The usual suspects are populating the airwaves this week with a slew of nonsense and harmful advice. Most frequently you will hear long- always managers and commentators without any meaningful investment discipline, recommending stocks every day of the week. None of them believe recessions are a normal part of the cycle (and especially during de-leveraging, secular bear periods). They think of recessions as a policy mistake or random catastrophe rather than the natural breaking system of capitalism to control human excess. Hence almost none see incoming recessions. Even if they did, most still insist people sit tight with their portfolios as prices crash down. In short they are hopelessly ineffective at helping real life people manage capital risk. This clip of ECRI Lakshman Achuthan talking to Tom Keene last week is very good in explaining the importance of seeing incoming recessions to inform one’s allocation decisions in business and investing, and how and why the mainstream misses them. Here is a direct link.
This week’s market letter from John Hussman is also illuminating on this same topic. See: Dancing at the Edge of a Cliff.
