‘Death Zones’ And The Trillion-Dollar Liquidity Narrative

In his latest note, currently making the proverbial rounds, Morgan Stanley's Mike Wilson channeled Jon Krakauer in warning that equities are surviving in the "death zone" thanks to "supplemental oxygen." I've read Krakauer. And not just Into Thin Air. All Krakauer. Krakauer is an easy read, and you can binge on his work much as you'd binge on a Netflix series, except that unlike binge-watching, binge-reading is actually good for your sanity. Admittedly, I have a visceral aversion to seeing lit

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7 thoughts on “‘Death Zones’ And The Trillion-Dollar Liquidity Narrative

  1. I remember skiing at 11000 ft altitude with a friend from Denver, CO (the “mile-high” city) where as I traveled from my home at 800 ft altitude. We we both in equally good shape and about the same age. His acclimation to altitude though made a hell of a difference as compared to my lack thereof. After a ski run he could talk normally as I sucked air.

    Bernake et. al. have told the markets to get used to the altitude and if the straglers cannot keep up, it is their problem, not yours. If you want to ski the bunny slopes, move on down the mountain to a lower altitude — otherwise enjoy the black diamonds near the top.

    Do I agree with it. Not at all. But it is the world we live in and the central banks are going to keep it that way. Real rates are low. The financial world runs on credit. When crap companies that have not earned a profit in 10 years can no longer issue more stock or bonds in order to keep the party going, maybe I will worry.

    Ah, hell, I guess I will worry either way.

  2. Investing aside, if you haven’t already, I suggest reading Anatoli Boukreev’s ‘The Climb’. Perhaps we can’t ever know what happened on Everest during that climb, but the two accounts are significantly different; one by a newbie and one by a top high altitude climber. As far as I know there isn’t a third account.

    1. Read Into Thin Air twice, …along with Into the Wild … thanks for The Climb recommendation, and to the reminders about Krakauer…the narrative does seem a bit colorfully over dramatic though…but nice for the long weekend….

      1. I live in the mountains amongst a higher percentage of the population who are “extreme” in their interactions with nature, and in particular with raging spring runoffs (kayaking) and the mountains (sports too numerous to name). Too many have died, including children (primarily the fault of parents not educating their children on the real possibility for life ending dangers) in pursuit of backcountry skiing, mountain biking and kayaking. It is horrible, but a part of life in the mountains.

        If you have ever come across the name Alex Honnold, and watched the incredible National Geographic documentary (Free Solo) about his life spent dedicated to free climbing, you begin to understand biologically what takes people to extreme positions in life- in nature and beyond. From a biological standpoint, it might likely boil down to the size of the adrenal medulla within each of us, which regulates the release of adrenalines and dopamines in response to stimulation (fight or flight).

        I think Wilson’s analogy to the “death zone” is catchy but inaccurate. With a small number of exceptions (i.e. Sandy Pittman), climbers don’t just wake up one morning and find themselves in the “death zone”, unless they are prepared to fall/die.

        My personal “fight or flight” hormones are more activated toward “flight” in mountaineering than in investing. I know I can die in the mountains and that I won’t die if my stock portfolio crashes because I am very long with my investment horizon.

        The best advice I ever read on The Heisenberg Report was that you shouldn’t gamble in equities unless you are prepared to lose half. In the mountains, summer or winter, you can be sure I stay below 13,000 feet, don’t need ropes to ascend or descend, and have a homemade gourmet lunch packed in my backpack.
        Know your limits- physically, financially and emotionally.

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