Stock Momentum, Covid and Big Tech

Stock markets feel like they are running out of momentum – but that should not lead to fears of a no-see-um crash, rather a more fundamental assessment of the reasons why? In the UK, Plan B – National Economic Suicide by winter Lockdowns – looks on the cards. And, despite all the wonders of Big Tech and promises about how much better it makes our lives – most of it is pretty pants.

Blain’s Morning Porridge – September 15 2021: Stock Momentum, Covid and Big Tech

“I like traffic lights, I like traffic lights – especially when they’re green.”

This morning: Stock markets feel like they are running out of momentum – but that should not lead to fears of a no-see-um crash, rather a more fundamental assessment of the reasons why? In the UK, Plan B – National Economic Suicide by winter Lockdowns – looks on the cards. And, despite all the wonders of Big Tech and promises about how much better it makes our lives – most of it is pretty pants.

Lots in the news to think about. Stocks feel like they’ve run out of oomph! That’s a great word that sums up the current loss of momentum. Bond yields are still falling – despite supply and rising rate concerns. What does that tell us? (In bonds there is Truth – or at least there was till central banks discovered how to manipulate them!) Yesterday’s US inflation data was less threatening than expected, and won’t force the Fed’s hand on an early taper. As the leaves start falling off the trees heralding the autumn, the market mood feels recessionary… even reflective.

Perhaps what we are going to get is not a market meltdown in October – which many talking heads are warning is likely to happen – but something more gradual? A market reversal into a new long-term fundamental rediscovery of the meaning of value perhaps? (Personally, I think it unlikely; there is so much money tied up in inflated financial assets, but let’s explore the theme.)

There are two types of market crash: the sudden, “No-See-Um” event like in 1987, 2000 and 2007/08 triggered by events beyond our ken (“ken” – a Scot’s word summing up knowledge and expectations), and the second kind: long-term periods of market stagnation as folk realise the assumptions that drove markets into the stratosphere are unsustainable.

That’s like the crash in Japan stock market from its peak in December 1989 – when the Nikkei was kissing heaven at 38,915. 32 years ago. It plummeted over the next 20 years to 7500 as global investors realised Japanese companies were nowhere near as innovative and well managed as the market fashion believed, the economy was in a long-term deflationary spiral, the Emperor’s palace was not worth more than California, the banks weren’t so great, and that Japan had all kinds of demographic and societal problems to sort out to justify the insane valuations driven by market speculation (which was part-fuelled by the curious Japanese equity-warrant market) in the 1980s.

This week the Nikkei hit a new 30-year record at 30,670. Still not up to record levels, but interesting as its recent rise is again fuelled by “hopeful” expectations…. that a new prime minister can do more to drive growth in a stultifying society, that Covid can be tamed and more and more global investors are re-entering the market.. Oh dear. I’ve heard this story before.

(Personal story: Since 1990 I’ve held a small chunk of my pension pot in a Japanese Equity Fund. All-time worst investment ever. I invested £20k. Its now worth about £12k despite the recovered market after the fees I’ve been charged. Lesson: The Law of Compound Interest doesn’t apply when Pension Funds are involved.)

Get ready for a Winter of Discontent

Meanwhile, here in Blighty, it feels like “Deja-vu all over again” as Boris preps us for a renewed series of pre-emptive Winter Lockdowns. I shall not be buying that Rail Season Ticket I was contemplating just the other day.

I can see it now. With the onset of colder weather, and despite booster jabs and vaccinating kids, the number of infections will rise. Hysteria and panic. The experts will be warning of a tsunami of sick people about the swamp the NHS. We will have a few weeks of dither – starting with a promise of “No More Lockdowns” followed by a Lockdown, and then two days at Christmas so we can all catch the latest variant, followed by another Lockdown in the New Year. You may choose to cower at home – I am going Skiing!

The thing is… the vaccine does not stop people getting Covid. It gives them the ability to resist it. People will get ill, but they probably won’t die and they won’t really need to go to hospital. But, government will probably close the economy – triggering all the negative economic consequences that creates – to take the strain off the NHS.

Who is this country run for? The people or the NHS?

I’m pretty sure it’s now the latter.

