Which is right on Trump: Bill Gross or Ray Dalio

Posted by Patrick Ceresna on Nov 16, 2016 11:18:13 AM

Ceresna Comment: Ray Dalio wrote an article reflecting on the Trump Presidency(click to read).  His initial view: Our very preliminary assessment is that on the economic front, the developments are broadly positive—the straws in the wind suggest that many of the people under consideration have a sufficient understanding of how the economic machine works to run reasonable calculations on the implications of their shifts so that they probably won’t recklessly and stupidly drive the economy into a ditch. 
On the other end, Bill Gross has taken a much more concerned view of the situation.  (click to read). His view centers on the idea that the populist movement is only beginning and that Trumps policies do not address the big picture headwinds of demographics, technological displacement, deglobalization and overleveraged balance sheets.  
I have to agree with Bill Gross on this one.  Trump cannot undo the global debt cycle that needs to deleverage. While this may not be immediately bearish, I do feel that the short-term optimism will have a reality check as soon as all the dumb money finishes its panic buying. 

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Topics: Trump, populism

Passive Negligence - Dangers in Passive Investing

Posted by Patrick Ceresna on Nov 6, 2016 8:42:30 PM

Ceresna Comment: Important article written by Michael Lebowitz highlighting the flaws in passive investing using indexing. I would summarize that as indexing becomes more popular, the more it will distort the market pricing and increase the risk to those believing it to be a conservative strategy. The more the public pours into the strategy, the more likely it is to be the epicenter to the next major market event.  The smaller and smaller the active management sector gets, the more likely that there will be considerable opportunities presented to the few dinosaur managers left using bazaar voodoo techniques like bottom up value investing. 

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Topics: passive investing, indexing

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