Is There A Bubble Forming In Stock Market & Private Credit? | Jonathan Treussard
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- Опубликовано: 9 июн 2024
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Jonathan Treussard of Treussard Capital Management joins Forward Guidance to help define what a bubble is. By his strict definition, nothing qualifies right now. But as money flows into risk assets, valuations become stretched. Treussard has trouble with the high valuations in the U.S. market, and sees opportunities in the cheaper European and Japanese markets. He also shares his views on the risk of the “engineered yield” that comes from strategies that sell options explicitly or implicitly. Filmed on April 2, 2024.
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About Treussard Capital Management: www.treussard.com/
2004 Paper on Bubbles with Earl Thompson and Charles Hickson: www.econ.ucla.edu/workingpaper...
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Timestamps:
00:00 Introduction
00:45 Hallmarks Of A Financial Bubble: New Technology and Valuations Stretching Far Beyond Fundamentals
05:24 How Bubbles Remake Social Orders
07:25 Credit Bubbles Vs. Equity Bubbles
10:00 The Rise of Private Credit
11:44 In Wealth Management, Private Credit Tends To Be "More Sold Than Bought"
15:25 Private Credit Is "Concerning" But "Not A Bubble"
17:05 U.S. Stocks Are Expensive
19:55 Trade Wars & Geopolitical Blockades Are A Serious Risk To Nvidia
26:49 Europe and Japan
29:08 VanEck Ad
30:10 T-Bill And Chill Has Been Drastically Outperformed By Stock Market Beta
31:03 Investment Framework For The New Cold War
43:58 How Option Theory Applies To Economics, Investing, And Life
49:35 Jonathan's Work As A Risk Manager During 2008
55:53 Beware "Engineered Yield"
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets. 
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Completely getting British history wrong. Stuart the first did not redistribute England's wealth away from England.
He's wrongly calling the English 'British', when at the time of the 1600s only the Cornish and Welsh were called British. Mostly in a derogatory fashion as the original British celts were the Britons
Re the Nvidia segment: I thought known risks were compensated through lower stock prices, not the other way around.
1) Equity risk premium (ERP) refers to an excess return that investing in the stock market provides over a risk-free rate.
2) All else equal, equity risk premium falls as stock prices climb, at least partly due to falling earnings yield.
3) Finally, if speculation is rife then equity risk premium falls as all equity prices are bid up.
With this background, high Nvidia prices are the result of expected growth in earnings combined with speculation. I don't see how the high prices are the result of some sort of 'risk premium' as described by the quest.
Where am I wrong? Thanks.
Some dumb questions in here, but thankfully Jon did a good job of covering.
My definition: When you have a pile of cash….but NOTHING is on sale
Fantastic guest! I'd add that anyone who has actually run a company (like I) can tell you when a company grows as fast as Nvidia, there is a lot of internal operational growing pains that can derail it.
James (Stuart) the 6th ascended to the throne of England in 1603, the South Sea bubble was in 1720. It was George 1 of the Hanoverian dynasty that started in 1714. Weird interlude.
At the bare minimum, the Buffett Indicator has toggled between "overvalued" and "strongly overvalued" for almost 7 years running and Berkshire is now sitting on almost $170B in cash (for a reason). GDP growth has hovered around 2% on average since 2010 while the DOW has almost tripled with really no major corrections (outside of the brief Covid panic). We've haven't yet unwound the manipulations of the QE, ZIRP and NIRP era. Look out when that hammer drops.
Solid interview. Again.
Fantastic interview!!
Thank you !
Has this guy even looked at European indices? How is the DAX40 'getting it's face ripped off?'
I want to be in a fast expanding bubble and leave it before it bursts - strategy or df?
It would be great for Jack to get someone like Zvi Bodie on, specifically to talk about the difference he touches on his book Risk Less and Prosper, about risk "capacity", versus risk "tolerance".
People in finance need to say "I don't know" more often, than just opine on every company.
Man, i dont have phd, but i am pretty sure credit is what enabled housing bubble not opposite.
Chicken and egg. It becomes a flywheel. Housing market produces equity, which owners tap and that fueled more spending on property.
The video refers to Greenspan as the initial trigger as he held rates very low relative to economic conditions coming out of Tech Wreck. That was followed with crazy credit.
@@thesolitaryadventurer Nope.
Calls and Puts have rights and obligations. Depends on if you’re buying or selling the call or put. I would never do naked shorts but shorting puts don’t have unlimited risk like short calls but they have a lot of risk. Spread trade - limit risk.
The problem with these types of posting is the conflict of interest embedded within the conversation. Talking about a stock market & private credit bubble while pushing an your own private ETF directly questions my take on how I should trust the information. Frankly. it leaves me with lots of doubt. Good luck with your D&P show.
Excellent perspectives and insights. 2025 will be tough.
Bubble I defined as something new and future earning power is unknown, so investors dream big and overbid the price. It will burst when investors realize the earning power is slow to realize in a reasonable of time. Like Meta's metaverse bet and no significant income is generated in a reasonable time, then the price will crash. Nowadays that time frame is getting shorter as investors are impatient.
