Wednesday, August 24, 2016
Whether it's protectionism (erecting barriers to international trade, immigration, etc.), the pros and cons of a minimum wage, of government spending, of regulation, etc., our busy lives and varied interests I'm afraid compel us unwittingly to adopt a crowd think that risks us taking ill-conceived sentiments to fruition. Politicians, and the special interests that support them, alas, know this all too well. As Gustov Le Bon warned back in 1895:
Crowds are only cognisant of simple and extreme sentiments; the opinions, ideas and beliefs suggested to them are accepted or rejected as a whole, and considered as absolute truths or as not less absolute errors. This is always the case with beliefs induced by a process of suggestion instead of engendered by reasoning.
The characteristics of the reasoning of crowds are the association of dissimilar things possessing a merely apparent connection between each other, and the immediate generalisation of particular cases. It is arguments of this kind that are always presented to crowds by those who know how to manage them.
Tuesday, August 23, 2016
If I only had a nickel for every time, over the years, a client asked me what I think of so and so's prediction that the market is about to crash (I use the negative example because it's those that seem to catch our clients' attention). Well:
Fear sells. Fear makes money. The countless companies and consultants in the business of protecting the fearful from whatever they may fear know it only too well. The more fear, the better the sales.
DANIEL GARDNER, The Science of FearEd Stavetski describes my view perfectly (HT Robert Mortorana):
You must have an independent view of the markets or the media will force a view upon you.
Monday, August 22, 2016
The indices for equity markets are roughly 10 times higher than they were in 1986, unadjusted for inflation and dividends, and the yield on the U.S. 10-year Treasury note is one-fifth of what it was. Of the top 10 companies by market capitalization in 1986, only General Electric, AT&T, and Exxon Mobil remain in the group today. Google, Amazon.com, and Facebook were not even dreams. In 1986, Microsoft, Oracle, Adobe, and Sun Microsystems went public.
Credit Suisse's Mike Mauboussin in his August 6 letter. (HT Josh Brown)
Lots of folks seem to