Am I the only person unhappy my taxes are rising so we can hire yet more over-paid NHS managerial bureaucrats on inflated salaries so they can retire on massive guaranteed state pensions, while the rest of us beggar ourselves paying more and more taxes to fund their comfortable retirements? The NHS needs fundamental replumbing and re-invention. Its increasingly clear all the money just promised to the NHS will sink into its black hole maw and achieve nothing. In a few months time we’ll still have waiting lists and a shortage of front line staff…

Back in the Real World: Big Tech

Some great comments back on yesterday’s Porridge about Apple. The gist of the piece was positivity about Apple’s future prospects. Its leadership of the smartphone market allows Apple to dominate the exponentially expanding new tech ecosystem we all live in. Fantastic. Stock price still fell after they launched new phones… the 13.

A very large number of readers came back on the piece. A number said I’d missed the fact that by controlling its own superior chip supply puts Apple in a great position relative to rivals. But – many wondered if I was overly enthusiastic. I make no secret of the fact I own Apple stock, and that is why this is merely market commentary and not an analyst report.

However, as the day wore on, I got a chance to think about Tech more deeply. Over the last two decades or so, the pace of not just new company formation, but the emergence of whole new sectors has been extraordinary.

I read a great list posted by John McGlynn, founder of Scottish Capital, of things and services that simply didn’t exist 25 years ago. These included (and I’ve added a few of my own):

  • iPhone, Streaming, Google, Facebook, Netflix, YouTube, Bitcoin, Twitter, TikTok, Instagram, Wikipedia, Android, iPad, Gmail, Tesla, PayPal, WhatsApp, Messenger, emojis, Zoom, FaceTime, BlackBerry, Amazon Prime, Airbnb, Uber, Snapchat, LinkedIn, Reddit, Skype, Spotify, SpaceX, Podcasts, Robotics, Virtual Reality, AI, Meatless Meat, 3D printing.

Some of these things are already yesterday! What a marvellous modern age we live in….

Until you get hit with the brutal reality of this modern Tech age – Many of these things aren’t  actually that good. Often there seems to be an unbridgeable gap between what new tech promises, and what is actually delivered. New tech is often exciting and disruptive – but if it relies on institutionalised bureaucratic firms to deliver – it sinks. As the complexity and diversity of the Tech space explodes it gets more and more difficult to understand.

Without broadband… none of it works.

Regular readers may recall that I am war with Virgin Broadband. They have proved themselves utterly incompetent when it comes to delivering services. We’ve had 17 visits and 18 different excuses/explanations of why it doesn’t work properly. Our home is festooned with boosters that mostly boost nothing. Their customer fulfilment strategy is to not communicate. One helpful engineer gave me a direct number to the team – so I use that – until I gave up.

Back in July we went for plan B and decided to replace Virgin with BT Broadband. Couple of days later a BT engineer turned up. He looked at the system. All we needed was for BT to connect the house to the Cable Box 6 meters away at the end of our driveway. Since we had builders in, we offered to do it. Nope, don’t worry, they said we will do it tomorrow. We have now complained, got angry, got sorrowful, and been promised support umpteen times. But every time BT “sincerely” promises engineers to fit the cable will arrive tomorrow, an engineer arrives with a new BT box to fit inside the house. We now have 3 of them. We have now told BT to travel far and multiply.

We have solved out broadband problem with a wi-fi dongle thingy-ma-boab which is proving more reliable and much cheaper than either Virgin or BT.

Yesterday we had a crisis with Ring, our new digital doorbell app which stopped acknowledging out existence. (Yesterday, I forgot to mention my phone also answers the front door.) My wife spent hours trying to resolve the problem on the internet, had to first obtain a code to get access to a customer service number, then spent 5 minutes identifying herself on the system, before an absolutely unhelpful customer service rep suggested she try the website to identify the problem to resolve.

I am solving the problem in a traditional manner. I’m deleting the app, replacing the digital doorbell with a real doorbell, and the linked security cameras with actual security cameras and our own recorder…

I could go on. I boasted about our IoT ovens – which I have to reset and reconnect to the internet every time we use them. I could talk about why I don’t use Uber: because I’m fed up ordering cabs that don’t then appear because the driver has seen a more lucrative ride somewhere else. I don’t use food delivery because delivering food on a bike means it arrives cold. I don’t order clothes off the net because they won’t fit, and I prefer to shop local. I do use kindle, but I prefer real books.

