YouSaid · the spoken record

Brendan Hughes

lines on the record: 46
first: 2023-11-26
most recent: 2023-11-26
sittings or episodes: 1
sources: podcast

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“Thanks, Clay. So you can find markets in Chaos, a history of market crises around the world. If you just search on Amazon, it's also available through my publisher, Business Expert Press, along with various other retail channels. And if you want to connect, you can find me on LinkedIn. You can just search Brendan Hughes, CFA, and then type in Lafayette Investments, my company or my book Markets in Chaos. And I'm sure I'll come up.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I don't know that I have anything that we haven't already touched on other than I think it's important for people to learn from the past. And I hope that our listeners out there are constantly trying to learn from history and applying that to today and the future.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“It's after they've already left. And so it's not on their watch. I don't know if you saw in this past year when France tried to raise their, they introduced a bill to try and raise their retirement age from 62 to 64, which is, I don't think that that should have been a very big deal. But riots and protests broke out across the country. So once you give someone something, it's difficult to take that away. And then the last option, which we've done a lot of in recent years, is to print more money. And that doesn't resolve any of these problems, but it does kick the can down the road. And I don't have any doubt that we'll continue to do that.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Which is what happened to a large extent after World War II. But where we are now, that's much more unlikely because population growth now is much lower than after World War II. So that's going to make it a lot harder. You can't just have ongoing productivity gains at 10% a year in perpetuity. That's just not a realistic expectation. One of the other options is to significantly raise taxes. And I don't think that there's really a doubt that at least to some degree this will happen, but this will in the process will also hinder economic growth. And one of the other options is we can have sustained cuts to federal expenditures, but at least from what I've seen, this really is almost never an option because sustained budget cuts are always politically unpopular. And politicians don't really have an incentive to do this because usually when things blow up, it's”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“The implications for what's going on with the deficits and interest as a result are particularly tied to the higher interest rates now, they're enormous. And to provide a baseline for this, what we're walking into is a situation where mandatory spending in the United States, which includes things like Social Security, Medicare, that made up 61% of federal spending in 2019. And this figure in 1970 was only 30%. So when we factor in the higher interest expense, we arrive at least the way things are currently constructed at a scenario where 100% of the federal budget is now going to things that are not, that have nothing to do with investing for the future in terms of growth. So we're really left with these options, and I note these in my book. We can try and grow our way out of these deficits.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Parent from their behavior that they don't view the swishing costs as being high. So that's how I would think about it from a business context.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think during periods of elevated inflation, the companies that tend to perform the best are, as you alluded to, ones that are able to pass the costs along to the consumers. And inversely, the ones that do the worst are the ones that are not able to, because then their profitability is eroded. Like the last few years, you've seen sectors like the lower quality retailers, like things like that. They're not able to pass costs along. They go from a really low net profit margin to a loss really quickly. And that's what always happens. But there are sectors where their product is really important to people and they're able to pass along those costs. I mean, some of the higher quality consumer companies like Pepsi, like they've been raising prices like crazy the last few years and their consumers have continued to buy their products because it's a”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Innovation that is going to continue to be a deflationary force. But at least to me, it does look like that some of this wage inflation is going to be structural.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“That a portion of that is structural. It's difficult to say how this is going to play out with what's going on with the unionization. I mean, for a lot of younger people's lives, I mean, unions were not even relevant at all. And it's really just in the last several years that we've seen this. And to the extent that that persists, that will also be a structural tailwind upward on inflation. I don't really know how all of that is going to play out. But there are some counter inflationary forces as well. You're seeing a lot of countries or a lot of companies, like big companies like Apple now investing big in India. So you are going to see some manufacturing and jobs shift there that are from China and they have low cost of labor. And we also have ongoing technological.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it does seem like at least one element of inflation appears to be somewhat structural, and that is tied to the labor units as we just noted. But also, it does seem to me like some of the globalization the last 30 years is in a degree of structural retrenchment. To the extent that we are having more manufacturing in the United States, well, people here are going to command way higher wages than people making goods did in China for the last 30 years. So to the extent that a decent amount of that is structural, it's inevitable that that element of inflation will remain elevated, at least relative to what it has been for the last 20 years or so. And I think that I'm pretty confident.