On the Move

On the Move

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?

Written by Kim Petch

8 Responses to On the Move

  1. it would be great if we could get this whole financial sector cancer/systemic risk/derivative Ponzi/economic dysfunction thing solved.

    I’m working on it! I’m working on it!

    How do we get out of this mess?

    I’ve come to believe that there’s a reason why it’s always darkest before the dawn. We need to be really scared before we are willing to do the things needed to bring the sun back. It’s not quite dark enough yet. But it’s getting there.

    Whenever I get to feeling that things are really bad in the world, I try to bring to mind that this is not the first time things looked bleak. I wouldn’t want to have been around during the Civil War. I wouldn’t want to have been around during the Great Depression. I wouldn’t have wanted to have been around when Hitler was dropping bombs on London. I wouldn’t want to have been around during all those long stretches of time when dentists didn’t make use of painkillers.

    People not only survive despite terrifying odds against them. They manage to make the world a better place in the days that follow.

    How the heck do they do manage over and over again to pull that off? I think they learn stuff from the bad times. Pain causes us to dig down deep in a way that eating ice cream just doesn’t. Pain is part of life. None of us invite it into our lives. But just about all of us can recall times when experiencing deep and scary pain helped us become better human beings.

    It’s a good thing that this economic crisis is causing such great amounts of human misery, you know?

    We’re all going to have to have a great big party when we make it together to the other side of the Big Black Mountain. I’ll bring glutton-free chocolate chip cookies.

    Rob

    • I see what you mean Rob. Sometimes it just takes a crisis or a big change to help us focus on what’s really important. It can be hard to do that when we’ve had a long period of time when everything has gone well and we become so comfortable with the status quo that we don’t even realize things have changed – and we need to change with them.

      Thanks for your comments. I look forward to the cookies! ;)

    • Great to hear your move is progressing. I hear you on the chaos factor. Isn’t it funny how we can sometimes get sick of our daily routines and then miss them like crazy when they’re somehow pulled out from under us? I hope September finds you in a state of balance between boredom and chaos! ;)

    • I’m not sure where your neck of the woods is, but we’ve moved to Cambridge (Ontario) and we’re really enjoying it so far. We live in a part of town that’s got some nice lakes/rivers and a small town feel, but we’re close to amenities and not too far from Toronto.

      Thanks for stopping by!

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