintenance and preservation of a hominid-friendly planet.
cheers ‘n coffee in Santa Rosa one of these days?
of which may we all find a better one.
Like my MGB :((
Sorry to hear. Those are cute!
Once again, before you delete my comment again because it’s too truthful as you are a chicken shit paid Fed representative, EVs are an impossible proposition like the rest of the green movement. It’s all designed to wipe out the remainder of the USA middle class. EVs do not save energy. They waste energy and valuable resources. There isn’t enough ore in the ground to make them.
My good man, you’ve got esprit, but the tactics are lacking!
I don’t want to be dependent on this crappy utility company Pepco, for my transportation. Pepco can’t even keep the power on during clear sunny weather. I like my ICE car. Why don’t they just build cars that get better mileage?
They do. Buy a hybrid. 50-100% more miles for the same amount of gas. Or, same ride for half the gas.
You don’t need a plug-in hybrid with an EV-sized battery to get the fuel efficiency boost.
The smaller battery in the typical hybrid can be replaced after 100K miles for $2-3K. With the savings in fuel, it pays for itself.
Disclaimer: I own two different Honda hybrid vehicles (’18, ’21) and love them both. These replaced 15-20 year old conventional gas cars of similar body types, and do in fact deliver 80% better mpg.
Imagine everyone in FL has EVs…..
and there is an evacuation directive due to a class 4 hurricane coming….
does everyone stop in Jacksonville and recharge…how, where?
And remember the I 95 log jam about 6 weeks ago? Imagine all in EVs….how to move, recharge, all those vehicles?
Historicus, good point regarding EVs. But I was talking about gasoline powered hybrid vehicles. These don’t need to stop and recharge. The onboard battery, electric motor and regenerative braking enable them to get 50-100% better fuel efficiency than the non-hybrid equivalent models.
So as a result they also have better range. You can evacuate Miami, blow right through Jacksonville and not stop to refuel with gas until Savannah or Atlanta.
I agree with you that there will be a lot of unintended and disastrous consequences of government mandates to switch over to all EV. Hydrocarbons make a lot of sense technically as vehicle fuels (energy density, refueling, safety…), and using a diverse range energy options makes society a lot more resilient. We should be doing more to develop renewable hydrocarbon fuels, rather than trying to go all-electric.
Hist, SC, Stupid, et al, like to use gas (or even worse, ethanol from corn) to heat the outside air and make brake dust. But they don’t know that.
F=MA is just another socialist conspiracy threatening their “freedom and culture”.
I think the effort is moving pathetically…no…make that DANGEROUSLY SLOW towards a Comprehensive Green New Industry.
But then I’m godless libtard who would like to flat out destroy America by shrinking (and reducing) personal transport size (and home size) and lowering speed limits and a whole bunch of other unpatriotic things.
I agree – ICE cars will likely remain the primary mode of transportation outside of cities for some time. Cheap, reliable, not range bound etc. But eventually EV will replace them as grid become capable of providing enough power for them, and battery technology improves.
I was wondering why all EV makers use fixed large batteries in their EVs. Why not to use smaller, removable batteries that can be swapped out of EV, and new fully charged one be swapped in, kind of like BBQ propane tanks ? EV would come to “gas station”, swapped out empty battery, swapped in the full one, and leave in minutes. The “gas station” stuff would took care of recharging empty batteries. Any thoughts if this model will work ?
Be easier to just swap cars.
There are programs like that in China. But the battery is big part of the cost of the car. So if you buy the car with a swappable battery, who would own the battery? Would you buy the car and rent the use of the battery? If you don’t own the car, this model would work better. Also, if it takes 30 min to charge the car and 5 minutes to swap the battery, is it really worth the trouble to swap the battery?
I thought that Tesla battery weighed 1200 lbs.
That doesn’t sound like a “leave in minutes” operation. I’m constantly amazed by ingenuity, though so maybe it is…
Many believe nuclear fusion is the future after the UK scientists recentlyperformed this experiment successfully
Thanks to all folks that replied to my post.
Let me clarify a bit this idea of EV with the swappable battery.
I didn’t mean to swap huge 1200 lbs battery; I was thinking of EV powered by a set (say, 10) of smaller batteries. EV would power off the first battery in the set until it is exhausted, then switch to the second one, and so on. So what is being swapped out at “gas station” is a bunch of smaller batteries, not the huge 1200 lbs thing. This would also solve the problem of what to do when EV battery goes bad (swap it out).
As for Wolf’s question of who owns the swappable battery, perhaps the same ownership scheme can be used as with BBQ propane tank. Initially EV would come with come with its own battery/batteries, and once they get exhausted, EV owner would swap them with the fully charged ones at “gas station”.
Battery swapping is just not a viable technology. I own a plugin hybrid with a relatively small 8kWh battery that gives me 25-30miles EV range. This battery weighs 80kg, so even for this small battery you’d need a lift to change it. And apart from the weight, to make these batteries swappable in the first place you’d need to completely redesign the car. You can’t put them right at the front or the back because these are the areas that get damaged by the typical collision. Most modern EVs have the batteries below the car, which makes it impossible to swap quickly.
What makes sense however is swapping cars. Why would every person need an EV with 300miles range if they typically only drive 20 miles to work und use that range maybe once a month? Car sharing could be the solution to limited resources, but people won’t make the convenience compromises until either cars are a lot more expensive or the country as a whole a lot poorer.
For long distance driving the battery pack
could be towed behind the vehicle
Think propane tanks on your gas grill. I take them to the local hardware store to refill until they are due for inspection then I just swap them out at the nearest Rhino location. You could do the same with your batteries and dump them on someone else when they start to show loss of capacity.
I say good idea…DAMN good idea. Saw where they do that for motor scooters in Taiwan. Fast , do it yourself in a few minutes….two milk jug sized batts under flip up seat.
Cars would require a bigger manned or robotic system, but still could be done in a couple minutes. You pay for KWH and a smaller charge for swap. Have to standardize a lot of things, but so what? Buy some dingle balls or a bumpersticker to “personalize” your ride.
Yuan….come on, ever see a drive over oil change bay?
et al-see a YUUGE RE conundrum/opportunity here (think of the number of cars that pass through your typical gasoline station every day. Thousands of gallons of fuel are stored reasonably efficiently underground to serve them. Can’t do that with the ‘Rhino’ 5gal propane model, though. Ergo: more real estate and aboveground warehousing for ‘swap stations’ will be required when implementing this model. More than willing to acknowledge my mileage may be varying here, and-full disclosure-have been very pleased with the performance/mileage of the Venza hybrid we purchased last year…).
ay we all find a better day.
I can’t tell you how much gasoline I have not paid for driving my Bolt EV. I just laugh at the fools waiting for one of 32 pumps at my local Costco.
Laughing at the fools you say…..
IMHO this kind of arrogant attitude that EV owners too often show toward the rest of the folks, is one of the main sources of antagonism toward EVs.
