Update: We have published Riding the Blinds - September 1, 2020 Newsletter !
Riding the Blinds
Central banks are only part of the reason we are in the midst of an epic stock market bubble. Market structure – the increasing dominance of passive and quantitative investment strategies – are playing an equally important role in blowing up valuations beyond sustainable levels. There is no reasonable case to be made that the constituent companies in the equity markets can generate sufficient earnings to support their current stock prices.
Grant Williams and Bill Fleckenstein have a fascinating podcast called The End Game where they discuss how the current market regime may end. In a recent segment, Logica Advisors’ Mike Green said the following: “It’s not a chess game. There is no end game. There is no beginning game. There’s no middle game. It just is, we are in this moment and what happens next is what is going to happen next. Everyone wants to know: How does this end? It ends for you when you die!” Yikes!