What, if anything, are people buying today in this 2 day selloff?, page-205

@Windham14,

Ivan,

I hear you, and I don't disagree.

There do appear - to me, as mere novice economist - to be some economic imbalances. But, being untrained to any significant level in the silky science of macroeconomic analysis, I am unable to form any useful context for how material some of these imbalances may be (as potentially hazardous as they might sound).

So, unfortunately, my contribution on this topic ends there.


"Moreover, I don't think one can point to the ''recovery'' of any stock market as being indicative of a recovery of the broader economy. Global stock markets over the last 10 years have been subject to massive amounts of QE. It's almost like pumping a bodybuilder full of steroids and then when he weighs 150kgs, proclaiming how healthy he must be."

Based on the theory of securities' pricing (and on this ground I fancy myself being definitively more qualified to comment), that is accurate (see previous post in response to @wombat54). QE is a large explainer of why stocks are priced where they are today.

But it's what it is, and for it not to be that any longer will require the reversal of twenty years of monetary policy (don't be fooled into thinking that QE was just a precipitation from the GFC. It existed for the decade leading up to the GFC... it was just not called QE at the time. But for sure it was QE in nature, if not name).

And do you really think this structurally-entrenched feature of capital markets, is going to be unwound somehow, voluntarily or otherwise?


Actually, I don't know why am I espousing any view whatsoever on macroeconomic prudential management given I pay no heed to it as an investor.

I happen to think its an exercise in futility to try to forecast the future when it comes to macroeconomic variables, and you'll kill yourself trying to nail all the variables down at any given time, only to find they have all moved relative to one another a little while later.

Me, I prefer the lazy route, whereby I spend most of my time waiting for the right opportunities to own high-quality businesses with leading industry positions and demonstrated pricing power and that are well-managed by shareholder value astute executives; businesses that are demonstrably capably of increasing in intrinsic value over time. And then I just hold these shares for years and years, re-investing the dividends along the way.

My experience is that these sorts of rare businesses are largely immune to whatever happens to trade balances, exchange rates, interest rates, bond market ructions, political developments, wars, famines, floods, pestilence or just about any other extraneous factors that are impossible to forecast or anticipate.

That way, I get to sleep easy, and not stress about my investment capital.
I just ignore the "noise".

PS. I need to stress in the most unequivocal terms:

I am not anti-gold per se (Gold-ambivalent, is how I might describe myself)

But what I most definitely am is Pro-Equities (but not just any old equity, or an Index... it has to be the absolute right kind)