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“He attempted to stabilize energy prices by deregulating the price of oil. And that led to the non-OPEC producers. They were then incentivized to produce oil. So they ramped up production. And yeah, I don't think that that should be particularly surprising given that they were then incentivized to do so. But to wrap up this scenario in the 1970s and 1980s, I have to at least mention Fed Chairman Paul Volcker, whose very people always cite Volker these days because he raised interest rates to 20% in 1981 to stamp out inflation. And all this was ultimately successful. And by 1980,”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Game in town, I think that you may have seen something similar to this rise that we saw. But at that time, there were widespread oil shortages and governments responded with price and wage controls, which I document throughout my book, and that always increases inflation. Another important topic that's relevant today is labor unions. And at that time, labor unions, they were in full force, and that was putting upward pressure on inflation. And when President Reagan, in early 1980s, he launched a well-documented campaign against labor unions in an attempt to stifle inflation. And most people think that that was really the start of the long-term decline of labor units that only really has retrenched in the last few years. And we've seen some wage inflation. I think at least if it persists, that's going to be structural. But Reagan also...”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“But one of the parallels that is strikingly similar to today, in 1973, Syria and Egypt attacked Israel in what would become known as the Yom Kippur War in light of what's happened in the last few months. The parallels are obvious. But at that time, this really was a shockwaves through the oil market given OPEC's huge influence at that time. And this was before the United States became a huge energy player. And I think that today there's been a more muted impact on oil owing to the more diversified sources. Like the United States can ramp up production if needed. If OPEC was the only”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“And I'll just walk through what happened in that period because there are a lot of parallels and some things that are directly applicable to what have happened the last few years. Kicking off, there were a few important differences between today and the 1970s. And for one, the global energy market looks a lot different. The United States is a much bigger energy player today. And that's because energy production in the U.S. really took off with the rise of shale oil. I think it was about 15 years ago. But the other key difference today relative to that period is that government balance sheets are in much worse shape than they were at that time. But the 1970s was an era that most people think about as a stagflationary area. And stagflation is a period of low growth and high inflation. And during the years 1973 and 1982, there were three technical recessions. So the economy was constantly in and out of recession.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“On in China, the last few years, but the property developers have a lot of them have been going busts because of the inherent leverage.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Return. But if you were an investor who just sat out the 10 best days of the market per decade over that period, you would have earned a cumulative 28% return. So if you missed the few best days, you are nothing in equity. So you can't, if you were going to invest in equities, you can't panic when these types of things happen or else you shouldn't be invested there. You won't earn anything. My book goes through various implosions in the banking sector across countries in timelines. And at least to me, that's why I choose not to seek out businesses that require leverage to earn a return just because they go bust quickly when things go south. And aside from banking, some other sectors where this is applicable include investment banks and property developers. And I don't know if you've seen what's been going on.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's a great thing to bring up. And I talk about that at the end of my book. I include a list of what I think are some important takeaways. And I think perhaps the most important, if not one of the most important thing, is I never attempt to time the overall market because this happens during every crisis. People get scared and they sell out at the bottom during these market events and then they miss all the returns for the next 20 years. All of the returns that an investor earns are just in the few days that nobody expects the markets to go off. Like I included a data point between 1930 and 2020. If you had just stayed invested in an S&P 500 equivalent over that period, you would have earned roughly a $17,000.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Of moderate misfires elsewhere. And I think in terms of valuations, you also have to be certainly careful in looking at valuations by Sector because it's perhaps counterintuitive, but sectors like semiconductors where there's inherent cyclicality, often they're the most undervalued when their cash flow ratio, their near-term price to cash flows is the highest. I don't pay that much attention to what is going on in the overall market in terms of what is the headline PE or price to cash flow. I'm looking at more individual situations and things like that.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Of the internet, it would not have been possible for a company to go from being invented to having hundreds of billions of dollars of profitable cash flows in the span of a couple decades or less. And we've seen companies do that. I mean, the metas, the Googles, in the span of just a few decades or in Google's case, a little bit longer, these companies have amassed hundreds of billions of dollars in profitable cash flows from nothing. Most of the time you would have looked at those types of companies and said, oh, this is expensive. Well, sometimes those companies can grow at rates that justify those multiples. Now, the difficulty is projecting these types of companies is more difficult than like a legacy consumer staple. But if you hit on one or two of these, it can make up for a”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Impairment, which is rampant in sectors such as banking and changing the classification of operating expenses to extraordinary expenses and things like that. So looking at free cash flow yields in the US market today, I don't think it's, at least in my view, above all like Japan in the 1980s, but not bargains like during the global financial crisis. But as you alluded to, that's a blanket assessment. It varies a lot based on individual companies. What I will say is I don't think that some investors that have been investing since well before the arrival of the internet have come to appreciate the growth that can be seen in some areas such as software that you kind of alluded to in your statements that can at times justify what could be perceived as maybe a relatively high valuation. Like just to provide a little context on that before the advent.