Are Your Fingernails Blue?

On a hot summer day, I was flying my single-engine Piper Comanche from Schaumburg, IL to Indianapolis, IN. I decided to fly higher than ever before (9000 feet). With the tailwind, I touched 200 mph. The sky was crystal clear; I could see across Lake Michigan. I felt like I was in the stratosphere and could see forever! It was euphoric!

Uh Oh! Euphoria signals danger for a pilot; it’s a symptom of hypoxia. Sure enough, my fingernails were dark blue. Hypoxia is – “a deficiency in the amount of oxygen reaching the tissues.” Hypoxia has caused pilots to fall asleep and crash. Can I hang on for a bit, the tailwind is really moving me along?

Not worth the risk – I pushed the nose down and rapidly descended. When I landed my fingernails still showed some blue.

Euphoria – Warning signs?

In a recent interview, Chuck Butler warned:

“I’m only going to say this once … This is all headed for a Minsky moment. … A Minsky Moment is when a market fails or falls into crisis after an extended period of market speculation or unsustainable growth.

… a Minsky Moment happens when everyone is complacent … thinks nothing bad could happen, so they get overconfident and decide to take on more risk.”

Bloomberg reports, “Signs of Euphoria Are So High Investors Are Having a Hard Time Imagining a Decline”:

“The New Year isn’t even two weeks old, and already $2.1 trillion has been added to the market capitalization of global equities. The market is verging on such overbought levels that not even reliably bullish analysts can keep up with the new highs.

…. The bull market, now in its ninth year, has finally reached the point of euphoria, said Morgan Stanley’s U.S. equity strategists.

“Now, we have seen a total reversal with people having a hard time even imagining how the market could decline,” (emphasis mine) they wrote in a report dated Monday. “We must admit the speed and relentlessness of the move is a bit troubling.”

I’ve heard this stuff before

Right after the first bank bailout, I asked the late Glen Kirsch, “When the government creates billions out of thin air, doesn’t that lead to high inflation?” Glen was emphatic that high inflation is always the result. He encouraged me to buy gold and move some assets offshore denominating them in foreign currencies.

He recommended some investment newsletters. They reinforced my belief, urging readers to diversify, buy gold, inflation is coming – protect yourself.