Monday, April 25, 2016


If you want to be like Warren Buffett and Bill Gates, adopt their voracious reading habits [H/T @jasonzweigwsj] (LINK)

Bruce Greenwald: The Death of Manufacturing (video) [H/T ValueWalk] (LINK) [The full video of that session at the 2016 Minsky Conference is available HERE. And more videos from the conference are avalaible HERE.]

Jim Chanos and the art of short-selling (27-page transcript PDF) [H/T @BarbarianCap] (LINK) [Or you can also listen to the audio of this Alphachatterbox podcast HERE.]

The Most Important Question We Never Ask: And then what? (LINK)

Less is more: what does mindfulness mean for economics? (LINK)

Hussman Weekly Market Comment: Lessons From The Iron Law of Equilibrium (LINK)
It’s largely forgotten that during the 2000 top formation, the S&P 500 lost 12% from July-October 1999, recovered to fresh highs, retreated by nearly 10% from December 1999 to February 2000, recovered to fresh highs, experienced another 10% correction into May, recovered to a new high in total return (though not in price) on September 1, 2000, retreated 17% by December, and by January 2001 had recovered within 10% from its all-time high, and was unchanged from its level of June 1999. 
Likewise, during the 2007 top formation, the S&P 500 corrected nearly 10% from July to August, recovered to a fresh high in October, corrected over 10% into November, recovered nearly all of it by December, followed with a 16% loss, and by May 2008 had recovered within 9% of its all-time high, and was unchanged from its level of October 2006. 
In 1954, John Kenneth Galbraith offered a similar narrative of the top-formation leading up to the 1929 crash: “The temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently, discredited.” 
I continue to have little doubt that the current market cycle will be completed by a 40-55% market collapse, with near-zero total returns for the S&P 500 on a 10-12 year horizon. Meanwhile, however, we have to accept that central banks have wreaked havoc on the ability of the financial markets to usefully allocate capital toward productive ends. Relevant warning signs that would normally prevent misallocation and malinvestment have been repeatedly disabled in the advancing half-cycle since 2009.