Three delusions: Paper wealth, a booming economy and bitcoin

Hussman Funds/John P. Hussman

“The upshot is this. At present, U.S. investors are under the delusion that the $37.3 trillion of paper wealth in their equity portfolios represents durable purchasing power. Unfortunately, as in 2000 and 2007, they are likely to observe an evaporation of this paper wealth. Nobody will ‘get’ that wealth. It will simply vanish. If a dentist in Poughkeepsie sells a single share of Apple a dime lower than the previous trade, over $500 million dollars of paper wealth is instantly wiped from the stock market. That’s how market capitalization works. Over the completion of this market cycle, we estimate that between $19.8 and $24.2 trillion in paper ‘wealth’ will evaporate into thin air.”

USAGOLD note: At some point, the law of diminishing returns takes effect. . . . .Bitcoin’s recent performance may turn out to be a precursor (fractal?) to more widespread damage.


Repost from 11-26-2018

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