Baby Boomers…Yes, It’s All About Them!

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alternative assets, American Dream, austerity, baby boomers, consumerism, emerging markets, entitlement spending, fall of communism, frontier markets, globalisation, Japan, Me Generation, Millennials, USA

In my last post, I acknowledged logic tends to fly out the window in a market correction, and fear & greed take over the driving. My advice was to take a deep breath, just accept the fact we don’t always know what’s coming next, and to positively transform the compulsion to do something anything to relieve your market-induced stress. Because a correction’s a wonderful upgrade opportunity, a chance to (re)deploy your weaker portfolio holdings & cash into higher quality growth companies – those compounders you hardly ever get to buy. Happily, things look a little rosier now (a special thanks, Japan!), and hopefully we’re now heading into a traditional year-end rally…

Of course, long-term performance is the best reminder to always remain invested in the market. Unfortunately, fear & greed can quickly undermine such compelling logic. Companies face a similar issue – it takes a great leader to keep a company set on its long-term growth trajectory, despite all the setbacks it will obviously encounter. The idea great leaders are great storytellers is interesting in this context – it suggests numbers & analysis aren’t enough, people often require a compelling narrative to motivate & help them stay the course. In terms of the markets, the more you can interpret & understand the narrative of the past, the better equipped you will be to see the long-term narrative arc & how it might continue playing out in the future.

So, let me share some of my market narrative. Remember, it’s a story – it doesn’t require proof, and it won’t necessarily remain set in stone. [Accordingly: I’m sure I’ll include plenty of links, but I’ll try resist the temptation to jam this post full of graphs & figures]. You may nod your head, agree, and ponder the implications for your own portfolio – or you’ll replace it with your own narrative…and that’s good too. I’m going to focus on the US here: i) because it’s the growth-engine of the world, and ii) where the US goes, much of the world tends to follow. I’ll also focus on the Baby Boomers – because they bloody deserve the blame…for just about everything! [I promise you’ll hear this more & more in the years to come]:

The Boomers grew up to a constant refrain: A never-ending list of the immense sacrifices and hardships their parents & grandparents endured during World War II & the Great Depression before it. Quite a dose of survivor guilt to be saddled with… Except when they started to come of age in the ’60s, they looked ’round and saw they were actually living in the richest & most powerful country on earth. Hardship and sacrifice seemed like rather quaint & irrelevant concepts, while sexual & political liberation beckoned as a far more enjoyable way to embrace young adulthood. Unfortunately, just when getting a job, getting married, and having kids began to enter the equation, everything turned to shit…

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A Greek Tragedy…?

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austerity, Big Brother, budget deficit, citizenship, Debt/GDP Ratio, default, Europe, European sovereign debt crisis, Greece, Occupy Wall Street, politicians, remittance economy, tragedy of the commons, US, venality

Two key (related) themes echo through recent articles about the Greek sovereign debt crisis. I’ve the distinct & nagging feeling something’s missing here? Hmmm… Anyway, the first theme is the expression of outrage at Greek politicians, their profligate ways and their general shiftiness. Sure, it’s always fun to criticize politicians, but why bother really? What exactly did you expect of them? I’m bemused by the air of superiority displayed in some articles – nah, nah, nah, my politicians are better than yours! Rubbish, there’s nothing unique about Greek politicians in a global context – they’re just a little further down the road to hell…

Let’s think about what makes them tick: Well, they say politics is an unpredictable business – true, you just can’t second-guess stupidity sometimes. But otherwise, you mostly just need to consider the actors’ motivations. Depressingly, this seems to boil down to Money, Power, or both! OK, Duty’s another possibility – reluctant leaders are often the best leaders. But how often, in the past decade or two, have you seen a politician consistently serve out of a clear sense of duty?

Whither the US, Europe & the EUR/USD..?

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activist investors, austerity, Bundesbank, catalyst, CNBC, distressed assets, Edward Gibbon, emerging markets, EUR/USD, Europe, Event Driven, Fed, frontier markets, idiots, Japan, Japanese debt crisis, NAV discount, private equity funds, Red Bull, student debt, US

OK, I confess, this isn’t really about the EUR/USD FX rate. I was beginning another article, and my despair over the developed markets & their prospects just kept interfering..! But let’s try keep this somewhat brief – maybe I’ll return again after reading my Gibbon – and hopefully it will prove a good lead-in for my other article.

Despite the dismal performance in the US & Europe (why even talk about Japan..?) over the past decade, I just can’t get too hopeful from here. I sighed, and resolved again to just ignore the news, when I heard the growing swell of anti-austerity political dissent in Europe (and even fresh mutterings about EUR exit, and devaluation).