MMT – Magic Money Tree
Growth in undesirable jobs can weigh down wage growth
Valuation is not a timing tool
Tariffs are not inflationary unless they are perpetually raised every year
40% of the debt of Russell 2000 companies is floating rate
War and excess peacetime are theoretically 2 ways to sever the business cycle
Recessions occur during a “window of vulnerability” that takes on a shock
Investors always fight the last war
1 Month Libor forecasts FED funds rate well
Corporate bond market near the most overvalued in history relative to treasuries
Once you do the unconventional, it becomes conventional
Theory of least words is best
Federal debt accelerations counterintuitively lead to less growth and inflation at high debt levels
Monetary decelerations lead to lower interest because of lower growth and inflation
Yield curve flattening causes banks to charge less to riskier clients
World is non-linear
The shale revolution and the Permian basin discovery held inflation down
Oil consumption is constantly growing worldwide due to emerging markets
Keynesians spend during recessions, republicans spend when their guy is in office
Strong dollar is by definition deflationary
Pensions are the most short dollars
Marxist government has a top priority of social stability, hence inflation
Soybean prices are not just down because of the trade war, but also because of the swine flu epidemic in China. Pigs eat soybeans.
If a government statistic is “manipulated” you should still have the benefit of the trend
Technological progress of a nation correlates with military budget size
All nations are moving towards planned economies
Social credit systems disincentivize risk taking
Nevada is the Saudi Arabia of Vanadium
Just because something has not happened yet does not mean it won’t
If you are an empire country, then going to war is not decided by you, but by your enemy
Low rates to VC firms is disinflationary in some instances. For example, Uber gets cheap credit to subsidize customer transportation via rent seeking behavior
Private equity has advantages with lock up periods
4 Horseman – declining 10 year yields, declining copper prices, declining South Korean equities, declining oil prices
Humans do 2 things well. Buy what they wish they had bought. Sell what they are about to need.
1 in 3 Russell 2000 companies do not make money
What or when, but never together
People do stupid things around full moons
Scarcest assets win when currency is devalued
Dollar peaks when FED starts raising rates
If 2 people always have the same opinion, then one is unneccessary
Never ask an incumbent what they think of innovation
123… what comes next? Maybe 3 because today is the best predictor of tomorrow. Maybe 2 because things tend to mean revert. But perhaps 1 because what goes around comes around.
Nobody that starts a sentence with “I could be wrong but…” can get in trouble
QE forced everyone out the risk curve
Current returns decrease prospective returns
Bailouts induce rational risky behavior
Things that are different this time are usually viewed optimistically
There are probabilities and there are outcomes
How do you know people are risk adverse? Because everyone has a favorite stock, but no one has a 1 stock portfolio.
Investment management requires uncomfortable idiosyncratic decisions
Short of losing your job or clients, you can take as many pitches as you like in investing
Cash should be viewed with option value, but that value is derived from 2 things. What is the probability that the world goes to hell? What is the probability that you will have the guts to put money to work if it does?
When social security was created, the average life was only 1 year past retirement.
Problems arise when FOMO>FOML (Fear of losing money)