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Want to start by saying that I actually don't look at PU ratios when looking at valuations, and I know that that's different because a lot of PE ratio is almost universally considered to be the most quoted metric in terms of valuation. But I struggle personally to understand why this is the case. I look at free cash flow yield. That to me is the most important metric because not all, and this is contrary to popular belief, but not all earnings arrive in cash. If the earnings don't allow you to repurchase shares, pay a dividend, invest in the business, or make an acquisition, I don't understand what good these supposed earnings are, but relative to earnings, cash flows are much harder to manipulate because over time, the cash that comes in the door is just the cash that comes in the door. Whereas accounting earnings can be manipulated by a variety of factors such as understating”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“United States, most valuable companies, you have a lot of good companies in the technology sector which have more attractive financial attributes as compared to old world companies like automobiles.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“That I find when I'm looking at Japan is if I want to have a quick idea of what's going on in a country in terms of innovation, I'll look at the list of most valuable companies because I can tell you a lot about what's coming out of the country, right? Like what are they producing? Well, when I look at the list of Japan's most valuable companies, there's not a lot of what I would deem to be good companies and sectors that I would seek to have exposure to. There's a few ones like Sony and Nintendo, but most are in the old world economy, like automobiles, like similar to what's happened to Germany. I remain very optimistic about the United States in the sense that I have high conviction that a lot of the best innovation is still coming out of the United States, at least in terms of sectors that I deem to be attractive, like technology.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“I do see some general parallels between the United States and in Japan, like in the present day and a few similarities that I note are the bloated fiscal structure. Like Japan has perennially been one of the most indebted countries. And the United States balance sheet, at least in the present day, is not in good shape either. So they're similar in that sense. And we also both have aging populations that's an issue. And Japan has for a long time now been one of the least hospitable countries in terms of immigration. It's very hard to immigrate to Japan. But in a more optimistic sense, at least from being a United States citizen, I do want to cite, but I think is an important difference. And that's tied to innovation.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Also Think that that can tie into perhaps the psychology. That could probably feed into people being more pessimistic about the business prospects and leading them to not invest. So I think in an indirect sense, you're correct in that line of thinking.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and I think I use the term in my book. They've been stuck in a deflationary trap that has lasted for several decades. And what's happened is that a lot of money was printed, but businesses and individuals in Japan have just not been convinced to invest this money. So they came to believe, at least for several decades, that cash will be worth more tomorrow than it is today owing to these deflationary pressures. It becomes really difficult to convince businesses and people to invest when they haven't seen a return on assets for a really long time. So it becomes somewhat of a self-fulfilling prophecy that people just keep hoarding cash, not investing it because they don't see any reason to because in recent history, nobody's earned a return on it. And that has been a short synopsis of the That Japan has faced for a long time.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Valued more than the state of California. It was by any measure and epic level even compared to some of the more memorable bubbles in history. But my big takeaway from this entire series of events is to think more about country diversification because history suggests that a variety of factors can prevent equities or real estate in a given country from perpetually rising like we've seen in the United States for a long period of time.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I'm pretty sure the Japanese index just in the past few months, like maybe in June, surpassed the levels in 1989. So you basically for over 30 years, you would have earned effectively nothing in inequities in a country. And I think that this is a very important point to hone in on because U.S. investors have only ever known stocks to go up for most people, most people's lives. And I think one of the takeaways from my book is to think more about country diversification just because of this example in Japan. But at the peak of the Japanese bubble in 1989, Japanese real estate was valued at four times the value of the United States real estate despite Japan only being 4% the size of the United States. And as you mentioned, the equities in the country also had a PE ratio of 60, the Imperial Palace was”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“I think that's a great point, Clay. And thanks for bringing that up. Yeah, we have extended periods of easy monetary policy. It often leads to asset price inflation. And this is not a type of inflation that is covered. CMDC and those channels, they're covering consumer price inflation. That's what they're always citing as what inflation is. But asset price inflation is very real. Things like real estate values and such. And that's not captured in consumer price inflation. And when people cite just consumer price inflation as being inflation, that's not remotely close to a full depiction of the whole picture as to what's going on.