American Consequences - March 2021

since construction was suspended last year and hasn’t resumed yet) completed, it will be more than 170 meters taller than the current world-record holder. The Jeddah Tower will have 59 elevators, but “the lifts will not reach the speeds of normal elevators, as the change in air pressure at those altitudes would cause nausea,” architecture website Architizer helpfully explains. Let’s hope the Jeddah Tower is never finished. The last thing a bubble market needs is a one-kilometer- high building – the ultimate sign of a bubble. But let’s hope it’s never finished. The last thing a bubble market needs is a one-kilometer-high building – the ultimate sign of a bubble. Before then... there are some simple things you can do to protect your portfolio from a burst bubble.

THE ULTIMATE SELL SIGNAL: MEET THE JEDDAH TOWER Indicators that have nothing to do with markets can sometimes offer insight on bubbles. One of the best is the “skyscraper index” (for those with a fondness for adolescent humor, this is also known as the “erection index”), which points to a correlation between the construction of the tallest building in the world and financial crises. When a country declares it’s going to build the tallest building in the world – a surefire sign of excessive optimism – it angers the gods of finance, who hurl a thunderbolt of crisis around the time the building is completed... ensuring years of depressed prices and empty floors. For example... the Empire State Building took the mantle of the world’s tallest building when it was completed in 1931, one year into the Great Depression. In 1974, Chicago’s Sears Tower claimed the title – just as the U.S. entered a macroeconomic hell of stagflation. When Malaysia took the curse of the world’s tallest building, with the Petronas Towers in 1998, they brought with them the poisoned chalice of the Asian financial crisis, which nearly swallowed the country’s economy whole. And the current tallest building in the world, the Burj Khalifa in Dubai, was completed in 2010 – just months after a default (or rather, a debt “standstill”) by the emirate’s investment vehicle. Next up? The one-kilometer-high – that’s 0.62 miles, 3,280 feet, or nine football fields – Jeddah Tower (pictured), in the eponymous city in Saudi Arabia. Once (or rather, “if,”


If it really is a bubble market – and it sure looks as if it is – you need to watch that your portfolio doesn’t pop with it. A few simple ways to protect yourself... 1. Regularly rebalance your portfolio. Did your 4,000% gains in, say, Garlicoin make your portfolio top-heavy with all those crypto gains? If so... be sure you rebalance your portfolio by selling the big gainers and redistributing to the assets where you have a

American Consequences


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