“We’re in a period with many daily (often hourly) points that represent pixels in the market’s
picture. The short-run trends (the cyclical cycles) of the market are hard to predict. Without
extraordinary powers of clairvoyance, the best plan is a diversified, non-correlated portfolio
with a few engines to counterbalance the weaker components of the portfolio.”
Ed Easterling, Crestmont Research
There have been quite a few “pixels” in the market this week. Volatility is back and the level of market indigestion is on the rise. I think many of us have become programmed to immediately look to the Fed.
‘It’s all about dat Fed, ‘bout the Fed, more trouble’. The jingle rings in my head. Art Cashin pointed out one such pixel in this mornings Cashin’s Comments, “Draghi Brings an Empty Plate and Markets Implode”. There is slowing in Germany, the balance of Europe, Japan and China. Recession seems certain there.
Cashin’s talks about currency, culture and chaos. As the Fed’s grand experiment plays forward, it is a reminder of the risks of such action. He concludes his piece with the following:
“Here’s what John Maynard Keynes said on the topic:
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some…..Those to whom the system brings windfalls….become profiteers.
To convert the business man into a profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards.
Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose….By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract….governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century.”
I also highlight Bill Gross this week and share what I feel is perhaps his most succinct piece: He shares…
Steve Blumenthal
Founder & CEO CMG
Stephen Blumenthal founded CMG in 1992. He is CEO, Chief Investment Officer and portfolio manager at Capital Management Group, Inc. where he manages equity and tactical investment portfolios. He is a frequent speaker and writer on investment strategies and has been featured in various media sources including the Wall Street Journal, Barron’s, Investor’s Business Daily, Pensions & Investments Magazine, Investment News, RIA Biz and Smart Money. He has been a guest on CNBC, Wall Street Journal Live, and Bloomberg. Mr. Blumenthal is a frequent speaker at industry conferences (NAPFA, IMCA, Index Universe, Opal Financial Group Indexing & ETF Summit and NAAIM) and is author of CMG’s popular investment research commentary. With 30 years of investment management and industry experience, prior to founding CMG, Mr. Blumenthal worked for Merrill Lynch Institutional, Merrill Lynch Retail and Prudential Securities.
Mr. Blumenthal graduated with a Bachelor of Science degree in Accounting from Pennsylvania State University. He is married, has three children and is active in his community coaching youth soccer.
