The Myth Of Controlled Market Demolitions
If you take your cues from the pantheon of market "legends" who appear weekly in the financial media, often to deride the current monetary-fiscal policy conjuncture in rhapsodic terms, it's all going to implode imminently. Stocks, credit, bonds -- all of it.
"Checking all the necessary boxes of a speculative peak, the US market was entitled historically to start unraveling any time after January this year," Jeremy Grantham told Bloomberg, during an extended Q&A late last month.
Asked what
May all our future leaders break their magic elder wand before using.
“I’ve said it before and I’ll say it again: It’s easy to claim that if only you were in charge, you’d flawlessly coordinate a controlled demolition of various bubbles, surgically remove pockets of speculative excess and reset the economy, thereby putting everything (and everyone) on a more solid foundation. “
Those on the soapbox naturally assume that they will survive intact and unscathed. One very real problem of aging and success is the lack of understanding that much of it was pure luck.
Arbitrary results.
At least Grantham gives a firm opinion….none of “if the SP500 holds 4000, it’s going higher”.
BTW, Russell 2000 looks like it’s topped.
It’s not a “firm opinion.” It’s a series of solicited soundbites.
It’s all entertainment, my friend.
Every, single bit of it is for-profit entertainment.
You want real, informative content? Read something like The New Yorker. When you read The New Yorker, you’re a “subscriber” and a “reader.” When you read Bloomberg or watch CNBC or Fox or CNN, you’re a “consumer.” Period.
They’re waving around shiny objects at you (in this case Grantham) so you’ll stare, and then they’re monetizing your staring. If you subscribe, that’s even better. It’s no different from a new Pepsi commercial with a celebrity dancing around. First, you stare at the scantily-clad model drinking the Pepsi on TV. (cha-ching!, eyeballs.) Then, the next time you’re at Walmart, you buy Lime-Cherry-Raza-ma-tazz Pepsi (cha-ching!, a customer!)
You think Bloomberg conducted that laborious Q&A with Grantham because they wanted a “firm opinion” or because the producers and editors actually care about markets or averting an economic calamity? Of course not. They’d love an economic calamity. Think of the clicks.
Bloomberg wanted to generate web traffic, ad revenue and subscriptions by running a bunch of pieces touting “John Authers interviews Bubble Expert And Noted Market Historian Jeremy Grantham.”
It’s a business, plain and simple. It’s not meant to inform. It’s meant to generate profits.
Oh, and if you had a terminal, you could have asked Grantham questions yourself! So, for the bargain price of $27,000/per year, you can occasionally ask a ‘legend’ when the new ‘humdinger’ bubble is going to burst!
Again: You’re not a reader reading “opinions.” You’re a consumer consuming a celebrity-endorsed product.
FMD – that was AWESOME!
On the controlled demolition point – it’d be somewhat possible, I think, if the Fed and the Treasury and the regulators were working in tandem/in teams and all working towards the same end point, using all of their diverse tools, to constrain or outright force investors/companies to behave the way they wanted.
But obviously that wouldn’t be very free market and even more obviously so than today’s administered markets…
To give an example – you could forbid leverage going up based on realised vol going down. But imagine the granularity of control that would require. Charges of liberticide would be easy to level.