“The only function of economic forecasting is to make astrology look respectable.” – John Kenneth Galbraith, one of the 20th Century’s most venerated economists Another year, another blur. Every year I’m struck by how quickly it’s time… Read More
“The only function of economic forecasting is to make astrology look respectable.” - John Kenneth Galbraith, one of the 20th Century’s most venerated economists Another year, another blur. Every year I’m struck by how quickly it’s time to write our annual forecast EVA, and this year is no exception. It continues to be my belief that there is a theory of relativity at work as you get older: When you are 10, a year is 10% of your life but, when you’re pushing 60, it’s less than 2%. As a result, the passage of time does seem to shift gears from leisurely to head-snapping as we become “mature”—chronologically, if not emotionally. (Some of you may have heard the old joke: What’s the difference between a bond and a man? The bond eventually matures.) As is our custom in this issue, we will first review our forecasts from last year and then make a few brief comments before focusing on what we see unfolding in 2015. Read More
“Safety’ is a tricky and paradoxical concept. The safe assets are often the ones most people regard as hopelessly risky.” – Jim Grant, acclaimed author of Grant’s Interest Rate Observer POINTS TO PONDER 1. The chart shown below, courtesy of the financial blog… Read More
“Safety’ is a tricky and paradoxical concept. The safe assets are often the ones most people regard as hopelessly risky.” - Jim Grant, acclaimed author of Grant’s Interest Rate Observer POINTS TO PONDER 1. The chart shown below, courtesy of the financial blog Hedgopia, vividly illustrates the incongruity between US capacity utilization (essentially tracking how "maxed out" the economy is) and the Fed’s key overnight rate. Despite this presumably unsustainable difference, equity investors seem convinced the Fed’s Big Easy will continue indefinitely. (See Figure 1.) Read More
“A stable market breeds complacency. Complacency breeds bad investing behavior. Bad investing behavior breeds regret.” – The Motley Fool’s Morgan Housel “Common sense is not so common.” – Voltaire What’s that smell? If you detect a… Read More
“Most great investments begin in discomfort…bargains are usually found among things that are controversial, that people are pessimistic about, and that have been performing badly of late.” – Howard Marks, one of the world’s finest money managers Wild Woody. Read More
“Never in history have household financial assets been higher relative to the disposable personal income that must support these assets and the humongous debts behind them.” – Ned Davis, founder of Ned David Research (and a stock market bull!) POINTS TO PONDER 1. Even money… Read More
“It’s not what you look at that matters; it’s what you see.” – Henry David Thoreau “The lack of volatility (in financial markets currently) is eerily reminiscent of the run-up to the financial crisis in 2007-2008.” – Charles Bean, Bank of England Deputy Governor… Read More
