“Someday financial markets will decline...rising stock/bond markets will no longer be government policy. QE will end and money won’t be free. Corporate failure will be permitted. The economy will turn. Someday, somewhere, somehow, investors will lose money and once again come to favor capital preservation over speculation. Someday, interest rates will be higher, bond prices lower, and the prospective return from owning fixed-income instruments will again be commensurate with risk.” Seth Klarman
Friday, November 13, 2015
Global Imbalances...
What happens when aggregate demand is papered over and not allowed to go through its normal cycle (debt clearance through default of weaker corporate balance sheets)? This happens. Organic growth is substituted with buybacks, M&A (rising goodwill %), etc. ALL kinds of imbalances start warping the global economic carpet.
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