anecdotes

“You either have risk on, or you do not,” said Simplicity, walking Occam’s Razor, “There are only these two states, nothing more.” He lifted both hands, palms up, to illustrate the point. “Now, reflect on the levels of anxiety you have experienced in each state throughout your career.” And decades of an agitated existence flashed before my eyes. “There are times when you are carrying an enormous amount of risk and sl

“The UK, US and Italy have rejected the established orthodoxy of the post-1979 period,” said the CIO, in one of those English accents that make American’s feel stupid. “Prior to 1979 it was accepted that the overriding aim of economic policy should be the pursuit of full employment.” Post-1979 the only object of government policy has been the pursuit of a declining inflation rate. “The former (full employment) bias s

“The only ones who don’t seem to understand are the economists,” said the economist, a Nobel Laureate. He was discussing the importance of narrative in society. “Economists talk about interest rates, price-to-earnings ratios, and obscure formulas as if we’ve arrived from a different planet. These things don’t drive people. Stories drive people.” Of course, economists may not know how to tell a good bedtime story, but

“There’s this whole culture of liberal art grads,” said the investor. “They spend their youth in safe spaces, isolated from micro-aggressions.” Then it’s off to big cities. “They surround themselves with people whose political beliefs mirror their own; it borders on religion.” Political disagreement becomes anathema. They’re incapable of processing it. “Why does anyone think Trump cares about these people?” he asked.

“How do you tariff someone who has stolen your nation’s intellectual property?” asked the scientist, an entrepreneur. We were discussing the concept of fair trade, which is as foreign to America’s most elite engineers as it is to Indiana factory workers. “China has turned reverse engineering into an art form.” An American manufacturer delivers its state of the art semiconductor fabrication machine to its Chinese cust

“No one makes money in the chop,” said the CIO. “People make money on big moves.” Trump held his press carnival, markets swung wildly. “The Yen was at 117 two days ago. Now it’s 114. Tomorrow it may trade 117. Will anyone make money?” A few will, most won’t. “Nearly 100% of trading returns last year were made between November 8th and December 15th.” The dollar rallied 13% versus the Yen in that time. Ten-year treasur

Teddy suspected something was up. And started probing, throwing stones in our house of mirrors. “Santa isn’t real,” he announced, unsure. Mara swept in for a rescue operation, pulling Teddy aside, telling him the truth, co-opting him in the grand conspiracy to maintain the magic for little Charlie, our youngest. But we see what we want to see, hear what we want to hear, believe what we want to believe. That’s as true

“Investors have outsourced risk-management to central bankers,” he said, pacing at the pension plan. We were discussing the challenges thrust upon large institutions by today’s new investment paradigm. They had built portfolios for secular stagnation, and awoke November 8th to something profoundly different. Trump’s victory marks a seismic shift from a world in which monetary policy was the sole driver of markets and

“America’s Massive Policy Error,” said the CIO. “That’s the title of the book someone will write in ten years about what’s happening today.” Never in economic history has a government implemented a fiscal stimulus of this size at full employment. “The Trump team and economic elites believe that anemic corporate capital expenditure is the root cause of today’s lackluster growth.” It’s not that simple. If credit to fir