The old hands on Wall Street (those who have been around 30+ years) have a wealth of knowledge and experience to impart. Much to their detriment and far too often the young guns on the street full of bravado and newly minted degrees give short-shrift to the old hands' stories and experience.

“It is different this time” is the saying of the truly inexperienced who have not been crushed yet by market dynamics and the manic psychology of the moment.

Wisdom and good judgment come from experience, and a lot of that experience comes from bad judgment. It is a cycle as old as humanity itself.
So, with that said, we turn to what we have seen in the markets since our start in the early 1980s. The banking and brokerage industry of that decade grew at a heady clip and sizable fortunes were made as interest rates declined. The historic bull market made everyone appear to be a genius, even those that were far from being one. It was a time when new kings of Wall Street were proclaimed, and those kings were impelled through either ego or avarice to build monuments (which scraped the skyline of Manhattan) to memorialize themselves and their firms. But along the way to that certain kind of immortality, the gods had other plans.

It is at that point in time when everything looks rosy and the future is assured that Wall Street firms step out on the risk curve, buy, build or lease a shining new edifice to the power and prestige of the firm or founder, that the gods of Wall Street see fit to humble them for doing so and tear their firm asunder. The street is littered with the names of the firms that shortly after taking possession of a new building/corporate headquarters that they went belly up i.e. Drexel, Salomon Brothers, Lehman Brothers, and Bear Stearns. All had the same pattern.
This brings us to a news item from the other day, which appears only a few have taken note of in regards to the potential importance of the transaction for the firm and the markets it is involved with.

 In an advertising opportunity,, a firm based in Singapore which is a cryptocurrency exchange app, has signed a 20-year lease deal to have Los Angeles’ iconic Staples Center renamed Arena. The deal was announced on November 17th and was valued at 700 million dollars for the term of the lease.

The future is not certain, but if history is any guide, this transaction appears to fit the template of prior financial firms that have gone before. A massive run-up in the market, and conviction that the trend will continue.

It is only when everything looks bright and the future is assured that transactions like this occur.

It goes to the psychology of the moment and the perception of risk.

“Those the gods will humble, they first make proud.”

Stay safe and trade well.

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