A quick question about the chart on pages 5 and 6 please [Things Fall Apart (Part 2)]: If you assume all other assets stay the same, how far would US equities need to fall to close the gap between US Household Net Worth and US GDP?
– Stuart E.
For 46 years, from 1951 to 1997, we were no more and no less rich than our economy grew.
The most frequent question I get is “what do you read?”, and I sense that people are really disappointed when I tell them comic books, short stories, and science fiction. Oh, I start plenty of “real” books, and I’ll breeze through them, slowing down in parts for something that seems immediately relevant. I’ve got two stacks of these books in my bedroom and four in my office. I’m sure that one day I’ll make my way through them, in exactly the same way I’m sure that I will reply to all of those emails that I’ve carefully tucked away in some folder. Yeah, right.
I’ve always loved this beautiful line from Oscar Gamble – who, sadly, passed away earlier this year. I referenced it in the first of my Things that Matter series last year, a note called Whom Fortune Favors. The gist of it is: when we are active in a specialized field for a very long time, or when we have a highly technical understanding of a narrow field, we often miss what should be obvious truths about that subject staring us in the face.
If you’ve never read Friedrich Hayek’s The Road to Serfdom … that’s okay, most people haven’t. But do yourself a favor and at least read the Classics Comic Book version I’m copying from here, The Road to Serfdom (in Cartoons). The Hayek cult is just as silly as the Elon cult or the Uncle Warren cult or the crypto cult, and I’m not saying that Hayek was some Nostradamus. But I AM saying that Hayek was a really smart guy who believed with all his heart in small-l liberal virtues and keenly observed the politics of the world the last time we got into such a global mess.
We’re on Cartoon #9 today, well on our way to Cartoon #10.
Once upon a time in the dead of winter in the Dakota Territory, Theodore Roosevelt took off in a makeshift boat down the Little Missouri River in pursuit of a couple of thieves who had stolen his prized rowboat. After several days on the river, he caught up and got the draw on them with his trusty Winchester, at which point they surrendered. Then Roosevelt set off in a borrowed wagon to haul the thieves cross-country to justice. They headed across the snow-covered wastes of the Badlands to the railhead at Dickinson, and Roosevelt walked the whole way, the entire 40 miles. It was an astonishing feat, what might be called a defining moment in Roosevelt’s eventful life. But what makes it especially memorable is that during that time, he managed to read all of Anna Karenina. I often think of that when I hear people say they haven’t time to read.
One of the most formative works in science fiction history is finally being brought to the screen. After years of false starts, both at the movies and on TV, Isaac Asimov’s Foundation just got a 10-episode, direct-to-series order from Apple.
In 1942, fresh from reading Edward Gibbon’s History of the Decline and Fall of the Roman Empire, 22 year-old Isaac Asimov published the first short story in what would become the most famous and influential science fiction series of his or anyone else’s lifetime – the Foundation Trilogy. In these books, Asimov invented the fictional science of psychohistory, a combination of history, sociology and mathematics that could make accurate predictions about the behavior of crowds.
I was at a financial advisor conference the other week and the closing talk was by a guy from Singularity University (yes, that’s a thing) spreading the Futurist Gospel, a wondrous world of drones and blockchain and Elon Musk just as far as the eye can see.
How does one apportion the market effects of the three-body problem between the narrative effects of central bank purchases versus the direct capital flows of central bank activities? And does the distinction matter?
I don’t have a strong methodology here, but my best guess is that the Narrative effect on markets is an order of magnitude greater than the direct capital flows impact. Certainly when it comes to the equity market I’m very comfortable saying that, with a slightly reduced Narrative share for the UST market and a more reduced Narrative share for the MBS market.