Before I talk about markets, I would like to thank Sam Knight for providing me with a much better logo for Brumby Capital. If you are looking for someone to help you with strategy and branding - Sam is someone you should get in touch with.
I have been in markets through three big inflection points - the dot com bubble, the GFC and the top in the commodity bubble. What always marked out a top in markets for me was supply. When supply of internet starts ups overwhelmed the available supply of advertising money (every business model back then was based on banner ads) - there needed to be a culling. When supply of housing overwhelmed the number of buyers - we had a culling. And when the supply of mines and oil wells overwhelmed demand - we had a culling. The politics of this is pretty easy to understand - large players are willing to take some short term pain for long term gain (survival). What was true with all of these inflection points was that there was a clear market signal BEFORE the culling. Most internet based retailers perished during the dot com bust - but Amazon peaked in December 1999, well before the market peaked.
Likewise, US homebuilders peaked well before the GFC. Toll Brothers actually peaked in 2005.
And Chinese steel equity started falling well before prices in steel related commodities began falling.
Markets are truth. There are always signs of a top - there are then two questions you need to ask yourself. Am I willing to accept the message that markets are sending me? And am I willing to act on these messages? My personal answer is yes - which is why I have set up Brumby Capital.
Bu I guess for you, dear reader, you are probably asking what message is the market sending?