>everyone agrees we're americans first
LMAO, sure they do
White Europeans claiming to be Americans has always been hilarious😂😂😂
I always ask these people what type of Native American language do they speak and it's always interestingly the European language of English only
I assumed Blocksworks was about crypto, yet it wasn't mentioned. Somebody was afraid to ask or was told not to ask. It would seem that crypto and gold would be a main topic, at least discussed if nothing else about bubbles. But no, zip, nothing. Can you explain? I can totally understand not wanting the barrage of negativity that would accompany a statement like, "Yes, BTC is a bubble." The BTC crowd is downright vicious. But still, you should have discussed it. I won BTC, like BTC but would have loved to hear his thoughts about it. Otherwise good show.
Bubble: new technology, herd mentality, redistribution of wealth??? Crypto anyone?
We have a bubble in the soul crushing government.
Yes, the answer is yes. They put out the warning letter last year about levered PE and now they are the ones buying up all the worthless CRE with no oversight. This will surely end well, it always does!
Btc in a bubble
Did I hear French shoring?
Interesting mispronunciation of redistribute
25 minutes into the video and no questions about bitcoin
because nobody cares
Not everything has to be about crypto
Maybe some underestimating regarding the conflict between States and the National Government. How hard is it to imagine a State seceding ?
National Government?... Where ya from, friend?
Secession of any state would never happen these days short of a total collapse of either the Federal Government or American society as a whole, and there's no putting these genies back in the bottle.
Last time secession didn't work out too well, not to mention back then the Federal governments power over States and the everyday lives of Americans, along with their degree of economic control were practically non existent compared to today. The Feds are simply too strong now, and they pay off too many people. The only scenario I can see Secession occuring requires 1) a total collapse of Congress, 2) a state(s) that wants to leave, and 3) a president who'll let it happen. Despite popular opinion on Congress's disfunction, Congress doesnt have to get along to exist and they are perfectly comfortable where they are and going nowhere. States depend on too much Federal funding to even think about it, even Texas. Its alot cheaper to just get your guy elected and change what you don't like from the presidency, alot cheaper, and alot easier.
People simply do not understand the size of the beast the American people released when they elected FDR, who's New Deal laid the foundation to what the modern day nanny state on the federal level has grown too. And since 9/11/01, the Fed's authority over markets, the people, and the overall economy as a whole have ALL gone hyperbolic.
The American people are just starting to notice for the first time that they've royally fucked up the best thing the world ever had going for it, before the majority of people even noticed they were being put back under the yoke of a theiving authoritarian regime and led back down the road to serfdom....
@@ClyDIley thanks for the reply. I am in the northeast USA and totally agree with you regarding this beast that we have created and how difficult and painful any secession would be if it were to ever happen. It’d be a major black swan for sure ! The reasons I assign non-zero probability is because like we said , the Fed has become too powerful that it will eventually topple upon itself … and also because we are seeing legal battles on certain issues (abortion and borders) that will lead to states and the fed gov defying each others laws to an extreme level.
Hopefully America will come out stronger and more united after we get through this age-defining period , and with a more under control central government !
The “ Mikenical “ ……
20:40 just like when tesla was at 20B, you refused to actually listen to our thesis then, you refuse to listen to us on Nvidia. I couldn't care less about short term. I know Nvidia.... 20-30% price hikes. Something you're not used to modeling. And I know, anytime you ask a traditional Finance person to model high-growth companies, they fail because they refuse to do the Deep dive on the technology. This is how you get finance people thinking that Cisco was ever going to be a Growth Company. Growth company selling networking products.... Grrrr. Logically answered actually covered how stupid it is to compare things to cisco, but he did it politely
22:00 you didn't cover any actual Nvidia risk... Man, I hate it when people talk about companies they don't actually cover. Just say these magic words. " I don't know."
You mean formed right? lol
26:15 I mean.. The next generation product is going to cost 40% more... But sure.... It's impossible. Nvidia has never done back to back 100% growth years. Just don't look at your Bloomberg terminal please.
?
Pffft.... Typical neo-Keynsian
28:15 he also needs to sell you his services, thus he needs to make things more complicated than they need be. He can recognize Japan has global Companies, but ignores the best global companies right here in America, with the best returns. These people want to global LARP with YOUR MONEY, and ignore actual facts. American companies are global companies, you don't need to global invest, because you already did so when you invested in American companies. When you add additional to other countries, you're now overweighting those countries, but with worse favorability to business, hence why they have lower returns.. But hey, sell your business boo.
You have a serious personality disorder.
24:20 woah... Careful, you're using your brain when thinking about Nvidia... Don't do that... Follow the hive. It's impossible. Sell the stock. There could be a multi year downturn in ai! Lol.... Lol I've doubted Nvidia for 15 years.... I'm done. Every time I think I forecast right Nvidia outperforms. I given up, but I understand, you're new, you'll need to feel the same pain others have, thinking "Nvidia can't do it again." every year. Every release cycle. It's like people who loved to root against Tom Brady. Except, way worse, because you can get paid to just bet on the best.... We all doubted ai when Jensen announced the. Nvidia 20 series in 2018. We lost, 6 years later. Again, like we always do with Jensen. So, you can play the game we been playing lol. I welcome people to do it. It's fun. Or just give up, buy the stock, accept Nvidia has a idiotic software, hardware, moat, the company is the definition of oppressive, and just ride with them.... Or, wait for a competitor to magically build a chip and ecosystem, and get developers to learn it.... That's the moat finance people will never understand, becauee learning the product is too hard.
Are you a bot?
You predicted the housing bubble in 2000-2002???? Really ????
Well, I am predicting WWIIII and WW IV now !!!! And I guarantee I will one day be right.
Crypto is definitely not a bubble ...