Catastrofisti
Nella nostra Lettera al Cliente spedita oggi 1 maggio 2021 abbiamo offerto un confronto tra i risultati offerti dai nostri portafogli negli ultimi tre e cinque anni e quelli prodotti dai portafogli degli altri gestori: in particolare, dai portafogli dei Fondi Comuni di Investimento e anche dai portafogli dei Fondi Hedge, ovvero di quei Fondi che, alcuni anni fa, si diceva raccogliessero “il meglio del meglio”.
Che cosa risulta dai dati? Che per piazzare i nostri portafogli davanti a tutti, in termini di risultati, oggi è necessario soltanto un moderato e controllato ottimismo sulle nostre scelte fatte nel 2021.
Non abbiamo alcun bisogno di stravolgimenti, sconvolgimenti, terremoti e maremoti. sarà più che sufficiente un po’ di … sobrietà dopo una lunga ubriacatura..
Come si sa, tra gli effetti dell’alcool c’è uno stordimento dei sensi, una andatura incerta, e a volte si finisce poi con il sedere per terra. e tra gli effetti del troppo alcool ci sono allucinazioni, visioni ella fine il vomito.
Non appena i mercati saranno ritornati allo stato di sobrietà, quello che (in un modo oppure in un altro) arriva sempre la mattina dopo, noi collocheremo i nostri portafogli davanti a tutti gli altri, come abbiamo fatto in modo regolare dal 2007 ad oggi.
Ai lettori del Post oggi regaliamo qualche lettura stimolante: che in questo specifico caso a noi serve per sottolineare una fondamentale differenza tra i “catastrofisti” (quelli che si aspettano un terremoto oppure un maremoto) e chi invece semplicemente ha mantenuto e mantiene la testa lucida anche quando si trova in quelle feste tra amici dove tutti fanno a gara per chi si ubriaca più in fretta.
Noi siamo poi quelli che riportano tutti a casa. Ogni volta.
By and large, the mainstream is bullish on the economy. According to conventional wisdom, we are in the midst of a robust recovery. In fact, many people out there believe the Fed is going to have to tighten monetary policy sooner rather than later. But there are a few people in the mainstream who seem to have caught a glimpse behind the veil. Former JP Morgan managing director Jon Deane told Kitco News that we’re sitting on an economic cliff. And because of that, Deane is extremely bullish on gold and silver.
Gold has struggled in recent months due to inflation expectations. Many in the mainstream think the Fed will reverse monetary policy sooner than expected to deal with inflation. In an interview with Kitco News, Deane said inflation is already here.
If you look around the world, you see real estate prices, building supplies, and services skyrocket.”
Historically, the Fed has dealt with inflation by tightening monetary policy and raising interest rates. But how does the central bank do this in an economy built on debt? Peter Schiff has been saying the Fed won’t fight inflation because it can’t. Deane echoed that sentiment.
What we created since the early 1990s is an entire financial infrastructure that is relying on debt, and we have accelerated that dramatically in our response to managing the COVID-19 crisis. In that regard, we will continue to increase the money supply globally, and we will continue to have a quite aggressive fiscal policy. We are sitting on an economic cliff.”
Deane says that the monetary policy system is broken. The entire global economy is built on debt. There was a massive debt problem even before the pandemic. Monetary policy is incentivizing even more borrowing. You can’t raise rates to fight inflation without popping the debt bubble.
If you are now at 50 basis points and you raise rates by 25 basis points. That is a 50% increase in your borrowing costs at a time when the world has the greatest amount of debt we ever had. It would be a huge economic shock to put it through the system.”
Meanwhile, all of this stimulus is doing the exact opposite of stimulating. It’s actually blowing up a giant economic bubble.
Monetary policy is broken because of the debt situation everyone is in and it is impossible to get rates back up to a meaningful level without some form of significantly higher inflation. Money printing creates stimulus in the economy. You are pushing those dollars out the door. And people are building houses, renovating their properties, starting new businesses, spending cash. That naturally creates inflation.”
Peter has been saying that once the Fed figures out inflation is a problem, it will be too late. Deane echoes this sentiment, saying that once inflation starts running hot, it’s very difficult to control.
We don’t want inflation to run too hot. And this is the risk of Fed’s approach to inflation right now. People are losing confidence in economic management. People are less likely to hold US dollars. The return on them is zero.”
