Blowing Bubbles

Published on: June 14th, 2017

It is really starting to look and feel like a tech bubble out there… again. Here is what to watch out for and how to manage the risks.

Comments

  • RM
    Ritwik M.
    31 July 2018 @ 02:15
    Impressive
  • rm
    robert m.
    2 August 2017 @ 16:32
    Is there anyway to implement the Euro Dollar trade without setting a currency trading account.
    • NB
      Neil B.
      2 August 2017 @ 19:07
      Robert, I also have the same challenge with Raoul's trade idea in terms of having access to Euro Dollar options. I had written some comments within Raoul's piece along these lines and posing some questions on alternate approaches which you may wish to review. Even if one can get access to an Options or Currency trading account, many are simply not comfortable with the esoteric and higher risk nature of such trades. We can go do our own research about options of course ( which I have in the past ) but options can get fairly ( well, very ) complex and one must be seasoned and have the mind for it all in the first place. Forex trading looks very attractive on the surface as well since currency markets are the most liquid, least able to be manipulated and some tend to trend very well once they get underway in one thematic direction. But they are highly leveraged markets and if one is not extremely careful with position size AND risk management ( i.e. stops in place at all times ), one can blow one's account up very quickly if a trade goes against ( much quicker than with non-leveraged stock or ETF trading ). Of course also there are ETF's ( like UUP which is the US$ ETF ) which focus on currencies but of course risk is lower ( because they are not leveraged ) while the reward for being right on a trade would be lower than with a direct Forex trade due to the leveraged nature of Forex. Again, you can search for Forex and find massive amounts of information on it all to help you feel it all out. Would be very nice if Macro Insiders would include some further videos providing insight into how to trade Options and Forex which perhaps can help peel away the layers of complexity to help us understand from Raoul's and Julian's experiences and perspectives the way to use them. Like we have seen for some other topics in some of the RealVision Educational/Training videos.
    • rm
      robert m.
      3 August 2017 @ 20:37
      Neil- thanks for the follow up. It would be helpful to have educational videos from Raoul and Julian as the depth of their experience and training is beyond my understanding and this may be the case for most subscribers. I am similar with the ETFs you suggested and they may serve my purpose at this point in time. I am looking into a couple of other services that may provide a basis for setting stop losses based on past price changes.
    • LD
      Lance D.
      5 August 2017 @ 19:53
      I like the idea of educational videos you describe however i feel they should be confined to the RVTV section and not on this format. I also feel that if you don't understand don't trade also remember a stop loss downs nessacerily mean you have manage you risk 100%
    • LD
      Lance D.
      5 August 2017 @ 19:54
      *does not
    • LD
      Lance D.
      5 August 2017 @ 19:56
      Why would you not want to open a currency trading account ?
    • NB
      Neil B.
      7 August 2017 @ 13:39
      Not that there is anything against opening a Forex account or getting involved with it. But Forex is highly levered and it's a more complex task to calculate risk of portfolio and evaluate/set stop losses ( due to pip value move loss/gain is different across different currency pairs because of exchange rate differentials ) compared to straight stock or un-leveraged ETF products. Of course there are calculators to help with figuring this all out but unless seasoned and very careful one can really blow up one's account very quickly with Forex. Perhaps I'm being over-cautionary and, of course, those with experience and success trading Forex might scoff at this caution. Forex is a very elegant environment to trade of course and comes with some great advantages ( due to the trending that can occur and the fact that profits can run fast due to the leveraged nature ) ... but just pointing out that it takes even more careful pre-seasoning and discipline than what some may have honed their skills on thus far and should lead them to approach Forex with due caution and either refrain from opening an account even if they had access to do so until they really learned the ropes ... or cut their teeth only on a simulated "paper trading" account funded to the level and with rules based approach to truly simulate the amount of funds and trading approach they plan to use on an actual "live" account. For example, trading a "paper" account like a cowboy with unrealistic fund levels and shoot from the hip trading style and then transitioning to a "live" account with the same approach is a recipe for disaster. Having said that, of course there is nothing like actually trading using real money and real experience. But prep ahead of time with Forex is, in my view, something quite necessary due to the factors I have conveyed. Bottom line sentiment though, within the scope of Macro Insiders ... given that it is a product targeted towards retail investors ... it would be nice to have some break away material/content that delved into some of the tactical approaches and guidance to getting involved and trading in Forex by Raoul and Julian. I think many here would really love to see that. Yes there is a sea of information out there online to go thru and view across the web. But to see some curated and distilled presentation and guidance from Raoul and Julian would be lovely indeed .
  • rm
    robert m.
    2 August 2017 @ 16:31
    I like the idea of the "neckline" concept as a sell indicator, however what at the exact mechanics involved. Price action is key and is a 10% fall a sell signal. Are there some tools that I can deploy across my entire portfolio.
    • NB
      Neil B.
      2 August 2017 @ 18:50