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Printing money out of thin air. So the extreme leverage required to operate a bank is also why banks go bust quickly when conditions deteriorate. And in Iceland, this blow-up happened in a week. Sometimes it takes longer to develop. But one of the core issues with the modern fractional reserve banking system is that the interest of private commercial banks and central banks, they're just not aligned. Private commercial banks care about how much”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Fractional reserve banking is the commercial banking system that's still employed around in the world today. And I'm pretty sure the average citizen isn't even aware that when they deposit money into a bank, the bank often lends this money to someone else. So the entire system is predicated on the idea that not too many people are going to go and try and claim their deposits at the same time. But as we know from studying various events in history, is often not the case not often, but it happens during crises. People go and try and get their deposits. But a quick summary of the fractional reserve banking system in terms of numbers is that banks effectively earn one to two percent return on assets, and then they leverage these low returns, like approximately at a 15 to 1 ratio so they can juice their return on equity. And commercial banks facilitate this heavy use of leverage by”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Lot of countries will go to places that are offering a bit more yield. In this case, Iceland. So when it started to become apparent that there was trouble brewing around the world in the global financial crisis, these foreign deposits quickly fled. And these were deposits that these banks were now relying on for stability. So you also have various problems. Like there was increasingly exotic financial instruments such as CDOs, which are collateralized debt obligations being rated as investment grade, and similar to what we saw in the United States. Things like that.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so what happened in the banking sector was astounding even by historical banking sector collapses. The entire banking sector in the country basically fell apart in one week. In the course of just three days, the government effectively nationalized the three largest banks and the three largest banks made up the vast majority of the entire banking sector. But one of the core issues that led to the demise of the Icelandic banking system was the banks started to increase their reliance on foreign deposits. We've seen this happened. This was going on during the Asian financial crisis as well. But leading up to the global financial crisis, capital flows that Icelandic banks exploded. And this was owing to investors searching for yield. So during easy monetary, when interest rates are low and”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“As we saw during the most recent 15 year period where there was easy money, when this happens, people pile into basically anything but cash because cash doesn't pay a lot. So people buy up everything else. And the money supply in Iceland expanded by tenfold in the 14-year period ending with the global financial crisis. And I think a lot of these types of events have really been possible because I tie it back to the huge moment in 1971 where the United States severed the US, the link between the US dollar and gold. And that is really, I think, facilitated a lot of these ultra easy monetary policies and also just piling on massive amounts of debt at the federal and business levels.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“The story of what happened to Iceland during the global financial crisis in 2008 and 2009 is really interesting. And if you want to dive more into the global financial crisis, I would recommend looking at Iceland, even though it's a small country, as you noted, they have 375,000 people. The country GDP is about $26 billion. So in other words, it's a very, very small in terms of both population and size of the economy. But the story of what happened there in 2008 and 2009 is really interesting. And I think business classes can learn a lot from studying it. Iceland was one of the hard to safe countries during the global financial crisis. And the seeds were leading up to the global financial crisis. Like between 2003 and 2004, the Iceland stock market skyrocketed 900% in the standard of one year. And like this is a recurring theme that I document throughout my book, but there's a period of easy money, which”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“I think it has a lot to do with confidence in the government itself and laterally that flows over to what's going on with the currency. I talked about that when I was documenting Germany in the 1920s because I was comparing and contrasting the German and Zimbabwe and hyperinflationary scenarios. Ultimately, Germany got their hyperinflation under control. And I think that that has a lot to do with people had more confidence in the German government as compared to Zimbabwe and you can throw modern day Venezuela in there as well. Because Germany, they ultimately rolled out a new currency and they said that it was backed by hard assets. But if everyone went to go said we're going to go try and retrieve these hard assets all at once, there's no way that they would have actually been able to fulfill on that. So I think it had a lot to do.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Implement various new currencies, and they haven't worked out. And international investors and lenders have largely neglected the markets for a long time now. And I think, rightfully so.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“People started leaving Zimbabwe in large numbers. So as usually happens when these types of scenarios start to play out, the government responded by printing more money. And this is a classic response to these types of scenarios and it ultimately leads to more inflation. So as previously mentioned, inflation was estimated to have peaked around 80 billion percent month over month. And during this hyperinflationary period, some economists estimate that between 75 and 90 percent of the local population was unemployed. That's, again, difficult to head around. Almost nobody in the country was working. And Zimbabwe has never really recovered from this period. And I think that that is tied to trust in the government and the corruption that it's persisted. They've periodically attempted to”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I can walk through the hyperinflation events in Zimbabwe. The seeds for hyperinflation in the country were planted when the government launched land reforms that resulted in Zimbabwe seizing white-owned farms and transferring this property to local black individuals that lacked farming experience. So once this happened, there was a food shortage and foreign investment dried up because people didn't have confidence that their assets weren't going to be confiscated. And then real estate values were obviously negatively impacted by this. And as is typical in hyperinflationary scenarios, the government was increasing national debt. So in the 2000s, Zimbabwe's economy started to go downhill. Basic consumer staples were in short supply like is typical in hyperinflationary scenarios. Inflation increase in confidence in the local government eroded.