Anche quando i toni si alzano, e le previsioni si fanno estreme, come nel brano che vi abbiamo appena fatto leggere, ci sono numerosissimi spunti che meritano di essere (da voi lettori) sviluppati, magari con una veloce ricerca sul Web che vi aiuti a rispondere a questa domanda: “se davvero è così facile avere i mercati sotto controllo e fare ripartire le economie dopo un CRASH, come si spiega allora che solo negli ultimi 20 anni ci sono stati ben due episodi di cali del 50% ed oltre dei valori di Borsa?”.
Nel grafico qui sopra, il tipico portafoglio di asset allocation, quello del robot advisor, solo 12 anni fa arrivò a perdere il 32% del proprio valore. Tutto intero il portafoglio, nel suo insieme. Il 32% dei vostri soldi. Perché?
Voi avete una risposta, amiche ed amici lettori? No? Attenzione, perché il risparmio che rischia di essere cancellato è il vostro, i soldi sono i vostri (quelli che leggete nel grafico qui sopra). Non sono i soldi del wealth manager, non del personal banker o family banker, non del promotore finanziario.
(Il quale, tra l’altro, neppure lui saprebbe cosa rispondere).
Qui sotto, nel brano da Recce’d selezionato per voi lettori, si prova a dare una risposta proprio a quella domanda.
In aggiunta, l’articolo in chiusura vi ricorda la celeberrima frase dell’economista Irving Fisher nel 1929, che a tutti voi lettori ricorderà sicuramente qualcosa.
Such a level certainly seems unthinkable, but as Shawn Langlois previous penned:
“I recognize the notion of a two-thirds market loss seems preposterous. Then again, so did similar projections before the 2000-2002 and 2007-09 collapses.”
While the current belief is that such declines are no longer a possibility due to Central Bank interventions, we had two 50% declines just since the turn of the century. The cause was different, but the result was the same.
The next major market decline will get fueled by the massive levels of corporate debt, underfunded pensions, and record “margin debt,” and the lack of “market liquidity.”
What Will Cause It?
The real problem with discussing corrections is three-fold:
It is has been so long since we have had a bear market, many investors have forgotten what happens, and more importantly, how they reacted previously.
The majority of mainstream media advice gets written by individuals who don’t manage money for a living, have no substantial investment capital at risk, and have never actually been through a bear market.
Given the extremely long market expansion, many investors have genuinely come to believe “this time is different.”
What will cause the next bear market?
I do not have a clue. Nor does anyone else.
Numerous catalysts could pressure such a downturn in the equity markets:
An exogenous geopolitical event
A credit-related event (most likely)
Failure of a major financial institution
Recession
Falling profits and earnings
An inflationary or deflationary spike
A loss of confidence by corporations that contracts share buybacks
The Cycle Is Always The Same
Whatever the event is, which is currently unexpected and unanticipated, the decline in asset prices will initiate a “chain reaction.”
Investors will begin to panic as asset prices drop, curtailing economic activity and further pressuring economic growth.
The pressure on asset prices and weaker economic growth, which impairs corporate earnings, shifts corporate views from “share repurchases” to “liquidity preservation.” Such removes critical support of asset prices.
As asset prices decline further and economic growth deteriorates, credit defaults begin triggering a near $5 Trillion corporate bond market problem.
The bond market decline will pressure asset prices lower, which triggers an aging demographic who fears the loss of pension benefits, sparks the $6 trillion pension problem.
As the market continues to cascade lower at this point, the Fed is monetizing nearly 100% of all debt issuance and has to resort to even more drastic measures to stem selling and defaults.
Those actions lead to a further loss of confidence and pressure markets further.
The Federal Reserve can not fix this problem, and the next “bear market” will NOT be like that last.
It will be worse.
Low Future Returns Only Require One
Over the next decade, it is unlikely that a 50-61.8% correction will happen without a credit-related event occurring. The question becomes the limits of the Fed’s ability to continue to “bailout” banks and markets once again.
Maybe they can, but I am not sure I want to ride the markets down trying to find out.
The point here is that it only takes one “mean reverting” event over the next decade to lower your annualized returns close to zero. Such does not bode well for retirement plans banking on 6-8% annualized returns or more.
As noted, over the next decade, there will be some terrific “bull market” years to increase portfolio valuations. However, one essential truth is indisputable, irrefutable, and undeniable: “mean reversions” are the only constant in the financial markets over time.
The problem is that the next “mean reverting” event will remove most, if not all, of the gains investors have made over the last five years. Possibly, even more.
Still don’t think it can happen?
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as they have predicted. I expect to see the stock market a good deal higher within a few months.” – Dr. Irving Fisher, Economist at Yale University 1929