VECKA 49
Måndag
30
November
BT-annons
2020-11-06
photo


Herd mentality
GURU SNACK

The new progressive world order is little more than the latest version of the socialist revolutions pushed in the Old World. But this agenda is cloaked in promises of "efficiency" and "sustainability."

In the thinking of many experts, all problems and solutions are geared to the mindset of central planners—of people like themselves. Climate scientists mistakenly believe themselves solely qualified to determine public policy for everyone else.

Herd mentality poses a danger at every turn here. While Wall Street seems excited about the possibility that the Federal Reserve may eventually drive rates to negative levels, passive investors should recognize that the Fed has already engineered negative rates – for the first time in U.S. history, including the 1929 top. Unfortunately, it’s in their portfolio, and they don’t realize it.

From present valuation extremes, we estimate the likelihood of negative 10-12 year average annual total returns for a passive investment mix invested 60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills.

Even if we assume that market valuations will never, ever retreat, we estimate that total returns would be likely to average only about 3.59% for this passive investment mix. Again, this estimate assumes that valuations are held at a "permanently high plateau" indefinitely.

We expect that the most valuable aspect of our investment discipline over the completion of this market cycle, and future ones, will be our ability and willingness to flexibly respond to changes in observable market conditions – particularly valuations and market internals – as they emerge.

The October comment also includes an extended public health comment on the COVID-19 epidemic, addressing topics including containment practices, "herd immunity," certain misconceptions regarding the experience of Sweden, and more.

Currently we have the absurd situation in which the faster the rate of technological progress, the more that central banks do to create “inflation” and thus offset the benefits of this progress. They aren’t doing this because they are malicious, they are doing it because they are trapped within an ideological framework that prevents them from understanding the way the world works. (Steven Saville)

Mises in 1944: "The German and the Russian systems of socialism have in common the fact that the government has full control of the means of production."

In social media—as in the established old media—editors, curators, and managers work to promote their own self-described “mainstream” views while excluding as “extreme” the views of everyone else.

Because politicians have no liability for the economic damage they inflict, they have no incentive to minimize the disruptions they decree.

Reserve Bank credit (i.e. the sum total of interest bearing assets at the Fed) jumped $26 billion to $7.045 trillion, a four-month high. That pushed the three-month annualized growth rate to 4.9% compared to 1.1% last week, though the year-over-year comparison continues to dwindle, with growth now at 81.1% compared to 82.7% a week ago.

Politicians have ignored the threat to small businesses that are failing not because their owners used the wrong strategies, but have been destroyed by the misguided and ineffective forced shutdown.

 
Göran Högberg

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