Aggressive risk-takers are widely declared ‘genius’ winners during speculative booms, while risk-managers concerned about downside risks and resiliency are discounted as pessimists and ‘underperformers’. In the same vein, those who make money by selling ‘investments’ to others commonly espouse that ‘cash is trash’ since they are in the business of getting people to exchange their cash for goods and services.
In reality, no one knows exactly what’s coming next in life, but low financial leverage and high liquidity enable optionality and–as COVIV-19 has so quickly reminded–are the lifeblood of households, businesses and investment opportunity–the difference between resilience or demise in times of stress, like now.
To keep our heads and personal discipline when others are losing theirs requires preparation, patience and a plan to move against the herd in times of exuberance and depression. This recent Hedgeye TV discussion with Dr. Malmgren is far-reaching and worth a mull as we think about the world.
Pippa Malmgren is a trend-spotting economist, entrepreneur, two-time bestselling author, former economic advisor to President George W. Bush and co-founder of H Robotics. Here is a direct video link.
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