It transcends EVs. These virtue-signaling narcissists need to be knocked back a peg or two in life – humbled. They take pride in mocking others and portraying themselves as some sort of superior beings when in fact they’re mentally ill inferiors.
Well, get an EV and you don’t have to pay for gas either. You have a choice. If you don’t want to pay for gas, get an EV. If you don’t want to pay for electricity, get and ICE vehicle. Both are available.
And you made your choice. What’s the problem? Angry that you’re getting ripped off by the gas prices?
In the cosmic scheme of things we are ALL nobodies….even the somebodies!…….don’t get so wound up or full of yourself.
Watch the South Park show on EVs and laugh at both “sides”….it’s one of their best. Funny as hell.
Wolf please do not take this comment down. We all need a good conspiracy theorist to keep our tin-foil hats on straight. LOL
Thank you for choosing a screen name that perfectly describes you. This braindead crap has been copied-and-pasted for years, including by people like you — if you’re actually a person not a bot. Ever since I had this website and “EV” was in the title, the braindead comments get copied-and-pasted on how EVs will never work, how they cannot work, how they waste resources, how they pollute more than ICE vehicles, how they burn coal, how they can never be charged because the grid…. yadayadayada. Post this braindead BS on twitter.
And yet, in reality, EV sales are the only segment in the auto industry that is growing in leaps and bounds while ICE vehicle sales are in sharp decline.
Do you think that the EV of 21st century will be more affordable than the ICE vehicles of 20th century?
I mean in cost per unit of distance.
The stake I see here is the personal mobility as a part of lifestyle.
Operating costs of EVs have been lower from get go.
In terms of acquisition costs… The manufacturing costs of EVs are much lower, except the battery, and the battery costs have been coming down too. When they enter huge global mass production on the scale of ICE vehicles, production costs should be much lower than ICE vehicles.
There is also a chance that more of the vehicles will be assembled in the US because they’re less labor intensive. We’re seeing some of that already with GM and Ford.
The question I have for the future is this: will automakers just increase their margins, or will they pass on the lower costs? Only a very competitive environment will force them to pass on the lower costs. So I’m rooting for all the new companies to shake up the legacy auto makers.
Hey, it’s still possible the materials guys will come up with a ceramic turbo ICE engine that runs hot as hell, needs no radiator. and delivers 25-35 hp to the rear wheels of a small two seater suv
from 200cc…or less..and sips hydrocarbons or H2.
The point is the money has to be invested in this stuff rather than cruise ships and other stupid crapp.
Only if you give a damn about 5 year olds…ANYBODY’S….that is. Good planets are hard to find…….
And before you start whining about China or whoever, what did your parents say to you when you whined, “But the Jones kids get to…..”?
‘EV sales are the only segment in the auto industry that is growing in leaps and bounds while ICE vehicle sales are in sharp decline’
Sounds great and idealistic! I am all for it!
Will we ‘enough’ RESOURCES in terms of mining and metals++ needed to make it come true? What’s the effect on the environment?
The problem is, getting to 100% renewables, if that is even possible (I’d say more like 40%, if we’re lucky) will require more metals than are currently available in the world’s mines. Shortages are forecasted by 2030 for cobalt, copper, lithium, natural graphite, nickel and rare earths.
The irony is, the rush to “go green” carries with it the simple fact that the mining of this stuff is anything but. Yet because Western countries like Canada and the US haven’t bothered to develop their own mine to electric vehicle, or mine to renewable energy plant supply chains, they are dependent on imports. EVs and solar/wind sound green, but how green are they when the materials are being imported from places like Indonesia, which allows tailings to be dumped into the sea, and the extremely polluting HPAL method of separating laterite nickel into the end product used in batteries?
People who bring up this “green” argument like Mish are trotting out a red herring. These people like Mish have a short-circuit going on their brains. They cannot add 2 and 2 together. Forget green.
Green is NOT why 100,000 people got in line to buy a 600-hp Ford EV monster pickup. Get it?
Americans buy vehicles because they WANT to buy them. This same-old-same-old copy-and-paste nonsense, such as that crap from Mish, is getting really old after seeing it for ten years. It’s just braindead. What goes on at Mish stays at Mish. Don’t drag this garbage into here.
Americans have been using a huge amount of resources forever!!! Why should an EV buyer suddenly have to worry about resources when an F-150 buyer doesn’t give a crap. Why does this braindead manipulative bullshit keep showing up on my site???
Apparently you even never bothered to read the original article
It is NOTHING to do with Mish!
Is Going Green Really Worth It?
That’s the question Rick Mills at “Ahead Of The Herd” addresses in his most recent column.
This kind of abrupt, snapping at opinion/blogs ‘not agreeing with one’s views’ is childish. It is a view point with several valid points, if one reads the LONG article completely.
Our resources are limited is the bottomline. If a you think that’s wrong assumption, I am guilty as charged!
You didn’t get my point. So I’ll repeat it:
“Green is NOT why 100,000 people got in line to buy a 600-hp Ford EV monster pickup. Get it? Americans buy vehicles because they WANT to buy them.”
People who drag any of this “green” BS into EVs don’t understand a thing about the car market.
And why is it that only EV buyers have to worry about resources when Ford F-150 buyers, that shell out $80K for a monster truck don’t have to? Hypocritical, no?
The pollution out of the brand new diesel trucks is now near zero. You can’t smell anything even if you sit right next to the tailpipe. So, with ICE reaching zero emissions, the question is would you rather be drilling holes and sucking liquid out of the earth through a straw for your energy, or raping the surface for your lithium? Google “lithium stip mines” and you tell me. I prefer the straw. Oil runs this world. Lithium and batteries never will.
Oil needs to be sucked out of the ground per mile travelled, while lithium needs to be strip-mined once, per EV built (and then EV can run on this lithium for a decade). Also oil is becoming scarce, and is needed by other technologies (plastics etc.). So I personally would prefer strip-mining lithium – at least this can be done for long time, way longer than oil would be available.
EVs had a great misfortune to become associated with a certain type of people (“virtue-signalling narcissists”, in your terminology) . This resulted in formation of perception that EVs are just a plaything for these unbearable folks. I predict that this perception will be broken soon, as EV trucks and mascular cars become available, as military uses them for transportation and combat, as costs come down, and – most importantly – they can compete for the common folks’s hard earned money on their own merits, without government subsidies, climate propaganda etc., and win this competition fair and square.
“The pollution out of the brand new diesel trucks is now near zero.”
” So, with ICE reaching zero emissions,…”
Diesels have gotten a lot cleaner than the they were, but there is no such thing as a clean diesel. Diesel (along with kerosin-type jet fuel) are terrible fuels. You cannot measure pollution by smelling something. Pollution comes in many forms, including microscopic particulate matter that goes through your lungs into your bloodstream. ICE have gotten a lot cleaner too, but they’re still big polluters.
And why are you even bringing up this bullshit?
