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Bitcoin Bubble In Terminal Stage

Bitcoin had a stellar comeback and traded close to USD 65,000 per unit at its peak last month. There are stories of early transactions involving pizzas that were sold for a five-digit amount of the cryptocurrency around 2010. Regardless of being fact or fiction, the magnificent price increase in Bitcoin is unprecedented. An investment of just USD 100 in 2011 ...
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A Longview On Precious Metals

The precious metals complex and especially gold is fascinating many investors. Not surprisingly, some myths formed around the asset class. There is a widespread belief that precious metals are a safe haven and protect against inflation. That's true over the long run but can be costly on short- and medium-term timeframes. The crucial question is first and foremost, how did precious ...
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Debt & Inflation

Peter Bernholz, a Swiss-German economics professor, researched the causes of past hyperinflations. 25 of 29 hyperinflations in his long-term dataset were the result of government budget deficits financed by money creation. External shocks in the post-communist era triggered the remaining four. Historical evidence shows that past hyperinflations were often proceeded by multi-year budget deficits that amounted to roughly 40% of ...
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Long-Term Home Prices

The last three decades recorded remarkable returns in home prices within most OECD member countries. Nowadays, institutional and retail investors perceive housing as a safe long-term investment. However, they will be most likely disappointed over the next few decades. This write-up discusses long-term evidence that academic research revealed on home prices. It will conclude with an assessment of real estate ...
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This Time Is Unlikely Different

Those who read our latest write-ups know that we laid out a bearish case for equities. The two principal reasons for that outlook were extremely expensive valuations and evidence of excessive speculation among investors. Both elements have typically preceded large corrections and even bubbles historically. Nonetheless, we concluded that technicals were intact and likely leading the S&P 500 above 3,884 before the ...
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Calm Before The Stock Storm

The cyclically adjusted price-earnings ratio (CAPE) is among the most potent academic finance concepts. It estimated long-term equity returns reliably. 150 years of equity market history is plotted in the first chart below. The broad-based US equity market is currently priced at about a 34 CAPE, which coincided with a negative return during the subsequent ten years. (Source: calculatinginvestor.com) The ...
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