Fallout shelter luck over 10 have affect2/24/2024 ![]() They are driven by the sum of three factors: growth in fundamentals, income from cash distributions, and changes in valuations (the ratio of prices to fundamentals). ![]() Market returns don’t just emerge from nowhere. What sort of “catalyst” is needed for a Potemkin Village or a Ponzi scheme to disappoint? Only the gradual or sudden discovery of the reality behind it: the recognition that there is no “there” there. When one examines the collapses of the tech bubble and the housing bubble, it’s evident that one of the central elements of those collapses was the gradual recognition by investors that the overvalued pieces of paper they were holding were actually little Potemkin Villages temporarily glorious and impressive on the surface, but backed by much less than investors had imagined was there. There’s an apocryphal story that in 1787, during the journey of Empress Catherine II to Crimea, Prince Grigory Potemkin, the governor of the region, erected fabricated villages along the Dnieper River, which would be disassembled after she passed by, and rebuilt again downstream overnight. The markets are so overvalued now that Hussman expects a 60% decline from here. This week it’s more of the same with his post Behind the Potemkin Village. Last week Hussman wrote about Valuations, Sufficient Statistics, and Breathtaking Risks. John Hussman’s presents a message no one wants to hear because nearly everyone is too busy believing for the third time in 17 years that “It’s different this time”.
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