Basically, I am just very unhappy with the modern world.

Out of time and back to the day job!

Bill Blain

Strategist, Shard Capital


  1. I used to think banking on line was convenient and saved postage. Then other people began accessing my Visa card and checking account. I was signed up for Zelle and over $5000 in Zelle transfers were made. After my checking account was drained and after I had followed my bankers instructions to transfer money into a new savings account she informed me that I had transferred $50,000 telephonically from this new savings account back into my checking account. I had over 20 unsolicited credit cards sent to me including from banks my only relationship to was having made a CD deposit.

    The bank made good on most of this criminal activity save for two wire transfers totalling $2080 dollars to whom I no not but they denied that claim. I would go to small claims court to contest their decision but they are a very large bank and the fraud department only uses first names so I don’t know whom to name as the defendant.

    I now bank 20th century style. Monthly credit card statement mailed to me and my payment sent via postal service back to them. If I want to buy something remotely I call and give my credit card number telephonically not via the internet. So far so good.

  2. “I’ve come up with a set of rules that describe our reactions to technologies:
    1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.
    2. Anything that’s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
    3. Anything invented after you’re thirty-five is against the natural order of things.”

    The universe is now even more bizarrely inexplicable than when Douglas Adams wrote those lines and some additional observations may help in our daily battle with technology.

    1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works. The fact that it doesn’t work and replaced something that did work is a myth perpetuated by old people who just don’t get it.
    2. Anything that’s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it. You will easily convince people under fifteen to buy your new invention if you can persuade those over thirty-five that it is deserving of funding.
    3. Retire at thirty-five upon the realisation that the future hates you.

  3. Having looked into your palace example… as a metric does land value identify long term asset-inflation trends and suggest a Japan future awaits the West? “Land-price inflation was so distorted that land constituted 65 per cent of Japan’s national wealth, compared to just 2.5 per cent for the UK at the time… Land accounts for 51% of the UK’s net worth in 2016, higher than any other measured G7 country.” (Frankenquote – two sources).

  4. 🤣🤣🤣
    Thanks Bill, that cheered me up no end! Glad I’m not alone !

    On a serious note though, as you pointed out, so much of this tech is not actually that helpful. A kindle or a book? No brainer.
    In education, tech was supposedly meant to transform how we teach.
    You would cry if you knew how many kids don’t even know how to delete email. And for all the fantastic things being learnt during lockdown, we’ve come to the conclusion that kids learn better in school. Did tech teach us that? (Hint of sarcasm).
    Conclusion ? People are what matter.

  5. Routers and switches and hubs, oh my! We had an hour-long internet outage yesterday that created quite a stir amongst the remote-work part of our team (3 out of 7). The ISP resolved it fairly quickly, and we have the back-up of WiFi hotspots giving a kind of redundancy, but cell service goes down occasionally as well. It’s curious how blithely we welcome AI intruders (ha ha) into our home in order to keep a digital eye on our pets while we are away. I realize most homes would not be the direct target of computer hacking, but when people cavalierly use “password” as their password, or don’t even change the default when setting these up, it leaves this large surface available to create bot-nets for nasty things to happen elsewhere.

    The building code still requires physical sets of plans to be on the jobsite, and it was only COLVID that forced us to go to complete Electronic Document Review (EDR). Contractors must submit digitally, but then at the end print a copy of the approved stamped plans. We are close enough to the old way of reviewing with paper sets that if push came to shove we could do it, but our process has changed so much it would be a real challenge.

    I guess my point is, the digital still requires the physical. The entire city is enduring having miles and miles of trenches dug in their front yards etc. for fiber installs which will make things go much faster, but create yet another point of physical failure. The shiny new is entirely reliant on the backhoe.

  6. @DA, BB
    It’s possible that Japan is an anomaly. Raymond Goldsmith noted that land was an unusually high proportion of Japan’s national balance sheet way back in the 1960s(?).

  7. The land proportion comment is interesting. My father bought a farm for under £100 / acre in the 1960s, we sold it for over £1000 / acre in the 1990s, it would now cost over well over £10,000 / acre. It is no more productive and agricultural prices have not gone up 100 times. But, agricultural land is outside the estate for inheritance tax so who cares about the return on capital. Central government can distort prices in many ways.

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