Juggling Dynamite

GMO’s James Mortimer and Matt Kadnar have written a great piece breaking down and comparing ‘relative’ value opportunities in risk assets today. Well worth the time for anyone with savings to shepherd through the world’s presently precarious financial markets. See: The S&P 500: Just Say NO.

If you’re a manager that must be long risk assets, or an individual with some financially suicidal obsession, their table below shows today’s relative return choice set for different risk assets from current levels over the next 7 years.  Math must be faced.  No strong picks yet, to say the least.

However for those that have the flexibility and self-discipline to not choose from poison fruit, future returns offer much promise (precisely because this price cycle is so over-extended today) once the next bear market arrives to ‘Make Value Great Again’.  Here’s their suggestion:

In absolute terms, the opportunity set is extremely challenging. However, when assets are priced for perfection as they currently are, it takes very little disappointment to lead to significant shifts in the pricing of assets. Hence our advice (and positioning) is to hold significant amounts of dry powder, recalling the immortal advice of Winnie-the-Pooh, “Never underestimate the value of doing nothing”or, if you prefer, remember – when there is nothing to do, do nothing.

The trouble with pathologically dishonest behavior and actors is that they have a way of making rational people feel like the rational people are crazy or the problem. As a lawyer and analyst I have always found that a focus on organizing facts and objective evidence is the best decipher of crazy, but it can take a lot of work and many people lack the focus or discipline to do it.  Donald Trump famously said in his campaign that “he loves the uneducated” voters.  This would make sense if one’s life long modus operandi is to delude and confuse.

Putting his highly honed fact-organizing skills to work, last February retired trial lawyer Stephen Harper began building a timeline of verifiable events in the Trump/Russia/conflicts saga.  In the months since, it has now grown to more than 400 data points.  You can view it here and develop your own conclusions.

Harper explained his process in the clip below.

Attorney Steven Harper has prepared a timeline with more than 400 data points of all the events surrounding the Trump team and Russia. He prepared it as if it had to be presented to a jury. Lawrence O’Donnell also discusses the findings with Bill Moyers.  Here is a direct video link.

Also, the man who spent 18 months shadowing Donald Trump in the 1980’s as prep for ghost-writing Trump’s 1987 promotional memoir The Art of the Deal, here on CNN last night, said he believes Trump will resign before year end as a way of avoiding the fallout from political failure and the ongoing FBI investigation into his business conflicts:

“The reason he’s going to do that, as opposed to go through what could be an impeachment process or a continuing humiliation, is that he wants to figure out a way, as he has done all his career, to turn a loss into a victory. So he will declare victory when he leaves.”

Political and economic crisis have erupted in what was once Latin America’s richest country. Daily protests and an increasingly authoritarian leader threaten to transform Venezuela into a failed state. Here is a direct video link.