Sunday, June 15, 2008

Res Ipsa Loquitur

Hat tip to the wonderful Decision Point site: top panel is light crude; bottom panel is the U.S. dollar index. Both track the period from 1990 - present. From housing to the dollar, banking to commodities, national debt to soaring Medicare and Social Security obligations: it's difficult to see the period since 2002 as anything other than one of profligacy and utter fiscal mismanagement. I am not a bear by nature, but when you consider the average debt of the average household and the concentration of household assets in housing, it's difficult to see happy retirements for many baby boomers.


Tim said...

Brett, I come to your site for trading psychology, the links and strategy, to see that you're writing about the macro economic situation in the U.S. adds another reason to visit as that's my other interest. It's difficult for me to balance what we know about the major theme of government fiscal irresponsibility with short to medium term trends. As you've mentioned, it's one thing to be a successful trader, producing income and another to be financially successful and responsible over the long term. A trader should be able to produce income but what of retirement and all those baby boomers that are going to pull their stock investments at the same time and start looking for income streams? With inflation including public monetization of bad bank loans (private debt) where can you go to get a hedge and protect assets for the future? Thanks for your effort on the blog.

Brett Steenbarger, Ph.D. said...

Thanks for the comment Tim. This is a particularly dicey time for individual investors, given weakness across financial markets and housing on top of rising inflation.