Note: there is a vote going on at http://list.ly/list/1HO-top-100-investment-blogs regarding the best investment blogs. Whether you vote for me or not, I encourage you to vote up blogs you like. I voted for 12 or so blogs, I didn’t just vote for myself. Recommend other blogs if you see fit.
PS — If anyone wants to nominate me for Who do you think is a big thinker in finance? I would be honored, but I understand if otherwise. I voted for many who were there already.
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It took me a while to come over to the views of Lacy Hunt, Van Hoisington, and Gary Shilling, but with the addition of Bill Gross, Mizuho Securities, and Jason Zweig, I am beginning to feel crowded. When abnormal theories begin to get embraced I get concerned that the cycle is changing and that the theory will fail because more people believe it. In the short-run, it means the long end of the yield curve will rally, in the long run, macroeconomic forces will dominate.
Will long rates continue to fall? Probably. Will they stay low? They might stay low for a few years, but if the US government takes actions that reduce regulation, the economy will grow, banks will lend, and rates will rise. But if Obama is re-elected, regulations will increase, businesses will not grow, banks will have no reason to lend, and we will remain in this morass.
Note: I am planning on voting for a third party, I don’t care for Romney. Romney would be far better for the economy than Obama, but economics does not figure into my voting; I look for the man who can best lead us ethically, and that is almost never the Republican or the Democrat.
Hedge funds have also recently become net buyers of the long bond (http://bit.ly/MMKDXR). I think the predictions of Hunt, Van Hoisington and Shilling for 2% on the long bond will probably come true. Having said that, at current levels the potential gain compared with the risk, if policy changes drastically, no longer seems that compelling.
Separately, I completely agree with your political view here.
David, Have a high regard for your thinking, but I get v cranky when I read this:
“.. but if the US government takes actions that reduce regulation…”
Can you please provide some examples of regulation you believe to be ‘holding the economy back’, because quite frankly I think its a load of c_ _ p. The entire last three decades have been an exercise in deregulating everything from financial svcs (first, usury, today, fraud) to food (‘pink slime’). Thanks in advance.
Chuck,
My main inspiration derives from Reagan, of whom many thought his deregulatory push was the greatest of his efforts. Regulation is a silent killer of business, and we would be better off with a sharper law that restricts business only where there is a large interest against any given practice.
David
@ Croc -
There are literally dozens of examples. But just a couple of recent ones would be:
- the Dodd-Frank Act (en.wikipedia.org[slash]wiki[slash]Dodd_Frank_Wall_Street_Reform_and_Consumer_Protection_Act)
- and the JOBS Act (en.wikipedia.org[slash]wiki[slash]Jumpstart_Our_Business_Startups_Act).
Both of these are prime examples of horrifically conceived pieces of legislation that do not even come close to addressing the relevant root problems, and merely exacerbate the issues by causing all manner of unintended consequences.