Post 2009 Financial Crisis, they made movies about the housing and economic downturn. Here’s the thing, there are over 10M financial advisors, money managers, hedge fund managers, and fundamental and technical analysts in the industry. This doesn’t include the geniuses in the Financial News business. However, why did only a hand full of that total population (less than a dozen) see the SPX dropping 60% from 1587 to 666 in a matter of 5 months?
Did you watch the movies?
Because the reason was on average, housing has always been a 3-5% asset yielding per year over the long term. There was no way the housing market was going to crash. 10M smart people and only a dozen got it right? What does that say about the other 9.999M smart people in the industry?
No, I’m not writing about how I am smarter than 10M professionals in the industry, but you have to admit, by and large, EVERYONE IN THE INDUSTRY got it wrong. It's easy to manage money when the market just goes up for 100 years...what about when that is no longer the case. During the very long cycle paradigm shifts, the old norms no longer apply.
In my opinion, they’re cranking up the ignorant train once again. I’ll attempt to over simply this.
INTEREST RATE REVERSION TO THE MEAN
Most market participants are not used to interest rates at 10%...I on the other hand, used to think 10% was competitive. But long-term cycles being what they're are, their purpose is to clean the slate, re-educate participants, get rid of the old and welcome the new, all while reverting back to an equilibrium or a cycle norm.
I'm curious when the street will stop discussing soft landing, no landing, higher for longer, etc. Start concerning themselves with how our economy looks and functions next year, the year after that, and 5 years from now in a long-term rising interest rate environment. I have a feeling the 10M in the financial services industry will shrink, and those smart people, will have get a lot smarter to survive.
Did you watch the movies?
Because the reason was on average, housing has always been a 3-5% asset yielding per year over the long term. There was no way the housing market was going to crash. 10M smart people and only a dozen got it right? What does that say about the other 9.999M smart people in the industry?
No, I’m not writing about how I am smarter than 10M professionals in the industry, but you have to admit, by and large, EVERYONE IN THE INDUSTRY got it wrong. It's easy to manage money when the market just goes up for 100 years...what about when that is no longer the case. During the very long cycle paradigm shifts, the old norms no longer apply.
In my opinion, they’re cranking up the ignorant train once again. I’ll attempt to over simply this.
INTEREST RATE REVERSION TO THE MEAN
Most market participants are not used to interest rates at 10%...I on the other hand, used to think 10% was competitive. But long-term cycles being what they're are, their purpose is to clean the slate, re-educate participants, get rid of the old and welcome the new, all while reverting back to an equilibrium or a cycle norm.
I'm curious when the street will stop discussing soft landing, no landing, higher for longer, etc. Start concerning themselves with how our economy looks and functions next year, the year after that, and 5 years from now in a long-term rising interest rate environment. I have a feeling the 10M in the financial services industry will shrink, and those smart people, will have get a lot smarter to survive.
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