By the way, when I said it was “to trigger you,” Wolf, I was being facetious. I have never set out to to upset you. I think your information is usually very accurate, and presented in a great way.
I read a lot about diesels since I need them for work. The trucks now are so much cleaner, and the technology has made real progress. There are a lot of BTUs in a gallon of diesel, and everything you see on the store shelves everywhere is a result of burning diesel fuel.
CO2…..even if oil DID last forever, which it won’t.
And Jesus belongs with Santa Claus and the tooth fairy.
The subject post by “Stupid” was in very poor taste. Wolf deserves credit for not deleting it. Name calling is not appropriate.
there were some 250 million SUVs on the road in 2020. That’s several times more than enough to wipe out any decarbonization gains that came from the 10-million-odd electric cars. In recent years, SUVs have been the second highest cause of rising carbon-dioxide emissions, behind elec- tricity generation and ahead of heavy industry, trucking, and aviation. If this trend continues, the additional SUVs on the road by 2040 could offset the carbon savings from more than 100 million electric vehicles.
The United States started the trend. SUVs took up 1.8 percent of the U.S. light-vehicle market in 1975, rising to 5.1 percent a decade later and to 18.9 percent by 2000. The financial crisis of 2008 induced only a small dip and by 2010 SUVs made up nearly 30 percent of all sales and reached half of the market in 2020.
‘ There isn’t enough ore in the ground to make them’
Hard truth and reality, every one is conveniently ignoring!
All the alternative energy sources have also detrimental effect on environment like mining, water depletion and pollution.
The problem is, getting to 100% renewables, if that is even possible (I’d say more like 40%, if we’re lucky) will require more metals than are currently available in the world’s mines. Shortages are forecasted by 2030 for cobalt, copper, lithium, natural graphite, nickel and rare earths.
(h/t Mishtalk – Is going GREEN really worth it)
IMHO it will not be possible for human civilization to achieve 100% renewable power, but it will be possible to eliminate all types of fossil fuels (coal, natural gas) by switching to nuclear energy. If fact, I would claim that widespread adoption of EVs is 100% conditional on major scale-up of the nuclear power generation.
For that to happen, nuclear energy engineers will need to solve two big problems – radioactive waste disposal, and safer nuclear process (thorium ? small-scale reactors ?). It will take an effort to do that, but this is achievable.
One day AK ,one day.
Despite all the doom and gloom that human beings “the shonky one’s that is”! 🤣
There will be a place to dream about the holy grail of pure 100% renewable energy !
Not the Bull Shit that the political “greenie radical agendas “ so loud, so forcefully try to ram down our throats.
I am talking about Nuclear Fusion.
That might sound like a very far off dream, but look at our history in the last 200 odd years!
Now just imagine if we dedicated only a small portion of our trillions to make those dreams come true!
CAN YOU ENTERTAIN SUCH A FUTURE DREAM AK? Can you?
What about drinkable water most important resource on earth ,but we stupid humanoids ,to dumb to realize it
Flea-but for a lot of humans it’s just the old song lyric: “…you don’t miss your water ’til the well runs dry…”.
may we all find a better day.
Late 90s I was trading Lucent Tech fast and loose. No one believed Lucent could actually ever go down. I live near the former Corp. Hqtrs. A lot of employees had all retirement savings in Lucent – and lost everthing. Lucent was a legacy to the break up of the Bells and Western Electric. I remember an “elder” in our investment club warning us. But half the club came from Lucent. Just before the dot bomb, I kept buying the dips. At some point I listened to that elder thankfully. Good luck to all.
Hah!, funny you mention “Lucent”. I started thinking about them as I was reading this article. My co-worker bought a bunch of Lucent at around $70 bucks in 1998. He was about 25 years older than me, in his early 60s. As the stock was sliding down over the years He could bring himself to sell it. I remember him joking about it when it reached about $4. So much for buy and hold he said :-)
Correction: “As the stock was sliding down over the years he couldn’t bring himself to sell it”.
That’s what the majority of “investors” have been conditioned to do and that’s what they are going to do when this mania ends.
It’s impossible for everyone in the aggregate to get out (someone has to own everything at all times) but most will hold it, all the way down.
He probably bought Radio Shack stock, as the company was buying all their stock back. That is until it hit .25/share and filed for bankruptcy.
Back in the late 90s I needed an extra money to put down on a house, back when you needed a full 10% to get to the table. I was wondering how I would do that, but I heard through the crowd that Lucent was a sure thing, and put some money into it. Voila, I made my down payment!
Unfortunately I thought that made me a genius and I kept on trading through the dot com bubble including Broadcom, JDSU and a couple of those high fliers. But I only played with my winnings so didn’t lose any real savings when the collapse came, but I lost a six figure paper gain when I didn’t make six figures! it made me a much more cautious investor, only blue chips and indices now.
Then there was that time when I lost 10% in week in a “safe” bond index fund. I learned the hard way about duration and how the market reacts to perceived Fed movements.
This is why you sell in increments,as investment rises ,pull profits not much different than gambling
What/Flea-illustrating the danger in reading one’s own press releases (yah, i’ve been there, too).
How often is ‘genius’ conflated with an extended run of good fortune?
SWOT analysis on as much as you can, always!
may we all find a better day.
The old adage..
I bought the first break
I bought the second break
I was the third break
It could have been worse — my Dad worked for NorTel (started so long ago that it was Northern Electric) almost all the way through to its utter collapse, escaping only complete immolation by being among those hived off into some small entity (the name of which escapes me — he was a systems analyst in financial database software) they had bought an interest in towards the end. Fortunately he was smart enough to have diversified his investments at least somewhat so as to avoid condemning my mother to penury in her widowhood. But the pension fiasco was something to behold and truly instructive — the puck was ragged so long most pensioners of any consequence (ie. of long standing) were dead before it was settled. I doubt that this was an accident, and the lawyers made out like bandits …
I’m more of a carbeurator guy but those Rivian trucks are pretty cool, gotta admit.
Why isn’t there a standardized car battery that can be charged on racks at a gas station and swapped out in three minutes. Seems this would solve a lot of problems with EVs range and battery replacement. Could have a regular and a premium battery.
Would make for a great IPO. Where’s Bootygig on this?
Battery chemistry is changing too fast now a days.
And would you really swap out a valuable part on your Mercedes or BMW at a Stop-N-Gulp in Natchez, Mississippi?
Speaking for my M8: NO.
Is that an EV? Seriously, I never heard of one before…..maybe it’s an ex-military off-road rig?
It’s a 600-hp BMW with a V-8 ICE, not exactly a run-of-the-mill BMW. You can google it (try: BMW m8) see some pics and details, such as gas mileage, price ($130k-ish), etc.
Probably not something you’d want to take off-road or put to military use other than trying to outrun a missile :-]
Sounds like it belongs on the race track….I mean, isn’t being relegated to driving alongside old ladies going to the grocery a bit insulting to the owner?
