Something’s Gotta Give (Watching Paint Dry)

Something’s Gotta Give (Watching Paint Dry)

Valuations are too high. Something's gotta give. That generic complaint, or some version of it, is ubiquitous. If "this time is never different" (to employ the five-word, bearish version of the most dangerous phrase in finance), then all you need to know about equities is that if you exclude the tech bubble, valuations are in the 100th%ile (figure below). On Deutsche Bank's cyclically adjusted earnings measure (which is different from the standard CAPE), the S&P trades beyond 26X, which
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5 thoughts on “Something’s Gotta Give (Watching Paint Dry)

  1. It’s been said that some oil paints can take 50 years to dry, a process of sicc?re.

    I’ll step out on a thin limb and suggest the paint isn’t dry yet and is still very fluid, primarily because, we’ve already seen this paint used before around 2009 in the GFC painting which took years to finish — in fact, that paint actually didn’t dry, because the Fed held onto a massive amount of MBS that they couldn’t sell for losses (I think).

    Like paint, the Fed can play with duration and convexity and probably is doing so with a very nice super computer, and thus alter, enhance, adjust and manipulate drying times — or maturity outcomes, rates, yields, spreads and tinker with a wide range of color spectrums as they modify content. The Fed is still in the process of adding brushstrokes and refining perspective and dimensionality with shadows, this is art (baby).

    Something will give, but it’s likely it won’t happen soon, because of sicc?re.

    1. I don’t know a lot about 1 thing but, I do know a little about a lot of things. (Purdue ’77 Interdisciplinary BSc/ME MA )
      The word you are looking for (sicc?re) is coalescing..

  2. Yah, coalescing is like fusion, which also fits in with long-term economics, versus an unbonded state of transition, like liquidity or fluidity. Our world today seems to welcome micro-instantaneous observations, which can provide inaccurate and chaotic relationships. It’s probably good that people learn from mistakes, then build deeper intelligence through years of experience. A good recent example of flawed short term tinking is a story from Twitter, where a screaming spouse in an emergency room wanted a doctor to use de-wormer to save her her husband from Covid, suggesting every third grader in the world knows it works — the Dr. responds, that’s why we don’t let third graders practice medicine (sad but funny).

    I’m not why that word ended up with a question mark, it was probably a weird character?

    ==> An oil drying agent, also known as siccative, is a coordination compound that accelerates (catalyzes) the hardening of drying oils, often as they are used in oil-based paints.


  3. Research has shown that concrete, something the ancient Romans used for their buildings, roads and other public works, never actually dries. It cures asymptotically and continues unabated, although more slowly, indefinitely.

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