An ominous anniversary in financial history is drawing near, as Sept. 15 will be\u00a010 years since\u00a0investment banking\u00a0powerhouse\u00a0Lehman Brothers<\/a>\u00a0collapsed, a pivotal event in the\u00a02007-08 financial crisis<\/a>\u00a0that turned a year-old\u00a0bear market<\/a>\u00a0into a full-fledged panic of selling. Marko Kolanovic, the global head of macro quantitative and derivatives research\u00a0at the largest U.S.-based bank, JPMorgan Chase & Co., has\u00a0marked\u00a0the occasion by issuing a dire scenario of what the next financial crisis is likely to look like,\u00a0CNBC reports<\/a>.<\/p>\n Meanwhile, the current\u00a0bull market<\/a>\u00a0will have lasted 9 1\/2 years as of Sept. 9, delivering spectacular gains during its run so far. Investors with short memories will be unprepared for the next big shock to stock prices, increasing the odds that the next crisis will be particularly severe. Meanwhile, since earlier this year, a number of well-known market gurus have been issuing their own warnings that stocks are on the brink of plunging by up to 60%. (For more, see also:\u00a0Why the S&P 500 May Fall More Than 60%: Hussman<\/a><\/em>.)<\/p>\n A particular source of concern for Kolanovic\u00a0is the growing importance of computerized trading and\u00a0passive investing<\/a>. As long as bullish sentiment held sway among investors, both these factors helped propel stock prices to new heights. However, once sentiment pivots toward the bearish, the lightning speed with which\u00a0computerized trading algorithms<\/a>\u00a0operate can produce massive selling pressure that may overwhelm the markets in fractions of a second. Moreover, these programs tend to play follow-the-leader, with waves of selling inducing yet more waves of selling.\u00a0(For more, see also:\u00a0How Algo Trading Is Worsening Stock Market Routs<\/a><\/em>.)<\/p>\n According to Kolanovic, over the past decade about $2 trillion of investments have moved from\u00a0actively-managed<\/a>\u00a0to passive funds, reducing the possibility that bargain-hunting managers will stem a wave of selling. Additionally, he estimates that up to 66% of all\u00a0assets under management<\/a>\u00a0are now in\u00a0index funds<\/a>\u00a0and\u00a0quant funds<\/a>, and that about 90% of daily trading volume is driven by these and similar strategies.<\/p>\n Noted\u00a0emerging markets<\/a>\u00a0fund manager Mark Mobius\u00a0has voiced similar concerns about the explosive growth of\u00a0passive ETFs<\/a>\u00a0and\u00a0high-speed\u00a0computerized trading. He sees a growing danger of a\u00a0“snowball effect”\u00a0in which a small wave of selling rapidly becomes\u00a0an avalanche.\u00a0(For more, see also:\u00a0Contrarian Mark Mobius\u00a0Sees a 30% Stock Plunge<\/a><\/em>.)<\/p>\n A plunge in stock prices is likely to cause what Kolanovic\u00a0calls the Great Liquidity Crisis, with willing buyers for stocks becoming increasingly harder to find, sending prices down yet further. If the selloff reaches a 40% decline, he expects that the\u00a0Federal Reserve<\/a>\u00a0will have to intervene, to prevent the economy from slipping into a severe\u00a0recession<\/a>, if not a\u00a0depression<\/a>. This is essentially what the Fed did in 2008-09, with its massive program of\u00a0quantitative easing<\/a>\u00a0to combat that crisis.<\/p>\n With personal wealth cratering, and pension funds becoming severely underfunded, thus threatening\u00a0deep cuts to benefits, Kolanovic raises the specter of the worst social unrest in the U.S. since 1968 as the result of a new financial crisis. That year was marked by rising discontent over the Vietnam War, as well as the assassinations of civil rights leader the Rev. Martin Luther King, Jr. and presidential candidate Senator Robert F. Kennedy.<\/p>\n You can read the rest of this panic “logic”\u00a0here<\/a>. <\/strong>But you don’t have to.<\/p>\n Real estate investing 101<\/strong><\/span><\/p>\n 13 years ago I bought an apartment for Michael. I overpaid. But it was 2005 and the market was hot. The location was perfect.<\/p>\n Since then, I’ve been renting the apartment, praying that Michael would return to New York. No such luck.<\/p>\n Hence I’m putting the market up for sale. If I get roughly what I’m asking I will have earned just under 5% a year. That’s not miserable. It’s better than a slap in the belly with a cold fish. But it ain’t great. and it’s about half what I’d earn if I had put the money in an S&P 500 index fund.<\/p>\n Here’s what I did wrong with the apartment:<\/p>\n + I paid too much. I bought at the top of the market. If I was ever going to rent the place, the rent I could get would not justify the price. Latest rent shows a 2% return on the price, after taxes and maintenance.<\/p>\n + I didn’t significantly improve the value of the apartment. I fixed things — like the bathrooms, windows, AC and the kitchen. But I didn’t make them “spectacular.”<\/p>\n + The location was great — right on Central Park. But the apartment building is huge and there are always apartments for sale — at often desperate prices. Lots of desperate divorce sales. Must be something in the building’s’ air.<\/p>\n All the above is irrelevant given the goal was to motivate Michael back to New York City after his two-year sojourn in business school. No such luck.<\/p>\n As I’ve written before, there are two keys to successful real estate investing:<\/p>\n + The price you pay. It should be a “bargain.”<\/p>\n + The property should have “hair,” which you have a plan for fixing.<\/p>\n Anyone want to buy a nice two bedroom apartment on Central Park West? Good price. Some hair.<\/p>\n Price of bitcoin drops <\/strong><\/span>after Goldman Sachs drops plans for a trading desk<\/p>\n Rosie spat our her pills<\/strong><\/span><\/p>\n I was dispatched to buy these:<\/p>\n So who made these beauties? There’s a fantastic pet stock here?<\/p>\n No such luck.<\/p>\n They’re made by Mars, the sixth largest privately-owned company in the U.S.<\/p>\n Keep looking.<\/p>\n You need to see this<\/strong><\/span><\/p>\n The man is about to turn 69. He remains a bundle of positive, optimistic energy.<\/p>\n Susan and I saw it last night. He was fabulous. For more, read his Wikipedia<\/em> bio. Click here.<\/a>\u00a0<\/strong>Buy tickets here.<\/a>\u00a0<\/strong><\/p>\n Crazy Poor Middle Easterners.<\/strong> <\/span><\/p>\n The Middle East could prosper if it would put its past behind it. An article by Thomas Friedman of the New York Times.<\/em><\/p>\n Fascinating.Read it here.<\/a>\u00a0<\/strong><\/p>\n This is meant to funny as all get out<\/strong><\/span><\/p>\n I’m told the movie\u00a0Crazy Rich Asians\u00a0<\/em>is hysterical.<\/p>\n![\"bitcoinfivedays\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2018\/09\/bitcoinfivedays.jpg\")
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