I remember when the REAL badge of honor on common roads was the soap writing on the window (still see it but not as much) that showed you DID race it alongside REAL competitors. Even your drag strip ETs were on there.
People left it on till they washed it.
Other than that, old rich guys just bought Cadillacs or maybe Bentleys to show off wealth.
No way they could react fast enough to use the high performance cars….pointless to own one.
What if your EV is not Mercedes or BMW, but 6 year old Hyundai Accent ? How would you answer your question then ?
Also, if you don’t want to swap your swappable EV battery, then just recharge it in-place.
There isn’t a standard battery in power tools for obvious brand and marketing reasons. I really can’t ever see a Tesla battery fitting a Ford EV.
EV development will be geared toward maximum corporate profit potential like any other product. In vehicles, dealerships want you to pay $200 per hour labor and exponential parts cost to work on their own brand after the sale. It’s a huge business that consumers accept, so why not?
It’s been a hundred-plus years since Henry first made a ride the average Joe could afford to drive. Now, everyone has money to burn, corporations find ways to get the maximum buck, not just a profit.
The whole system of IPOs need to be reformed. The current system is theft.
Promoted inflation while pegging rates at Zero is THEFT.
Now at over 7%….
all decided….all intentional..by the unelected cabal known as the Fed.
IPO’s are presented to you “ the prospective investor”, and the “ Facts” or/ and “ lies” are there in the prospective!
So you’re either too lazy to do your own DD, or just lacking some investment skills!
Either way you shouldn’t be investing in what you don’t understand.
Or Maybe have a go at all those cheap as chips NTF!!!! 🤣🤣🤣
I do not thing this replay is going to be published, because owner, MR. Wolf, believe that “government” is here to protect us.
The Securities and Exchange Commission was established by Franklin D. Roosevelt, with its legislation written by corporate lawyers to cartelize the market for big Wall Street firms. Over the years, the SEC has stopped many new stock issues by smaller companies, who might grow and compete with the industrial and commercial giants aligned with the big Wall Street firms.
But in the average history or economics text, these agencies emerge in response to public demand. There is never a hint of the regulatory-industrial complex. We’re told that the public is being served. And it is, on a platter.
SPACs can be hard to borrow.
Count that as a gift from the almighty!
Indeed, John H, indeed. Thou shalt not short thy brother’s shares (whilst he’s losing his shirt).
The moral aspect you mention is one aspect.
I was referring to the possibility that what a speculator decides to short might rebound… at least long and hard enough to wipe out his portfolio!
I’m a chicken, and a self-preservationist, I guess…
If some of these companies are sued by class action lawyers, chances are that there will be very little for individual shareholders after legal expenses. A recent out of court settlement with Altria (a major tobacco company in the US) provided for a settlement of about $0.15 per share for qualifying shareholders and about $30 million for the lawyers. For a small shareholder owning a few hundred shares of the company, it is hardly worth one’s while to complete the claim form.
If you trade in and out of a broad spectrum of stocks throughout the year, and in size, CAL’s can turn out to be an unanticipated, but welcome, additional stream of income.
But the rich bankers and Mutual Fund companies always tell us that investments ALWAYS return 7% year over year on average?
Bitcoin a hedge against inflation? Buy Dog coin at 75 cents because it’s the future of money?
“the rich bankers and Mutual Fund companies always tell us that investments ALWAYS return 7% year over year on average?”
That’s over at least 10 year horizons. not 5-minute ones. Maths make a universe of difference.
Those who took 400% payday loans to but dog coin at 75% are losing tremendously and having to pay quadruple the money they borrowed.
Collateralized Loan Obligations….
the new version of Collateralized Debt Obligations
The debt games encouraged by the Federal Reserve’s policy to force “investors take more risk” is coming home to roost.
Why would a Federal Reserve FORCE investors to take more risk…especially after 2008? Risk is a measure weighed against Return…and the Fed skewed the parameters off of reality into an era of ZIRP desperation and yield chasing.
The debt pyramiding is beyond measure, and the fragility soon to be revealed.
Once again, investors are not “forced” to take more risk. Is one supposed to add investors to the long list of “victims” in American society?
For the most part it is greed and FOMO rather than being an innocent helpless investor victim of Fed policies.
Note that in 2019, “Only 5% of families in the bottom quintile held stocks directly, while 12% of middle-class families and 44% of families in top 10% did.”
Obviously, the worst thing for those in real need, or middle-class raising a family, is inflation caused by Fed policies. They have no assets to be “forced” out on the risk curve. And many are happy to see the investor “victims” getting a haircut.
J Powell took care of his buddies and the debt creation sport for venture capitalists.
The Fed FORCING investors…..I can’t get over that concept, that somehow is “mission” or mandate of the Fed? They are not directed to do such. And the more risk for lesser return creates a “bomb” down the road…and here we are.
They did it to create a mass demand for that which the few already owned.
And who votes all these shares that are held in mutual funds and ETFs………? We know.
The contrast in values between Hoenig and Powell, as related in “Lords of Easy Money” can be traced back to their upbringing and roots. One grew up in the Midwest, worked his way up and did some labor, the other was launched into the country club, prep school, high finance and government agency insider. Never touched a shovel or visited a lumber yard.
When central planners like the Fed decide, they assist one group at the expense of another. And it is clear the Powell assisted those he rubbed elbows with all the way up his career path, and those harmed were more of those who Hoenig knew in his life experiences in the Midwest.
“investors are not “forced” to take more risk. ”
Sure they were.
The choice was reach for assets or get slaughtered by the promoted inflation. That is not being forced into a decision?
Reaching for assets, higher PE ratios, riskier debt securities, paying much higher (all time highs) for housing just to get out of the risk of holding cash. All a result of Fed actions, putting mortgages well below inflation, holding rates at zero as the national debt reaches $30 Trillion….all forced events decided by the Fed, not by free market forces.
No, it is false to say that investors, in general, were forced to take more risk. They could have used their cash (if they had any to invest) to buy a house or some type of hard asset.
I lived frugally my whole life, and jumped on the chance to buy a small house in 2011. I didn’t feel anything was forcing me to take risks. And if I had felt that way, my rebellious nature would have been to say effit. I slaughter inflation. Inflation doesn’t slaughter me.
Your last sentence changes the point you were trying to make to something different: “forced events decided by the Fed.” No problemo with that. That is different from existentially forcing someone to do something.
The major problem was the greedy filthy rich capitalists taking more risk. The were totally into it, not forced. Primarily because the system was rigged, with the Fed put backing them up.
In sum, people are forced to do many things in America (go without adequate health insurance, eat crappy food, live in polluted and violent environments, etc.). I shed no crocodile tears about people being “forced” to invest in risky assets.
” They could have used their cash (if they had any to invest) to buy a house or some type of hard asset.”
They HAD to buy a house or something to get out of cash, which became a wasting asset due to Fed policy.
