Professor Glen Arnold

Kindleberger and Aliber (2015) point out in their book Manias, Panics and Crashes that in 1928 the market value of transactions on the NYSE increased by 36%.  In the first eight months of 1929 they were up by 53% expressed as an annual rate.  A similar rise was observed for the late 1990s – see […]

I want to understand more about the changes that occur in market manias, and how manias can move to panic, and finally a crash. To assist with my education I’ll write out the key points from a world famous book on the subject written by Kindleberger and Aliber, K&A. First, an overview of crises (what […]

This week I heard Nigel Farage say that the most likely outcome of the Brexit negotiations is the “Norwegian model” (he doesn’t like the idea, but recognises the course we are now on).   A year ago (17.6.2016) I posted a newsletter explaining the Norwegian model and a few other things about Brexit.  I thought it might be worth […]

A chart in the latest IMF Global Financial Stability Report raises an important question: is the Chinese economy taking on so much debt that it is vulnerable to a crash? As you can see past crises have been triggered at similar debt to GDP ratios. The IMF team comments: “China faces mounting risks to financial […]

The last few newsletters have highlighted US vulnerability to interest rate rises and/or a loss of lender and investor confidence. But what about some other leading economies? This map was drawn by Eurostat. It shows countries with high levels of private sector debt relative to GDP, i.e. the stock of liabilities held by non-Financial corporations and […]

Jeremy Grantham is a well-respected thinker on financial markets, particularly ideas of reversion to the mean and bubbles. He is founder of the very successful asset manager GMO, based in the US – but remains a Brit! He recent wrote in the GMO Quarterly newsletter a piece entitled “This Time Seems Very, Very Different”...

Yesterday’s newsletter described the dramatic rise in US government debt to 100% of GDP. But there is another worry: the debt issued by US companies. Before we look at that, there is something we can set aside – we do not need to worry about too much – the issue of household debt. (Except that it […]

A country with a large amount of debt owed to foreigners might be subject to bubble tendencies, followed by a crash – especially if that debt is currently rising at a fast clip. Today I’ll look at the position of the United States. There are three big debtor groups, (1) Government, (2) Households, (3) Corporations. […]

In February I noted, in a series of Newsletters, the extraordinarily high level of the US equity market as measured by the ten-year cyclically adjusted price earnings ratio. It has only been this high in two years of the past 100: in 1929 and in 1999. I followed that up in May with Buffett’s comments […]

The quality of the senior managers is crucial to a firm’s success. Sometimes faith in just one person can be the most important factor in making an investment decision, as Buffett and Munger explained at Berkshire Hathaway’s May 2016 AGM. Question from a BH shareholder: “Precision Castparts, besides confidence in CEO Mark Donegan, what do […]