03/29/2017 - Paul Brodsky: “A Socialized Market With Guaranteed Positive Returns For All Must Fail”
“When we step back and look at the broad macroeconomic setup, characterized by aging populations in the world’s largest economies, declining overall birth rates among the world’s wealth holders, record sovereign and household leverage, the continued economic emphasis of finance over production, the reliance on over-accommodating central banks (even during the Fed’s current rate hike phase), historically high equity, bond and real estate prices and record low asset and liability values (in real terms); we cannot help but conclude that asset prices are generally rising due mostly to inertia, in spite of unreason, and that the most likely outcome will be something unexpected and disappointing.
Even though it is a rejection of the established secular bull market in assets and the social, economic, political and financial cultures established and tweaked over the span of our career (almost to the day), our heart and mind (not to mention the vast sweep of investment and economic history) tell us structural change is coming. We can use our experience to forecast specific events and new trends that might occur, and we have, but we cannot know exactly what form structural change will take or when it might begin.
A socialized market framework with implicitly guaranteed perpetual positive returns for all must fail.”