No one has to do anything but die. Every other action is a choice as is lack of action.
drifterprof, yeah, good for you that you were in a position and time of life to buy a house in 2011 at the bottom, but people who are in their late 20s or early 30s today were not. so they have to pay grossly inflated house prices because of the fed actions historicus mentioned.
people should be able to put their cash in a bank and keep even with inflation. they should not be forced to take risk, which is exactly what buying a house is.
People had to divest from the currency IF they wanted to avoid being harmed by Fed policy decisions.
That was implied because that was the topic.
All these stock schemes have at their core the belief among many that the EV business will be hugely profitable for someone. Even if people like them, and they sell a lot they still won’t be hugely profitable. The auto industry is big but the last time it was hugely profitable was back when a car was made up a of a few iron and steel parts. Henry Ford docked the ore carriers at the River Rouge plant and in 3 days the ore plus a bit of copper, some rubber and some wood was turned in to a model T. An Ev requires complex inputs from all over the globe. From copper wire, to computer chips to lithium, to aluminum to composites these inputs are all skyrocketing in cost, and will continue to do so. Betting on making a big profit on these complex assemblies of expensive and energy intensive components is a fools game. I think they all knew this and decided that stock swindling was the only way to get rich when it comes to EV’s.
Information theory: it is always easier to make up and project a fake reality than to make a concrete, real reality. So, in any innovation period, over time, the rats move in. We got a fake Steve Jobs (Elizabeth Holmes) and now, a whole fake EV industry (superimposed on the real EV industry). Blowing bubbles, as the centuries-old British saying went.
And if you like fake realities, wait for the metaverse. Fake all the way down, in its architecture and essence. Like a poppy dream, but founded on a neurochemical drip, with total surveillance and the meter’s running. Like living inside an advertisement. Made for the era of the luftmensch (air-man).
A zombie can be stopped with a head shot. Not so a with a Venture Capital Zombie that morphs into a SPAC. It takes several well placed head shots to put them down. As long as they are twitching they might rise again.
You’d just king taking down an android. The venture capital Gollums are deep underground and will simply create more androids (derivatives and other creations) to do their bidding.
Yeah, hard to kill a new financial “instrument” and then the well lobbied laws behind it.
That’s why they like (and I hate) corporations. No matter what harm the corporation does, the controllers of it’s deeds are hidden by layers of lesser players and plenty law, and “not responsible in any way”.
And now they are “people”…when they want to be. People have lots of extra rights.
But as my Canadian NDP friends say, “They will believe they are “people” when they are subject to capital punishment.
NBay-still believe if Corp’s. are ‘people’ they (or their assets, at least) need to register and be subject to the draft, like the rest of the (male, anyway) citizenry…
may we all find a better day.
“For example, Nikola, one of the minus-90%-ers, was once worth $34 billion. Now it’s word $3.2 billion – over $30 billion gone up in smoke.”
Wolf, a minor typo. word = worth
I saw Warren Buffett speaking once, and pointing out that trends are easy to spot. But, of the 100 or so ICE car companies at one time, 3 or so survived. So, EV may be the future, but good luck picking winners.
Buffett owns a big stake in BYD, one of the major EV makers and battery makers in China. It also makes EV buses, including in the US.
So… Who’s the WINNER?
As with the ICE vehicle makers 100 years ago, this will take a while to shake out. There are over 300 EV makers in China. A handful will survive. The US is behind. Even Europe is ahead.
It’s the most dynamic thing in the auto industry in my lifetime. It’s fun to watch.
There won’t be a winner because this technology will die out. Recently I saw a video on youtube about the newest Mercedes ElektroCar.
Some interesting points here :
1. The car has an range of 600 km at good weather – at around 0 degree Celsius (freezing point) the radius is just about 400 km
and at 10 to 20 degree minus the range is just a fraction of it.
2. It took 30 min until the battery was loaded till 80 % at good weather. Question : what will happen when you are on a trip and the next available charging station is full – 2 cars before you. Then at least you have to wait 1.5 h for charging your car.
As long as the charging time not comes to an range similar to a petrol car you loose mobility and not gain some. This alone is practically already the knock out for the entire technology.
Only when mum goes for shopping within the city an EV would make sence, charged in the own garage over night and not used for long trips or trips where the driven miles are not planned exactly in advance.
3. There is an total lack of loading stations currently – at least in my country. And where you charge it when live in a condo and not own house ?
4. The EVs are not able to drive a longer trip with high speed. Ok, that is perhaps of no concern for your country.
But the idea of Grand Tourismo – means driving bigger distances with the car instead of airplane is impossible to realize with EV’s since the battery cannot keep up with higher speeds.
5. The technology is not more green than that of an petrol car. The CO2 balance is the same as with an petrol car. Just CO2 is blown to the atmosphere during the production process and not during the usage process.
6. The production is much more cheaper than a petrol car but the price much higher, for what pay that for a product which is not better.
7. Since the software is not open but proprietory you have no more a chance to repair the car by yourself or a free garage.
Instead you have to go to the manufacturer and they can charge you what they want. They have the entire monopoly.
But that is not all – they could even charge you when they need turnover by manipulating some features on the software in order to bring you to their service. They can even stop the entire car. Twice my dear wife lost a smartphone since the vendor did not provide updates anymore. Exactly the same they will do with EV cars – at least when a majority of people would use EV’s.
I use OpenSoftware and be free – at least relatively.
8. EV`s can be produced without people – and that is the reason in my eyes why this technology is pushed so much. So many will loose their jobs.
9. An entire surveillance of the people within the car is possible. Although people like this I guess.
10. An real alternative to EVs would be H2 cars. H2 is burned to H2O – that is water. In my eyes a real good alternative to EVs
and makes sense for our small planet too.
But let them go for EVs now – even the big car producers doing it now – that is good. Soon or later the customer will see what they really got.
In my country the politicians saying – EV driving must become more attractive – and what they mean is they increase taxes for petrol and make it extremly expansive. Could that be also a reason for the high oil prices ?
Why don’t you people let buyers decide what they want, and what they want it for???
This entire BS of ICE-vehicle drivers telling EV drivers that their EVs don’t work for x,y, and z red herring is just dumb.
If you don’t want an EV, don’t buy an EV. Simple as that.
People decide on their own, and they buy what they want to buy. And EV sales are BOOMING and ICE sales are spiraling down. That’s a decision EV buyers made, and they’re buying EVs even if YOU think that EVs will never ever work. But it doesn’t matter what you think except for your own personal decisions. Don’t try to persuade EV owners that their EVs don’t work. That’s just dumb.
Rivian looks like a cartoon. Does that hurt sales (if they can even get production up)?
Don’t forget, Edsel made a great car that didn’t sell because the nose looked like a woman’s privates.
I’ve seem a few Rivian pickups drive by. They looked pretty good, imho, smaller than the ICE monster trucks made by Ford, GM, Ram, and Toyota. That would suit me just fine. But it might be a problem with people who like the new generation of very big trucks.
