Economic Analysis

Secular Stagnation?

Outside the Box

June 21, 2017

In today’s Outside the Box my good friend Charles Gave shares an instructive “Tale of Two Countries.” Since 1981 in the UK and France, structural growth rates have diverged: The rate has fallen by two-thirds in France, while in the UK it has risen. Why? Well, to begin with, in the UK Margaret Thatcher was elected prime minister in 1979 and almost at once reduced the role of the bureaucracy in managing economic activity and dialed back government spending as a percentage of GDP. Meanwhile, in...

The Next Minsky Moment

Thoughts from the Frontline

June 17, 2017

“China’s economy has entered a state of new normal.”

– Premier Li Keqiang, 2015

“Success breeds a disregard of the possibility of failure.”

– Hyman Minsky

Where’s My Productivity, Dude?

Outside the Box

June 14, 2017

One of the true conundrums in the macroeconomic world is the continuing drop in total global productivity over the last few decades, in spite of the growing use of computers, robotics, and artificial intelligence. Theoretically, productivity should have gone up.

Professor and Nobel laureate Robert Gordon and others have speculated the GDP growth is going to decline to less than 1%, and they have all sorts of maps to back up their claim. I’ve taken issue with their reasoning, but they makes...

What, Me Worry?

Thoughts from the Frontline

June 11, 2017

“Forget the past. The future will give you plenty to worry about.”

– George Allen, Sr.

“I try not to worry about the future, so I take each day just one anxiety attack at a time.”

– Tom Wilson

Finding High-Quality Companies Today

Outside the Box

June 7, 2017

Last week in Outside the Box, Jim Mellon shared some good advice on picking stocks in the Age of the Index Fund. Jim said,

[C]ommitted investors should make a list of companies that they really like, know about, and want to own – at the right price. If the shares of those firms are too high, put in limits, possibly 20-30% below current levels, and wait. Don’t let cash burn a hole in your pocket – let the stocks come to you, and don’t chase.

Within a day of publishing Jim’s piece, my friend...

Can You Afford to Reach 100?

Thoughts from the Frontline

June 3, 2017

“I often joke that 100 years from now I hope people are saying, ‘Dang, she looks good for her age!’”

– Dolly Parton

“Just because you live 20 years or 100 years doesn’t make it less meaningful. They’re both short amounts of time. So all we can do is just live in that time, whatever time we’re given.”

– Ansel Elgort

“If I had more time, I would have written a shorter letter.”

– Blaise Pascal, 1657 (and a few score other later attributions)...

Assume the Brace Position

Outside the Box

May 31, 2017

My friend and British investor extraordinaire Jim Mellon, who made a large amount of money traveling the world doing real estate, is now focused on thinking about and investing in life extension and its derivatives. But he's also worried about what happens when a lot of people live longer and how we pay for it. He shares my concern about the demographic bubble that we are already in becoming even worse as we live longer than we expected. Further, he points out the same thing I have about the...

The Great Reset, Part Two

Thoughts from the Frontline

May 27, 2017

“Premature optimization is the root of all evil…”

– Donald Knuth, from his 1974 Turing Award lecture

International Inflation Cycles Sync Up

Outside the Box

May 24, 2017

My friend Lakshman Achuthan, Co-Founder & Chief Operations Officer of the Economic Cycle Research Institute (ECRI), has done some really interesting work on international inflation cycles, and in today’s Outside the Box he shares it with us. This is a special treat – ECRI does not normally make its material available outside of its client base. I am truly grateful that he allows me to share this. Lakshman will be joining us at SIC this week in Orlando, to the great benefit of the attendees.

It...

The Great Reset: How Should We Then Invest?

Thoughts from the Frontline

May 22, 2017

“A speculator is one who runs risks of which he is aware, and an investor is one who runs risks of which he is unaware.”
– John Maynard Keynes

“The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply that an asset has become more expensive and is a poorer, not better, investment.”
– Ray Dalio,...