Juggling Dynamite

Caught this 2015 documentary co-directed by Monty Python’s Terry Jones on Netflix yesterday.  An interesting cast of characters woven through with entertaining art and humor; it offers valuable perspective on the history of human behavior and policies in driving regularly recurring boom and bust cycles.  Hint: it is happening again today in real estate and financial markets.  And those warning about the obvious and foreseeable risks, are being marginalized and ignored as usual in favor of the very popular ‘this time is different’ prophets.

Of course, understanding all of this intellectually, is different from maintaining the emotional and operational discipline to avoid repeating classic errors–a constant but absolutely crucial battle.  Here is a direct video link to the trailer.

It’s ironic, and should be unacceptable to the American people, that their new President-elect–who ran on promises to drain government of self-dealing and conflicts of interest–comes in as the most financially conflicted President in history. Trump owns stock in some 500 different companies including oil and pipelines. See: Donald Trump’s stock in oil pipeline company raises concern:

“You have climate (change) deniers, industry lobbyists and energy conglomerates involved in that process…The pipeline companies are gleeful. This is pay-to-play at its rawest.”

Centuries of human experience, revolution and jurisprudence have long established that high ethics and integrity demand more than “trust me”.  They must be demonstrated through full disclosure, transparency and arm’s length dealings. Democracy requires fiduciary duty of appointed leaders who represent the public trust. Full stop.

Editorial Board Member Joe Rago on more evidence that the president-elect should liquidate his assets to avoid conflicts of interest. Here is a direct video link.

Howard Davidowitz, chairman at Davidowitz & Associates, and Don Rissmiller, chief economist at Strategas, examine the state of retail on Black Friday and runs down the winners and losers in the retail sector. Here is a direct video link.

By the way, my partner Cory Venable’s chart of the Canadian REIT ETF (XRE) here between 2007 and 2009, gives a sense of the price performance potential once these ‘income’ securities hit an overzealous valuation top.  While holders lost 60% of their capital in under two years, those who resisted temptation and waited to buy it after mean reversion took place, had the reward of an 11% dividend yield, compared with 4.7% yield at the price peak in 2007. (The income yield at each price point is noted in the boxes.)  The price of indiscriminate buying and holding is routinely catastrophic to savings each cycle.  Important to pay attention to valuations and cycle!