This page has been archived and commenting is disabled.
Howard Marks' Scrapbook On Lessons From A Rhyming History; And Why We Believe This Time It Is Different
As always, a must read letter (which is a compilation of many prior Howard Marks missives: "Thanks to the tendency of investors to forget lessons and repeat behavior, it sometimes seems there’s no longer a need for me to come up with new ideas for these memos. Rather, all I have to do is recycle components from previous memos, like a builder reusing elements from old houses") from the chairman of Oaktree who, prudent as always, cautions against the latest episode of Fed-funded irrational exuberance: "Investors who engaged in aggressive behavior just a few years ago experienced significant pain as a result. Perhaps the punishment was too brief, and perhaps it was reversed too soon. Thus some are acting aggressively once again. It’s possible that such behavior won’t be punished again the second time around, but prudent investors shouldn’t take the risk." On the other hand, whole countries are now at stake should the market decline. Taking on one central bank is tough... Taking on all the printers in the world may be a task that only nature can eventually tackle.
In a nutshell, to Marks, the three key trends exhivited by the most recent batch of exhuberance is as follows:
- rising confidence and declining risk aversion,
- emphasis on potential return rather than risk, and
- willingness to buy securities of declining quality.
We agree and disagree with Marks' conclusion: as never before has the very fate of the economic system been tied in with the continued ramp in Ponzi markets, any ability to derive history lessons fails. For the central banking cartel this is it: a do or die moment, in which the die is not even a possibility. Just like buying CDS on the US used to be considered the dumbest trade ever (what counterparty pays if the trade succeeds?) so now outright shorting of asset classes is futile: it will succeed of course, eventually, but when it does it will mean a total overhaul in the economic system. As such any and all paper profits will be irrelevant.
From Oaktree: Open and Shut (link)
»
- 7384 reads
- Printer-friendly version
- Send to friend
- advertisements -
I was almost ready to be bullish on Gold, but 1400 held and it is tanking into the pit close. Oh well, still bearish.
The system fights back,all those meal tickets at risk,$1400 will come very soon,the death spiral of fiat continues unabated.
Blythe and her monkey brigade fail again.
Goldman sees U.S. stocks rising 23% next year
I'll buy that along with a devaluation of the dollar of about 33%.
Interesting observation, and you can see how stocks vs. gold stack up by checking $indu:$gold at stockcharts.com
Gold has been beating up on equities but the trend might be due for a minor pullback.
Yes 23%,
A] THAT
OR (the logic of "excluded middle applies here"..no grey area, no fuzzy logic..no alive+dead quantum in-between state...or maybe 100% quantum JUMP, from A/B/A/B...soon we will know
B] 'economic end game'
No big deal, we have been through the DOOMSDAY clock Nuclear Scenario..how many minutes til Midnight...we 'lucked-out'...it was REALLY REALLY real, SAC run by Curtis LeMay, WW2 destroyer of Europe by Day, (bomber Harris, at night) really had 10-20 megaton H bombs in the air 24hr/day...Russia equally ready....Doctor Strangelove the movie 1964...
Still betting on thousands of years of human history. Gold and silver have always been valuable; pieces of paper with printing on them, not so much.
+1
the kind of financial/physical/economic WORLD circumstance
THAT KIND OF CONTEXT, forget your GOLD/SILVER, just showing some for 'spending' is your guaranteed death....as if in 1944 Germany, such a context means death to the holder
...thieves, government...unspendable...
Mother Nature has something in store for the markets and very soon at that! First Target San Francisco.
MIRAC said:
"Mother Nature has something in store for the markets and very soon at that! First Target San Francisco"
The San Andreas Fault, the offset buildup is about 70mm/year, and the significant release was about 5 meters in 1906...so now 100 years later expect 7 meters....1906 was about 8.2, this next maybe 8.5+
aIt would seem to be the SAME kind of DENIAL 'insanity' living in SF as the rest of the World exhibits regards the UNPRECEDENTED financial mess that EXISTS, as a matter of fact..
Its normal, we ALL deny our own personal Death...something that happens to other people...
you wonder, for instance, why does
Warren Buffett act, still at his age, as if he is immortal?
This is a classic, well worded line to remember:
On the other hand, whole countries are now at stake should the market decline. Taking on one central bank is tough... Taking on all the printers in the world may be a task that only nature can eventually tackle.
So, our conclusion is that critical analysis, reason, and common sense are almost completely useless in anticipating markets--governments and their cronies will manipulate markets and win out in the end?
Dancing is the vertical expression of a horizontal desire. GBS (A non sequitur, to be sure, but a nice one.)
What can't continue won't continue.
"Just like buying CDS on the US used to be considered the dumbest trade ever (what counterparty pays if the trade succeeds?) so now outright shorting of asset classes is futile: it will succeed of course, eventually, but when it does it will mean a total overhaul in the economic system. As such any and all paper profits will be irrelevant."
Righty-O. A drop in the Dow to $1,000 is only a 91% gain, by that time, the dollar will have dropped by a similiar or more amount. Therefore, there will only be nominal gains by shorting, forget about real profits. And one will just look like a total fool until that works, if it does at all (see Zimbabwe). Real profits will be had by leveraging up--with discount windows, of course.
Michael Burry and Cornwall Capital made out well with those CDS'...everyone laughed at them until they didn't. The great counterparty turned out to be the U.S. Government. Alas, "The Big Short" today is equally laughed at--even called a bubble--when, in fact, the ultimate bubble is anything fiat backed, except those $10 toasters at Wal-mart. Those things are awesome.
Yes, this time feels different.
The USD seems unlikely to continue in it's current role as reserve currency.
It would be gone already except there's no alternative to it just yet. The Euro is no good.
China and Russia are making noise. Gold is still there.