Wolf – This isn’t related to the thread but which software do you use to plot data on your blogs? Also my professor said he got drinks with you a few years back and he had nothing but good things to say about you
I do everything in Excel. Now I’m wondering who that prof was that I had drinks with. Hmmm
The new full size trucks are too tall for work. Try lifting something heavy over the bed rails. It’s very difficult.
Wolf’s depth of knowledge about the American vehicle market is one more reason to tune in.
The EV SPAC debacle further decreases the chance of new highs on the major averages. It is a privilege to have a front row seat in the bursting of this massive bubble; Wolf has clearly laid the blame on the Fed’s reckless over-stimulation.
“… the company confirmed that it was being investigated by the SEC and the Department of Justice for stock trading issues and accounting issues.”
Amazing how often Wolf mentions some variation of that sentence in this report. I actually got a laugh out of it… how hard is it to avoid “accounting issues” when you don’t have any Revenue? It would seem to me that the Accounting would be pretty easy!
Concerning NKLA : not 30 billion USD gone up in smoke but only the illusion of having that gone up in smoke.
But real wealth changed hands too in deed : those which bought NKLA low and sold it high have taken money from them which did the opposite and on the way down the short sellers have taken real money when they sold high and bought back low from them which did the opposite.
The whole game is some sort of redistribution of money, well orchestrated by mass media, news channels etc..
But important to point out, real wealth not disappeared in smoke but just changed hands !
Wolf, last time I missed the reply button after I got answers to my comment. I guess due to some technical reasons. Hope this time it will not happen !
“just changed hands”
“The printing press allows the government to tap the property of its people without having obtained their consent, and in fact against their consent. What kind of government is it that arbitrarily takes the property of its citizens? Aristotle and many other political philosophers have called it tyranny. ” Mises.org
Which is the true nature of the wealth effect: There is no wealth effect. On the stock market wealth is the future earning potential of a share, it’s absolutely not affected by the price. The price of a share is temporary and eventually returns back into line with the true underlying wealth and since every share is always owned by someone all the illusionary wealth of a bubble is eventually lost again. So all that the FED’s ‘wealth effect’ does is to extend timeframes and multiples at which asset holders can exit their positions with a price gain while bag holders can build positions with a price loss. My suspicion is that the people at the FED actually understand this, but I always underestimate the power of self delusion.
This time is different, they say
SPACs were signaling a bubble top. The market bubble was as big as SPACs were crazy investments. Now the top is behind us and stocks can be shorted. Tesla as the motor of the EV mania will fall a lot. Just my opinion of course. GL to all.
The SPAC will spike, JP will hike and the DOW will start wave (3) of 3.
I am not saying that investing in “pre-revenue” companies isn’t like buying a lottery ticket, but measuring SPACs from their high water mark instead of their $10 issue price and trying to throw shade by implying that having class action lawsuits by ambulance chasing lawyers is direct evidence of impropriety is very misleading.
I have seen estimates that legit cryptocurrencies make up 1 to 5% of total cryptos in number, not value. At least DeSPACs are now SEC reporters and current investors can measure quarterly performance against prior projections. They also will eventually have real sales, earnings and P/Es from real products and services or they will lose access to funding and go BK. Cryptos will never have traditional measurable valuation metrics.
Most SPACs have disruptive business plans so they are high risk, high reward by nature. I expect the percentage of total SPAC scams to pan out to less than 10%, failed business plans another 20 to 50%, survivors that materially underperform their projections 20 to 50%, companies that are successful 10 to 20%, and those that meet or significantly exceed their projections 5 to 15%. MP and DKNG are examples of the latter. I also expect the next Amazon level success to come out of this space with ASTS and ORGN having good, but yet to be determined, chances.
It is surreal to read your comment, Realist.
People who “invest” in companies with no known time horizon for profits and share prices based on ridiculous REVENUE multiples (vs. earnings multiples) deserve to be fleeced. I’ll save my gambling for the Superbowl !!!
Not to worry, most probably bought in with free Dogecoin profits
I wonder if the Department of Justice and the SEC will be as hard on these SPACs as they have been on JPMorganChase.
What, the best run financial institution on the planet for decades now? Yeah, there are a few stumbles, but nothing like other names (Deutsche, etc.). JPM never got too deep in subprime (hence its good condition in ’08), or in the crazier end of credit default swaps (though they innovated it, and used it wisely). Would you care to cite some facts? Whose money did they supposedly misappropriate or lose?
My only involvement with JPM is they hold my mortgage (and have been great with that), and I held a little of their stock at some point, which earned alright, and not fake earnings either.
phleep, I’m glad you’ve had a good experience with JPM and I mean that sincerely.
From wallstreet on parade:
“JPMorgan Chase is the largest bank in the United States. It also has the scandalous distinction of having admitted to five criminal felony counts brought by the U.S. Department of Justice since 2014 and a breathtaking series of additional charges from other regulator.”
If you search, you’ll find court cases.
Jamie and his 31 million payday…
Let’s be candid… the only reason any of this took place is because the Department of Justice, SEC, and the rest of the government allowed it to. SPACs have been around for a while but they didn’t become listed on the NYSE until 2017. The fact that some blogger named Wolf has been reporting on the obvious avenues for fraud in these things (rather than the regulatory agencies) means one shouldn’t get their hopes up that the government is going to do much here.
What actually happens in those class action lawsuits which rightfully allege false accounting etc ?
I agree buying stocks is speculative and you take risks, but if you were lied to and then file suit because of it, the perps are already cashed out. Do these end up in empty judgments where the perps basically got their one payday but can’t form new companies, raise funding etc, but the “victims” get to pund sand ? What’s the point if there are no criminal consequences ?
“pound” sand. ;-)
Exactly. Letting the CEOs and CFOs of these things retire to a mansion in Palm Springs doesn’t exactly discourage the next scam artist on Wall Street.
DOT com replay!
Watch what happens next couple of months! Dot comm in 2000, from peak to trough approx 28 months, where Nasadq lost nearly 90%!
During GFC, S&P lost nearly 60% in 18 months, might have lost more if Fed had not intevened!
Even if S&P loses 60-70% from it;s peak, it will be still above the fait value ( Grantham, Jim Rogers, Hussman++)
All the best for those who decides remain invested or putting new $, going forward! May be, Fed will reverse again, down the road, right?
Many of those guys missed the whole runup with their backwards methods… they failed to adapt…
So easy, right, when Fed’s perpetual PUT was behind you!
When Fed murdered the our good ole genuine ‘Free Mkt Capitalism. in the March of ’09 and replaced with CRONY/Predatory Capitalism, which has brought us where we are today! Back to Square ONE!
Paper wealth built on debt on debt with leverage. Those who cash out now will be the lucky ones.
Been in the mkt since ’82. Made enough profit following the RULES until ’09 when the Mkts became CASINOS supported by Fed/CBers with easy-peasy’ money printed out of thin air!
