NOTEBOOK – One Good Read: Is lazy thinking taking over markets?
CHRIS CONETZKEY Jun 14, 2019 | 4:12 pm
1 min read time167 wordsBanking & Finance, Business Record Insider, The Insider Notebook
“The value of a home always increases.” That certainty in thinking was one factor that helped lead to the blindness that was a major trigger of the Great Recession. Billionaire investor and Oaktree Capital Management Co-Chairman Howard Marks sounded some alarm bells recently about what he views as lazy thinking that could have a negative effect on the markets. Marks, who correctly warned about both the dot-com bust and the 2008 collapse sent a letter to the firm’s clients questioning nine financial theories that should be scrutinized. Here’s the list from a piece in CNBC:
- There doesn’t have to be a recession.
- Continuous quantitative easing can lead to permanent prosperity.
- Federal deficits can grow substantially larger without becoming problematic.
- National debt isn’t worrisome.
- We can have economic strength without inflation.
- Interest rates can remain “lower for longer.”
- The inverted yield curve needn’t have negative implications.
- Companies and stocks can thrive even in the absence of profits.
- Growth investing can continue to outperform value investing in perpetuity.
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