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“And I noted some of the most notable hyperinflationary episodes in recent history, meaning the past 100 or so years. And that includes Germany in the 1920s, Hungary in the 1940s, Yugoslavia in the 1990s, Zimbabwe in the 2000s, and Greece in the 1940s. In hyperinflation usually occurs as a result of some combination of war, economic turmoil, high national debt levels, excessive money printing, political instability, and loss of confidence in the monetary system.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Hyperinflation is often defined as a period of rapidly rising prices for goods and services when price increases usually measure 50% month over month. But really in practical terms, hyperinflation is basically when money stops being useful. I think that that's a better term. Like when citing that example in Germany in the 1920s where you order food and then the price is different 15 minutes later, money is not useful in those situations. And as I documented in my book, Markets in Chaos, in 2008, at the peak of the Zimbabwean hyperinflationary crisis, inflation was reported to have been $79.6 billion month over month. That's difficult to comprehend when in a country where people are complaining about what inflation was 10 or 11 percent. That's not good either, but slightly below $80 billion.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Keep interest rates very low. You see, like in a fan of 2,000 years, people are doing the same things. And that's a recurring theme that I cite throughout markets and chaos. And during the COVID-19 pandemic, we kept hearing that this was an unprecedented event. I don't want to downplay some of the negative things that came out of COVID-19 in any way. But the press kept saying that this was unprecedented. And that's just a very untrue statement. I cite the Black Death as a reference because in the mid-1300s, between 30 and 60% of all Europeans were estimated to have been killed. And that's a wide range because they didn't have the same ways of tracking data that we do now in the mid-1300s. And also between 75 million and 200 million people globally were reported to have been killed in the pre-pandemic population, which is 475.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“I think it's really important to study history, and Mark Twain is often credited with coining the phrase, history doesn't repeat itself, but it often rhymes. As I was working my way through writing this book and for any listeners out there, you start to notice patterns that have happened for thousands of years. It's actually crazy how similar some things have happened. And it's just really interesting. But as an investor, I think it's critical to have an understanding of what happens in the past so we can better anticipate the present and future in terms of potential ranges of outcomes, in terms of what happens to assets, government responses, and investor psychology. And some may be surprised that the Roman response to the financial crisis in 33 AD, so that was over 2,000 years ago, was very similar to what happened to the United States, what they did in the response to the global financial crisis. And that's inject massive liquidity into the system.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Reported that the price of meals at restaurants was different by the time someone received their food as compared to when they were ordered. Now that's just impossible to fathom and if you're living in a developed country and things have been relatively stable, but we're talking about Germany. We're not talking about some small country. So those types of things can happen anywhere. But yeah, the book covers those types of situations. And I think it's a good reminder that a lot of people look at what they've seen in their lifetime and they say that this is what always happens. But that's not the case. Sometimes what's happened recently and more broadly in someone's lifetime, that can in fact be in aberration. And I think that that's important to think about. And that's one of the main reasons that I wrote this book. I think it's important for people to know those types of things.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Crises, there's cases that review market bubbles in France and Japan where the quoted price of assets just far outstripped fundamentals. Citing an example that I note in my book, in the epic market bubble in Japan in the late 1980s, what some consider to be the greatest in history in terms of total market capitalization impact and recovery time, the Imperial Palace, which if you don't know the residence of the Emperor of Japan, was reported to have been worth more than the entire state of California, which is just hard to comprehend, but this was a crazy time in Japan. And then there's also crises documented that are tied specifically to macroeconomic event triggers, such as COVID-19 in the United States and a few hyperinflationary scenarios such as in Zimbabwe and Germany. The German hyperinflationary episode in the 1920s,”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT
“Would define a market crisis as a shock to the price of assets. And my book, Markets in Chaos, The History of Market Crises around the world documents case studies tied to different types of crises. The book covers classic financial crises tied to the banking system in Iceland, Indonesia, Chile, the United States, and Rome, Italy. And these are scenarios where basically there's an extended period of easy monetary policy and loose oversight. And then there's booming credit creation that coincides with rising asset values. It's a very similar story in each case. And eventually interest rates are increased in an attempt to quell inflation. And then all the companies and things that we're doing crazy things when money was cheap end up getting into trouble. And we've seen that right now after about 15 years of easy monetary policy following the global financial crisis. And then the other types of market.”
2023-11-26 · We Study Billionaires · TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes · IDENTIFIED FROM THE TRANSCRIPT