Continuity gives us roots; change gives us branches, letting us stretch and grow and reach new heights.
~Pauline R. Kezer
My computer will be packed and we will probably be en route for stage one of the move by the time you read this. It’s unfortunate that this geographical move is coinciding with more historical economic and market moves. I wish I could follow it all a little more closely. Alas, life happens.
The good news is that if you’ve been reading BJ for the past year or so, you weren’t lulled into complacency by the 2009-2011 rally. To borrow a metaphor from David Rosenberg, you knew that the rally was a house of straw rather than bricks. Hopefully, you managed risk accordingly.
Besides the market, I’ve been short on time, sleep, and as a result, brain power. So I’ll use today’s post to share some ideas from a few folks I respect a great deal. I’d be happy to hear your reflections on their work, but I likely won’t be able to respond for a bit.
- Barry Ritholtz had a great explanation of How the Fed Got Itself Boxed In. This basically goes along with my previously stated thesis that the Fed (under both Greenspan and Bernanke) has used monetary easing like Windex (My Big Fat Greek Wedding reference).
- In Danger: Children at Play Jeremy Grantham chides the U.S. government and the Fed for allowing the financial sector to collect the lion’s share of income gains over the past few decades. He sees this inequality as a destabilizing force in the global economy and society at large. A value investor, Grantham sees the S&P 500 as worth “no more than 950.”
- David Rosenberg shares an installment of Breakfast with Dave via John Mauldin and Barry Ritholtz wherein he reiterates his recession call and elucidates the current global economic situation: “This is not a replay of mid-2010. The global economy is slowing down much faster than was the case then and the problems surrounding sovereign government debt are far more acute. While the Fed may be forced at some point into more easing action, there is more reason to be skeptical of any success now than before.”
- Prem Watsa, the CEO of Fairfax Financial Holdings and one of the more astute investors in the world, sees Dirty Thirties Pain Ahead. He’s worried about the U.S. and Europe as well as a Chinese property bubble. Again, it’s all about the debt.
Any one of these articles would make for great reading, but I heartily recommend all of them. If you’re looking to try to understand the current chaos in the markets, these folks tell it like it is and offer a lot of great details. I always say that investing and life are all about context and all of these articles deliver on that metric.
I’m not sure when I’ll be able to write again, but it would be great if we could get this whole financial sector cancer/systemic risk/derivative Ponzi/economic dysfunction thing solved. You’ll take care of that while I’m out, right?
Seriously, what are your thoughts? How do we get out of this mess? Can we even agree on what the real problems are?