The same gang who brought us TWO boom-bust cycles in the 21st century, also in charge of this 3rd LARGEST everything bubble. Wow! Now they are trapped with their ill thought out policies since ’09!
Newbies (45y and below) investors who got in after ’09 think/thought that investing is SO EASY! None of them have under gone a real secular BEAR mkt!
A Life time experience awaits ahead for those! Reversion to the mean can be post poned but cannot be banned!
“Those who cannot remember the past, are condemned to repeat it’
20% of new businesses fail in their first two years.
ALL of those businesses in this article are OLDER THAN TWO YEARS. They just went public over the past two years.
Just an FYI for anyone interested and this is a special unscheduled meeting.
Federal Reserve Board of Governors
Closed Board Meeting on February 14, 2022
“Advanced Notice of a Meeting under Expedited Procedures
It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 a.m. on Monday, February 14, 2022, will be held under expedited procedures, as set forth in section 261b.7 of the Board’s Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th Street and C Streets, N.W., Washington, D.C.. The following items of official Board business are tentatively scheduled to be considered at that meeting.
Meeting Date: Monday, February 14, 2022
Matter(s) to be Considered:
Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks.”
Off topic, but maybe not, after reading your reply on where to learn about US Government Treasury Bonds and to be on the lookout for increased savings rates, I learned that I Series Bonds are paying 7.15% interest.
I don’t own any but, unless the government bean counters find a way to change the formula for I Series Treasury Bond interest payment rates in order to low ball the coupon rate like they now do with the “core” inflation, it seems like a decent hedge against inflation that the stock market may no longer offer. This is evidenced by the stocks you referenced that tanked 90%.
To save readers time, I read the fine print on the I Series Treasury Bonds (if I missed something or got something wrong, please correct me):
1. $10,000 per person per year max purchase. You can buy another $5,000 if you have a tax refund of at least that amount.
2. You can’t cash them in before a year.
3. If you cash them in before 5 years, you will not get the full interest due; you will lose three months of interest.
4. They are considered “non-Probate” 30 year Bonds. That is, they can be redeemed (i.e. renamed to the beneficiary) by the named beneficiary without inheritance issues or legal stuff.
5. The Treasury created 30 year I Bonds in 1998 so that investors had a tool they could use to hedge against inflation. They are backed by the federal government.
6. The I Bonds interest rate is a combination of two rates which is called the composite interest rate. I did not get into the weeds of the formula. I leave that to financial Experts like you.
7. The inflation adjusted-interest rate is calculated twice a year which is usually May 1 and November 1. So, if the current runaway inflation rate keeps up, in May the I Series Treasury Bond interest payment may be as high as 8%.
8. I Bonds are subject to federal income taxes but they are exempt from state and local income taxes. Despite the federal tax liability, bond owners can legally defer paying any tax due until maturity. Many owners die without paying the tax, so the named beneficiary will have to pay it when the bond is redeemd and renamed.
I am not advising anyone to buy I Series Treasury Bonds or not to buy them. Do what you think is best for you.
The small increments 10K….become more and more trivial with each uptick in inflation. Curious that they would put such a limit on them. I guess they knew the inevitable.
The small increments would actually become quite significant at up to $25,000 added every year at an over 8% coupon (for a married couple with at least a $5,000 tax refund). In four years that is $100,000 in I Series bonds at around 8%. That is an annual ROI of $8,000 or so, if inflation keeps going the way the Fed seems to want to make it keep going, regardless of their lip service about “controling inflation”.
True, real inflation is probably higher than the CPI published numbers that cause upward adjustments in the I Series Bond coupon rate, but it is, unlike the stock market, guaranteed by the federal government. If you can get more than 8% ROI out of any stock this year, you will be very fortunate.
As to why the government would put such a limit on purchases, I suspect it is to avoid a mass exodus of sellers from the stock market rushing to buy I Series Bonds if the published CPI inflation spikes. It may hit 10% or so in May, when the next adjustment for I Series bonds is due. The Fed wants to herd everyone into stocks, so Inflation adjusted bonds are not something they want purchased without limit. The Fed doesn’t want you to ‘go away in May’, or any other month, for that matter…
Some of these may become big in the end.
The best bet of the above is Lucid… it has some of the best in the industry on board, and it has deep pockets (Saudis).
Another ‘get rich quick’ scheme from these ‘blank check’ companies.
Blinkfien, the former chief of Goldman Sucks, was on record today as saying that Inflation was not as bad as Deflation. If forced to chose, the Fed will take the former rather than the later. I have to agree with him.
With the 1st sign of a stock/bond market meldown, the Fed will back off with interest rate normalization and stand pat. It will be more of the same.
That’s what exactly majority of retail investors ( DIP buying folks) and Wall St pundits are speculating! One can ignore the reality but NOT the consequences of that reality!
It is NOT 2000 (dot com – limited technology) nor 2008 (housing bubble) but now, they are facing their own created Frankenmonter – 3rd largest ‘everything’ bubble’ global wide!
NO limit for their hubris?
When inflation spiralled out of control in late 70x and early 80x, USD share of the global reserve currencies went from 85% to 45% (quoting from memory). So one of the costs associated with allowing inflation run high for extended period of time is that world will not suck in so many USDs as it sucks in today. This will undercut the ability of US government to finance lots of programs (trade deficit, social security, military). IMHO American ruling class will not allow this to happen, it will not allow Fed to tolerate high inflation for extended period of time.
From the comforts of his mansion and his billions. Blankfein is a malignant narcissist. This is the same guy who said “he’s doing God’s work.” He’s an evil, evil SOB, and near the front of the line for a comeuppance.
The guy is scum
Going GREEN, replacing fossil fuel with alternate sources, EV replacing ICE vehicles, ESG investment – all laudable ideas but is it realistic? 60-70% od energy is supplied still by COAL both in India and China! AS I mentioned above, there is limitation of mining and metals required for the transformation
The current consumption based (predominantly DEBT financed) Economy is incompatible in a world where resources are limited, deterioration of environment continues along with Climate changes, NOT within our control any more!
Only a sustainable and recycleble economy can survive the future but that model is in NO one’s mind of policy makers or the politicians. There are hard choices to be made, but no one is willing, even to discuss!
Do tell…when was climate change within mans control?
CO2 emmission – human activity since his presence on Mother Earth! Rise in temp of oceans over the last 50-100 yrs1
8 Billions, soon to be 10B! 5% of populatated Country using more 25% of Earth’s resources!
If one is a climate change denier, then it doesn’t exist. All happenstance, right?
I believe in being a good steward of the land. However, for decades the United States has filed numerous weather modification permits. As have other countries. The military has been experimenting with modifying the weather for decades. It’s easy to find these patents online.
