Insights

“This time it’s different” is an oft-repeated remark by economists and market pundits (and the title of a 2010 book by Harvard economists Carmen Reinhart and Ken Rogoff). In a literal sense it’s always true, each time is different; but figuratively, it is often false as “history repeats itself” and the next cycle looks a lot like past ones (the point of Reinhart and Rogoff’s book).. However, with respect to several dominant themes in the history of civilization, this time is different.

Last month we began a discussion about risk. Most of what we discussed was basic, which isn’t to say unimportant, and certainly uncontroversial. This month we take a deeper dive into “risk” and the conclusions might be more “unsettling”. Let’s think about risk in the big picture.

This month’s piece is the first of a two-part look at risk. Not just “portfolio risk” in the traditional financial sense but risk more generally, though we will address how investors should think about risk.

It is the end of the 2nd quarter of 2019 and the S&P 500 is up over 17% (without dividends) since we blew the horns last New Year’s Eve. Not one Wall Street economist, market strategist, TV pundit, or anyone else whose work I can find in places like Barron’s, The Wall Street Journal, The Financial Times, etc. expected this. Most predictions were not even close.

In a timely follow-up to our last piece on fusion technology making fossil fuels obsolete, The Economist magazine (in its May 4, 2019 issue) published two articles on new developments in fusion reactors and the private sector’s role in providing funding for new projects.

Millennials (those born between 1981-1996)* are facing tremendous headwinds when it comes to saving enough money for retirement. A generation which entered the workforce just in time to witness two major economic recessions in 2000 and again in 2008, has been met with stagnant wages paired with rising living expenses, healthcare costs, and extraordinary growth in student debt.