US technology boom, government bonds, shares: 3 candidates for the next big bubble

The best known is the South Sea Company was at the time. Companies such as these have lived from the almost hysterical enthusiasm among investors, who were will

US technology boom, government bonds, shares: 3 candidates for the next big bubble

The best known is the South Sea Company was at the time. Companies such as these have lived from the almost hysterical enthusiasm among investors, who were willing to capital for new business models (some more reputable than others) ready. FOCUS magazine

The "Bubble Act" should restore order by handing the Newcomer a Royal licensing proposals. Nevertheless, the Hype imploded ultimately spectacular. The share price of the South Sea Company fell by about 80 percent. It was founded under the intention to control the trade with South America. In reality, it was a means of financial trickery with government debt.

International financial bubble

With the Crash of 1720, the first big international financial bubble burst. Three centuries later, investors are as vulnerable as ever, in spite of the recent hard Lessons of the real estate crisis. Economists see this as a certain amount of logic and reason. Bubbles have their origin usually in plausible stories about how economic changes bring opportunities for huge profits.

The South sea bubble was in the midst of the enthusiasm aroused by the potential of trade with the American double-continent. It looks similar to today's markets, the bubbles are comparable. 2020, there will be some candidates, the burst could.

US technology boom

The first and most obvious of the US technology boom. In the past decade, the Silicon Valley and other technology centers, a steady stream of Start-brought-ups, the new sectors that want to dominate. Companies such as Uber, Slack, WeWork or Airbnb connect technologies and new business models with the promise to deliver exceptional returns.

you want to redeem by entering markets where the winner takes all. Rich investors have put a lot of money in this company. The result was a new phenomenon: the "unicorns" – Unlisted Start-ups with a value of at least one billion US dollars.

This once-rare creatures increased in the Wake of the ongoing rush ends rapidly. But now the Moment of truth is approaching. To earn profits and conquer the market leadership is more difficult than I thought. The share prices of Uber and Slack are down in 2019 after its IPO, other companies such as WeWork waive this requirement.

From the unicorn-Boom, like the dot-com mania, a few of the profitable mega-companies emerge. 2020 but there will be a shakeout of the market. Investors face losses, if the previous favorites are losing their Aura of financial invincibility.

Eternal growth?

The Economist

market for government bonds

Also, the relatively strong market for government bonds looks a little bloated. Bonds have developed in 2019 drastically better than stock, and thus their long-lasting popularity increased. The demand for government bonds has grown strongly in recent years. With the prices of these bonds increased the interest rates, the need to provide States, crashed. The yields of US government bonds are historically low, but high compared to the negative interest rates in Germany, France and Japan.

bond buyer like to put on slow growth and negligible Inflation. Some of them are also, perhaps, to have in the midst of the uncertainty created by the global Economic slowdown and the Chinese-American trade war safe assets.

investors seem to be convinced that the market only knows one direction – a sign of a bubble. A turnaround in the bond rates or unexpected changes in the exchange rate, some investors might force your Post to resolve. This would lead to unrest in the markets. Some safe havens, such as U.S. government bonds, it would be in the midst of the cleanup is probably still good. Other countries, such as Italy, but that you can rent for less than one percent, might have less luck.

Eventually it POPs

The biggest pessimists see a third bubble-the candidate: the stock market courses. Despite geopolitical uncertainties, the markets are not cool. The world stays as peaceful and globalized as usual, investors should continue to benefit from stable markets and high share prices.

Under other circumstances, but a radical re-evaluation of all prices could be in for – of real estate over stocks to commodities. The investors in the South Sea Company were confident that a new world would also be immensely profitable. In the year 2020 could show as 1720, that is not always the case. "The world 2020"

© 2019 The Economist Newspaper Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Newspaper Limited.

Where opinion is expressed it is that of the authors and does not necessarily coincide with the editorial views of the publisher or The Economist.

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Updated Date: 06 January 2020, 01:01

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