      Robert, I suppose Julian might want to explain this from his perspective and experience ( and I am not quite sure whether, or how, Julian and Raoul will find a way to keep subscribers of Macro Insiders more incrementally informed when certain action points are reached or to be considered across any of their ideas since there are essentially only 4 chances per week for them under the current format to Macro Insiders to officially convey their ideas to us ... outside of replying to Comments on these threads of course ... it's a question I have raised within one of my prior Comments actually ).... but there is no absolute rule in terms of basing decisions on % moves generally speaking but with a head and shoulders (H&S) pattern, the idea is that once price breaks beneath the neckline, the H&S topping pattern is considered valid/confirmed and, at that stage, the trading theory is that upon retracement of price back towards the bottom side of the neckline ( where it broke below ) would be an objective zone to put on or start scaling into a short position if one had not already built a short position ahead of the break in anticipation of a potential break. Some like to anticipate the break and short prior to it within the H&S pattern while others like to wait for the break to make their move into a position. If one would start to accumulate shorts within the H&S pattern before the break then one might have a higher reward but also potentially a higher risk since at anytime the pattern may morph into something completely different, never break beneath the neckline and continue onwards and upwards thereby blowing the shorts out of the water. But keep in mind, that the H&S pattern is not confirmed till it breaks the neckline and sticks beneath it. Also there is no guarantee that price would actually retrace fully to that underside neckline break ( or even partially ). But generally speaking there is some retracement back upwards before a further decline continues. Of course there is always chance that price comes back thru the neckline and invalidates the break. So just like with anything there are no guarantees. You can search the web for stock price patterns and find a wealth of information about H&S and all the others and how to interpret and potentially play them depending on your risk tolerance and trading style. Plus of course you must have either a stop loss in place or at least a stop loss in mind that you will keep monitoring for to invoke if things should go against you. Risk management is key in all this.
  • AC
    Andrew C.
    31 July 2017 @ 02:26
    @Julian With the recent release of the NYSE margin data, there are quite a few articles in the past week about margin loans being highest in history. So yes, I would love to hear more on your "ammo" index. Should margin amount be taken as a percentage of market cap? Hence we expect it to be at a record with the market at a record high?
  • YO
    Yousef O.
    30 July 2017 @ 21:40
    Great intro article - would appreciate learning more about the "ammo" index...
  • NB
    Neil B.
    30 July 2017 @ 02:28
    JULIAN: Questions posed below for you. Hi Julian. Nice and timely piece, thank you. I've also been keeping a close watch on all these FANTANG ( FB, AMZN, NFLX, TSLA, AAPL, NVDA, GOOG ) stocks as they have been the primary culprits pulling the the Tech indexes up masking declining breadth and participation from the majority of stocks in those indexes. The crowding into passive index ETF's and Funds is also fueling a self fulfilling prophecy in that as more $ enters a and these narrow set of stocks keeps ramping higher a larger and larger % of those passive $ allocated is simply and blindly shoved into these glamor stocks of the moment. I agree eventually they will break and the momentum crowd will turn negative very quickly but trying to pick a top is like an Russian roulette in reverse ( only one position in the chamber without a bullet! ). Two things I am interested to see your views on (1) and (2) below: (1) If and when a break below the neckline occurs and the initial wave of sharp selling ensues, as you say there will be a strong snap back rally at some stage when the downswing is way oversold back up to the neckline area. Would you recommend ( under the BTFD - Buy The "F" Dip mentality that pervades these markets to buy the dip in those cases for a potentially large rapid gain before reversing the position for the longer term decline? (2) The debate between arithmetic and log scale charts. I notice you are using arithmetic charts vs. log. Most chartists swear by log scale vs. arithmetic. But for charts that are experiencing a "bubble" type pattern I've noticed that if one uses log charts the "bubble" type ramp and pattern is just not near as apparent as when one applies a log chart. So many human eyes which are looking at log charts in addition to automated algo trading programs may have a completely different view of the sustainability of these potential bubbles which, in and of itself, could perpetuate the rise ( i.e. complacency since the chart, despite any fundamentals, still appears relatively sanguine and sort of "normal" stead rise visually ). With so many more using charts than ever before I wonder whether this might also be a factor to fuel the rises further than anyone looking at the arithmetic charts for any of the bubble/mania candidate stocks would ever imagine. I have also noticed, I believe, whenever I've seen charts presented in RV that they appear to be arithmetic rather than log scale. I've debated the use of either in my own mind over the years and these days I use both sometimes switching back and forth. I'm very interested to know your and Raoul's perspectives and views on this arithmetic vs. log scale chartist contention an debate. Thank you!
  • JB
    Jason B.
    19 July 2017 @ 22:07
    Could one play this through a long term put option (Jan 2019) on AMZN or NVDA that strikes at about half of current prices?
    • JB
      Julian B. | Contributor
      24 July 2017 @ 21:45
      Hi Jason, sorry for the late reply but I'm just getting a hang of the new website. Here's the thing with bubbles. If you are long stay long for as long as you can, especially in the parabolic phase. Conversely, never speculate against a parabolic move. The time to buy puts is once we see weakness 1) having made a new high, we fail and break back below the last neckline (tough to pick but you can get lucky) 2) When you've has a sharp drop from the highs and then a powerful rally that fails. That's a bull trap rally. If you want examples look at silver in 2011. It was textbook.
    • JB
      Jason B.
      29 July 2017 @ 19:29
      Thanks, Julian! Much appreciated.
  • SA
    Sandeep A.
    26 July 2017 @ 12:43
    Do you think that Tesla fits the pattern of breaking back below neckline and now is in a bull trap rally. How about a long term put option on Tesla SA
  • LD
    Lance D.
    25 July 2017 @ 11:23
    Hi Julien You say "Finally, it is also worth considering that myAmmo Index (a measure of available margin) suggests that the broad market’s ability to absorb any significant increase in VaR (Value at Risk),which one would expect on a sharp correctionas volatility explodes,is extremely limited. Therefore, even if funds want to buy the dip their ability maybe severely limited. " are you basically saying that theres a chance that brokers will not allow it be brought ? i have had instances where i have wanted to trade say a etf to find out the instrument is not tradable whereas a couple of weeks earlier the was no problem. Thanks Lance
  • JM
    Jim M.
    10 July 2017 @ 19:56
    Julian's been my #1 RV personality. This is huge.

