Understanding value, pricing and risk/reward tradeoff within the context of the business and credit cycles provides a durable platform from which results-oriented, sound investment can happen. As Ben Graham said, “Price is what you pay. Value is what you get.”
During periods of extreme bullish sentiment, investors tend to get overly enamored by price trends and investing fads while neglecting fundamental analysis and the primary driver of asset prices, the macroeconomic landscape. Accordingly, to level the playing field, many of the articles we have published have been devoted to exposing fallacious economic thinking. We believe our discussion on the matter is imperative as most Ph.D. economists, including those at the Federal Reserve, have convinced investors, policy-makers and U.S. citizens that durable economic growth stems from debt-fueled consumer spending. This is not only a patently false claim, but it has immense implications for investors as we have explained and depicted on many occasions. In particular, we wrote, The Death of the Virtuous Cycle, to provide readers with a clear understanding of why the United States and many other developed economies have seen productivity, wages, and economic growth stagnate.
We make every effort to craft articles in a clear format using common sense analysis and straight-forward logic. Financial jargon, complex formulas, and abstract theories are tools for those who prefer to sound smart or simply wish to advance an agenda by confusing readers and obstructing basic truths. That said, despite our efforts to be laconic and make the complex simple, we struggle at times. To combat this, we have often written sequels or follow-up articles to present a topic in a different light or to add emphasis and enhance the reader’s understanding.
Due to the significance of the message contained in The Death of the Virtuous Cycle and our desire to effectively reach as many people as possible, we take a new approach and present the concepts using an animated short video…
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