In spite of the obvious differences betewen the Soviet and U.S. economies there are disconcerting parallels between the systemic roots of their respective crises (USSR in 1980s and USA today).USSR's stalling GDP growth, growing 'defence' budget and balooning budget deficits ultimately led to currency debasement and high inflation. There's every likelihood that U.S. dollar will … Continue reading Inflation: lessons from last empire’s collapse
Last few years saw something of a gold rush into quantitative investment strategies. Their appeal is obvious as a way to put discipline into trading and take the emotion and stress out. Quantitative strategies might even help improve performance. Here’s how Black Rock President Rob Kapito articulated the industry hopes: “As people get the data … Continue reading Sack your quant!
In my April report I suggested that effective trend following required discipline and a good deal of patience. In this report we discuss the strategy’s proper objective, which leads compellingly to the conclusion articulated in this article's title. We are after outsized, long-term windfalls Many individual traders obsess over short term gains or even day … Continue reading Market trends are the most potent driver of long-term investment performance
In April I suggested that, between the bear market and bubble reflation, the latter was the more likely scenario. So far so good.Presently economic data is the worst we've seen in the living memory and stocks close to most overvalued ever. Now we have mass riots. Nonetheless stocks rise...As David Zervos recently said, looking at … Continue reading Will bulls or bears celebrate? Probably the bulls, right off the cliff…
Spending time looking at economic data releases or focusing on corporate earnings is a colossal waste of timeDavid Zervos, MD, Jefferies Over the years I’d written many articles suggesting that price forecasting based on market fundamentals is a waste of time – if not something worse. In polite society, this is not a popular claim, … Continue reading Trend following is the only valid answer to the problem of uncertainty
In March 2019, I published an article looking at historical perspective on boom/bust cycles in SeekingAlpha. I suggested then that, “the (still) festering economic imbalances might get resolved along two alternative scenarios. Either we’ll have a full-blown deflationary depression that could see asset prices drop by 50% or more, or we’ll have a strong and … Continue reading Bear market or bubble reflation: what comes next?
(Originally written in November 2019) Back when I traded stocks in late 1990s, I got a gnawing suspicion that beyond the nonstop noise of the news flow, there was some force pushing the rising tide, but I couldn’t discern what it was. By today I think I worked it out. The most surprising thing about … Continue reading The one force moving stock prices and what it tells us about the future
Lately I got into arguments about the proper role of hedging with some individuslas who, I thought, should know better. Their belief, essentially, is that operative businesses - mining firms, oil&gas producers, airlines... - should always hedge their price exposure and focus on generating value on their operations. In other words, ignore the price of … Continue reading Why hedging is key!
Benjamin Graham and Warren Buffett achieved their stellar performance by not following their own value-picking advice.