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yusko is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets.

Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office. Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation.

Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early stage investor in blockchain technology, digital currency and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.

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Anthony Scaramucci

SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authored The Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot on The New York Times Best Sellers list.

Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

Alex Saunders

Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

James Putra

TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

Raoul Pal

Real Vision, Co-Founder & CEO

Raoul Pal is the Co-Founder and CEO of Real Vision, the world’s pre-eminent financial media platform, which helps members understand the complex world of finance, business, and the global economy.

Real Vision members also have access to Real Vision Crypto, a cryptocurrency and digital assets video channel watched by over 80,000 people. In addition, Raoul has been publishing Global Macro Investor since January 2005 to provide original, high quality, quantifiable and easily readable research for the global macro investment community hedge funds, family offices, pension funds and sovereign wealth funds. It draws on his considerable 31 years of experience in advising hedge funds and managing a global macro hedge fund. Global Macro Investor has one of the very best, proven track records of any newsletter in the industry, producing extremely positive returns in eight out of the last twelve years.

He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full time journalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of human interest recordings, documentaries and films Peter has recently launched the Defiance podcast and DefianceTV.

Caitlin Long

Avanti Financial Group, Founder & CEO

22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

Hunter Horsley

Bitwise Asset Management, CEO

Hunter Horsley is Chief Executive Officer of Bitwise Asset Management. Prior to Bitwise, he was a product manager at Facebook, working on advertiser products including the multibillion-dollar sponsored content ecosystem and ad breaks in videos. Before Facebook, Horlsey was a product manager at Instagram, responsible for multiple advertising products generating several hundred million dollars of revenue. He is a graduate of the Wharton School at the University of Pennsylvania, with a B.S. in economics. Recently, Horsley was named a member of Forbes’ 2019 “30 Under 30” list.

Luke Gromen

Forest For The Trees, Founder & President

Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst. He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clients and former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.

FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients. Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14. At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”) for the firm’s clients. Prior to that, Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006. While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in which he aggregated and combined proprietary research from Midwest with inputs from other sources.

Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.

Meltem Demirors

CoinShares, Chief Strategy Officer

Meltem Demirors is Chief Strategy Officer of CoinShares, an investment firm that manages billions in assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem. Meltem oversees the firm’s managed strategies group and its New York office and leads corporate development.

Previously, she was part of the founding team of Digital Currency Group. As a veteran investor in the digital currency space, she has invested in over 250 companies in the ecosystem.

Meltem is passionate about education and advocacy, and teaches the Oxford Blockchain Strategy Programme and co-chairs the WEF Cryptocurrency Council.