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For the many pundits masquerading as authorities, there are precious few whom time confirms as worthy of commendation. Edward Chancellor is one of them.

As the dot.com bubble relentlessly defied history, logic, and valuation’s gravitational pull through the late 1990s—the NASDAQ composite doubling from October 1998 to October 1999 and then, remarkably, doubling again from October 1999 to March 2020—the undersigned was in search of kindred spirits. A resolute contrarian, I remember voraciously consuming two books that leaned in solitary with me, as a David against the Goliath of the prevailing speculative winds. Those were Devil Take the Hindmost: A History of Financial Speculation (published on June 1, 1999) by Edward Chancellor and Irrational Exuberance (published on March 15, 2000) by Robert Shiller. The passage-of-time crucible revealed both authoritative books to be eerily prescient.

Continue reading “On Good Authority” →

After a tumultuous start to 2022—the S&P 500 is down 13.3% and the NASDAQ has plummeted 21.1% as of April 30, to register the worst four opening months since 1939—the question on everyone’s mind and often lips is whether the meltdown is simply a correction in the grand secular bull market or something more ominous. My 2011 book, A Decade of Delusions, Chapter 9 (covering 2005 and 2006), describes the prelude of the Financial Crisis as a particularly violent storm arising from the confluence of a number of negative and unpredictable factors. Could the current volatility be a Perfect Storm 2.0 on the horizon?

Continue reading “The Perfect Storm 2.0” →

More than 25,000 crypto[1] enthusiasts, double last year’s attendance, converged on Miami in mid-April for the annual Bitcoin 2022 conference. The majority were Millennials and Gen Xers—and surely some folks of all ages in search of fast and easy money.

Continue reading “Fast and Easy Money? Not So Fast …” →

Gaining the attention of already inundated readers is not easy. While what we write about is our passion, for most of you it’s a pastime. With the division of labor in advanced economies, that’s the way it ought to be. Therefore, we’ll make today’s case as succinctly as we can.

Continue reading “Anatomy of a Bubble” →

Casino capitalism is the winning and losing of fortunes in the stock market. So wrote (and we paraphrase) John Maynard Keynes in his famous General Theory of Employment, Interest, and Money in the midst of the Great Depression (1936). He went on to warn about extremes:

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.

Continue reading “Capitalizing … on Casino Capitalism” →

The Precedents

Beyond surviving the uncertainty of our fragile financial system, capitalizing on it requires a combination of unique traits. These include a deep, experience-based understanding of how businesses are valued; an uncompromisingly skeptical mindset; and emotional acrophobia (a condition in which high and rising prices cause acute discomfort). By contrast, high-price euphoria is the prevailing emotion—at least of the moment. This is one of those uncommon times in history that will once again prove the adage that it’s easier to make money than keep it.

Continue reading “More Than Surviving Uncertainty (Part II of II)” →

A wise man observed that figures don’t lie, but liars figure. Failing to embrace the importance of that idiom makes idiots of the unwary. In our reflection on uncertainty, study our figures (and those of others) skeptically, even if you trust us. As for the charts in this post, go figure.

Continue reading “More Than Surviving Uncertainty (Part I of II)” →

A Bloomberg article headline on Saturday, July 24 caught our attention: “Stock Bulls Look Toward $17 Trillion Burning a Hole in Pockets.” It was the weekend, and this piece must have slipped through the editorial cracks. Phrases like “cash on the sidelines” and “dry powder” are common enough these days—but not from the likes of Bloomberg.

Continue reading “Cash on the Sidelines?” →

On August 13, 1979, nearly 42 years ago, a BusinessWeek (Figure 1) headline infamously announced “THE DEATH OF EQUITIES” with the subtitle, “How inflation is destroying the stock market.” The cover story captured well the antipathy of investors toward the prospects for future returns from equities.

Continue reading “The Death of Discernment” →