US stock markets rose to historical highs this week. One will be hard-pressed to realize that we are still in the midst of a pandemic though. Markets are forecasting months ahead, where things could possibly go back to the good old times pre-Covid.
It was a broad-based rise in the overall American indices where many grasp the good news that vaccination is progressing well and that the US might go back to normal by the fourth of July, Independence Day. Biden continues to under-promise and then over-delivering to manage expectations. Things are starting to look rosy again as restaurants begin to open and people are travelling again.
The fact remains that central banks had been printing like there is no tomorrow for the last few years and the pandemic had really turbocharged the process further. With economies collapsing spectacularly last Mar when the virus began its global onslaught, governments had no choice but to take out the bazookas to save their fragile countries. Lockdowns and overstretched medical facilities were a disaster recipe for economic destruction.
No one knew at that time what would happen next during this 1 in 100 years event where every human being in the world is affected. Never in our lifetimes have we experience such a situation that every living soul on earth is faced with the same issue at the same time. All of us were like the rabbits facing an oncoming truck with its high beam shining into our eyes. We all muddled through the many months wondering what and when could the end game be in this evolving apocalypse.
Things began to look brighter in Dec when the vaccines breakthrough happened. 5 months into the global vaccination roll-out, one can still see the difficult road ahead as the disparities between the have and have-not countries become even more apparent. As the world adapts to the next phase of the virus fight, new challenges will arise.
Meanwhile, the flood of liquidity unleashed by the central banks continue to flush into all asset classes. Fiat money losses its value in an ever-accelerating momentum as investors chase assets as a means to preserve their personal store of value. All traditional asset classes like stocks and property surged to new historical highs with no pullback in sight.
As investors run out of places to sell fiat currencies for asset preservation reasons, newer asset classes are starting to emerge and go mainstream. Cryptocurrencies are beginning to hoard the limelight in recent months. While many still do not have a vague idea of what it is, various corporations have started to jump in. Tesla, Square and others have decided to accept them and make it legal tender.
The rise in Bitcoin, Etherum and XRP prices had made many early adopter geeks rich beyond their imagination. In turn, this has sparked a rise in a new asset class, which is a derivative of the cryptos. NFT (Non-Fungible Tokens) that used to be an exotic concept just a few months ago is starting to develop into a new asset class for investors to park their wealth.
I still have a hard time trying to wrap my head onto this NFT phenomenon. As long as there is a demand for such products, buyers and sellers will complete transactions however unbelievable the end product is. It may be so intangible that it blows our mind on why there is value in a traditional sense. But as long as someone perceives a present and possible future value, then there is a meeting of minds.
Take for example the purchase of game tokens to play online games. The developer creates a virtual world for gamers to participate in and can issue unlimited game credits for exchange with fiat currencies. These “gold” token credits can be exchanged for virtual products to enhance the gamer’s play experience. This has already been happening for many years. Willing buyers and sellers gather to create demand and supply. Outsiders may not understand the economics and purpose of the tokens but the insiders really don’t care about non-gamers opinion anyway.
NFTs in a way is another version of the above. We now have a new class of people who have become super-rich thanks to the rise of crypto prices. They do not spend their wealth in a way like what normal people do. They prefer to push the boundaries and seek a newly created asset class to participate in. Metakovan buying an NFT from an unknown like Beeple for $69 million is one such example. Many are starting to jump onto the bandwagon to seek more NFTs to spend their newfound wealth in ways unimaginable just a year ago just to get bragging rights.
Asset bubbles are coming up everywhere and look like they are bursting soon. But yet they become even bigger over time. Newer ones are now being created as a pressure outlet from the continuous and tremendous flows of fiat currencies heading our way. It has been more than 13 years of asset inflation since the beginning of the 2008 GFC but we see no end in sight. I cannot think of any asset class that had not appreciated over this time at all.
As part of my life long journey, I had recently become a full-time student again. I enrolled on a full government-subsidized SGUnited 6 months course to learn about Artificial Intelligence (AI) via IBM. I am reaching my 2 months milestone next week and am happy to report that I have learnt new things like Enterprise Design Thinking and Cloud Computing. While they are more of a general overview of concepts and do not go too deep technically, it nevertheless was a refreshing new learning experience for me.
To date, our starting class of 21 students had bonded via the online Zoom classes and projects. 2 have dropped out so far due to family commitments and job opportunities. I expect more to drop off into the next 4 months as the job market is improving this year plus a tighter labour market for IT professionals due to the pandemic travel restrictions.
While I am not really attracted to wanting to get a full-time job at the end of the course, learning more about AI is my main motivation. With the Myanmar situation looking to worsen, my consultancy job which I had over the last 3 years seems to be over soon. I would have more time on my hands to look for things to occupy my time this year. I should never say no to what may fall on my lap by the time I complete this course in Aug and to keep an open mind. Life has a strange way to hand you new opportunities when you least expect them. When a door closes behind you, many more will open in front of you.
A good friend suddenly experienced a stroke earlier this week. Thankfully he had recovered fast and was discharged 2 days ago. We all should count our blessings and be thankful for what the Big Man above has given us. I continue to aim to stay happy and healthy into my 2nd half time.
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