This week we look at a remarkable and important essay by my friend Dr. Woody Brock who is one of my favorite "Outside the Box thinking" economists. I seriously look forward to Woody's quarterly insights and devour them as soon as the come in.
I especially urge you to read and re-read the first few paragraphs, and then think about what mean reversion will mean to US wealth growth, and to the developed world in general. This is a very important concept, and basic to economics, but one that has not had enough attention drawn to it. Coupled with high valuations, the headwinds facing traditional investments are getting stronger.
Woody is president of Strategic Economic Decisions, Inc. (www.SEDinc.com), an economic consulting and advisory firm that works with institutions and funds. For those of you who are looking for real insights into today's world, I suggest you look at some of Woody's material. I think you will be very glad you did.
John Mauldin, Editor
Outside the Box
Five Delectable Examples of "Stein's Law"
The most basic statement of Stein's Law says: "If something cannot go on forever, it will stop". More specifically, the late Herb Stein stressed that, when a trend cannot go on, it always stops--even when nothing is done about it. This yardstick of common sense is particularly apposite today, as we see in the following five examples of trends whose time has come and…