‘The military has been experimenting with modifying the weather for decades’
Please illuminate me with their achivements and those effects on climate. Thank you
“Operation Popeye was a US military cloud seeding operation (running from March 20, 1967 until July 5, 1972) during the Vietnam war to extend the monsoon season over Laos, specifically areas of the Ho Chi Minh Trail. The operation seeded clouds with silver iodide, resulting in the targeted areas seeing an extension of the monsoon period an average of 30 to 45 days. As the continuous rainfall slowed down the truck traffic, it was considered relatively successful.” Military History.
Climate believer here.
When it stops changing, this rock is done.
Mr. Powell and his COGNITIVE DISSONANCE – nearly 10 yrs ago!
He NEVER followed his own advice!
An interesting fact about the hikes of 2018 (and later reversal!) is that Jerome Powell had warned about the consequences of such actions years prior in 2012 during the October Fed meeting:
“…I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.” – Jerome Powell
Yet, he signed off on the policy anyway once he became chairman. Why?
Because he was ordered to. Former Fed chairman Alan Greenspan once admitted that the central bank answers to no one in government, but this does not mean the Fed is independent. The Fed is only a part of a larger global central banking machine under the oversight of the Bank for International Settlements. This is an (extra constiturional) institution answers ONLY to their masters – about 15 Global Banks.
This is not “conspiracy theory,” it is simply reality
Rothschild ,I remember PUTIN bragging he was longer under Rothschild DOLLAR ! ,
The Fed decided to HURT one group to the benefit of another. Sadly, the prudent, the earners and savers were the ones that were decided to be slaughtered to the benefit of those same folks that created the 2008 debacle.
““Inflation is what happens when people increase the money supply by fraud, imposition, and breach of contract. Invariably it produces three characteristic consequences: (1) it benefits the perpetrators at the expense of all other money users; (2) it allows the accumulation of debt beyond the level debts could reach on the free market; and (3) it reduces the PPM below the level it would have reached on the free market.” Mises.org
Powell took care of his cronies….and people like Hoenig tried to stop him.
The Fed may be independent of the Government, but they are in a sense partnered with them…hence the revolving door between the Treasury and the Fed (Powell and Yellen). And the Fed is NOT independent from the banking cabal and outfits like Blackrock, IMO.
‘revolving door between the Treasury and the Fed (Powell and Yellen)’
It is the revolving DOORs) between the regulated (industries) and the regulators (picked from the same industry!)
FAA, FDA, FCC, SEC, Secy of Treasury(all from Wall St Banks!) ++
The whole regulatory apparatus at the Govt is CAPTIVE to the industries they regulate!
Foxes chosen to run the hen houses, with the consent of the Congress and the vested interests – going on for decades!
Smells exactly like the dot.com era. SPAC actually stands for ‘Singular Purpose to Abscond Cash’.
Another SPAC to add to the list is Desktop Metal which reverse-merged with the Trine SPAC. Peaked at $34.94, now trades for $4.07, on its way to zero. Company is cooking the books. Jeff Immelt on the BOD. ‘Nuff said.
The direct listings are just as horrific. Coinbase comes to mind. Prospectus spelled out just how many shares were in the float but few bothered to read the document. When it came public, showed about 40 million shares out but the actual total was at least 5X that level.
ARK Funds owns boatloads of these scams.
“ARK Funds owns boatloads of these scams.”
Why am I not surprised? Cathie Woodshed loves losers and losses.
In before the comment gets deleted!
1) Zidanski housewives don’t panic despite the Russian invasion.
Our gov know our housewives and press the panic button at will.
2) EFFR is hugging zero for 14Y since 2008, with a failed spike in 2018 that
led to Xmas 2018 massacre.
3) Today a Fed emergency meeting during the Russian invasion when the 10Y is down.
4) Can JP hike EFFR to 21% and cut liquidity to fight inflation.
5) Paul Volcker hiked during the lame duck period between a defeated president and RR.
6) RR doubled gov debt, during the high EFFR , because debt today will be nothing tomorrow.
7) Michael Michael Milken financed SPAC in the Nasdaq, because the 1980’s/ 1990’s debt will be nothing in 2000. Small businesses thrive on high interest rates. They might become bigger and profitable tomorrow.
8) Day traders start their day with zero positions go around and by the close they have zero. 9)
and 2022 tops.
10) 2018 dividing zone support SPX and IWM Jan 24 low.
11) Will it be breached.
Huge sums there Mr Wolf but strangely it seems that many people don’t seem to care. Wonder why?
Too many seem to have forgotten these old warnings:
“There’s a sucker born every minute” and
“A fool and his money are soon parted.”
No real harm done. The only people who got fleeced were those stupid (and rich) enough to believe the hype, and the conmen are laughing all the way to the bank. Such is life. :)
Define “investors” please.
More money than brains club members sure, but “investors”, absolutely not.
Crazy thought here:
Have the current lot of “investors” ever learned exactly what
the “–” and “( )” symbols represent in accounting documents?
What accounting documents? Hahahaha
Cry me a river for the poor Rich man that gotten taken in for a get Richer Scheme. Boo Hoo. If you roll the dice, you better be prepared for how they land.
Glad someone covered this so now I get a chance to elaborate a bit on the world going full electric into the Jetsons. The “EV SPACs & IPOs” graph is mostly accurate but doesn’t paint the whole picture. Quantumscape opened at around $9.90/share less than 2yrs ago on its 1st day being traded so if you got in during those initial 2weeks – you are still looking good right now as its $16 today. Maybe adding “1st day Price/date” to the graph would bring some clarity. Rivian, 18% owned by Amazon, just added George Soros to its investor list. That’s ALOT of money & power! Rivian is actually producing the cars but the production is lagging. Jeff Bezos isn’t gonna let Rivian fail so Musk can laugh in his face so you can bet your bottom dollar that its here to stay. Buy & hold Rivian. All the rest mentioned in the graph are bum stocks. Now back to the whole world going electric… I don’t think its such a great idea for America. USA has 120yrs proven reserves of Natural Gas. Its the cleanest fuel you can burn & currently most public buses & UPS entire fleet of delivery trucks run on Natural Gas. Currently, 80% of the world’s Lithium is been produced in China. So what is America really accomplishing by going electric vs. the combustion engine? We would simply just be swapping dependencies from the OPEC cartel kingpins in favor of the Chinese. Also, the Lithium in those EV batteries requires 500,000 gallons of water just to extract 1-ton of Lithium. How many environmentally conscious people would have even bought a Tesla if that fact was known? A person must drive a Tesla for 9yrs to break even with the damage that the average gasoline vehicle would do to the environment. Who do you know that bought a 2022 Tesla is gonna be driving that same car 2031? Probably 5% or less as they will probably acquire a new, flasher car by 2027 or so. Long story short, America has Natural Gas – we need to rely on ourselves and what we have here. People claim America’s electrical grid is already under pressure, I don’t think millions of EV’s that require electricity is gonna help that situation. We need Anmerican car manufacturers to ALL build Natural gas vehicles and for the Gov’t to give tax credits to Americans who purchase them just as the EV’s currently enjoy