Post by account_disabled on Feb 22, 2024 3:50:23 GMT -5
Great market narratives In the Apple TV Foundation show, based on the novel by Isaac Asimov, the plot is set in motion by a mathematician who, using a sophisticated algorithm, predicts that the centuries-old galactic political order is doomed to collapse. Like the premises of all good science fiction, this one is intellectually unconvincing and emotionally compelling. Unconvincing, because societies are dynamic systems that change with the beliefs of their people, who are their constituent parts. The idea of predicting them definitively with a bunch of equations is about as likely as traveling faster than light. Compelling, because in the real world people have always been attracted to the dream of historical order and predictability. If you doubt that anyone will really fall in love with the great historical algorithm that predicts the very big thing that is about to happen, I suggest you read Francis Fukuyama's review of Neil Howe's “The Fourth Turning is Here” and “The End of the World.
Times” by Peter Turchin, in the New York Times. Turchin's book is based on something called "cliodynamics": in Fukuyama's words, "a variety of big data analysis that makes predictions by Pakistan Phone Number applying mathematical models to a huge database of previous historical crises going back several millennia." Thus described, the method is indistinguishable from the “psychohistory” of Asimov's mid-century imagination. On Wall Street, some great theories and historical narratives come from investors who have made a lot of money, which gives them credibility. It is tempting, for example, to take seriously George Soros's theory of reflexivity or Ray Dalio's speech on the five great forces of history as predictive frameworks. But good investors are no better than the rest of us at seeing the future; his skill is a keen understanding of the present. Whenever someone starts with “I've been reading a lot of history lately ask the waiter for the bill.
We must try to see as far as we can. To the extent that we think that economies and markets are amenable to analysis, it is natural that we try to anticipate not only cyclical changes but also regime changes. The latest to try are Jim Reid, Henry Allen and Galina Pozdnyakova of Deutsche Bank, who published yesterday the third part of their study on long-term asset returns, under the title “The history (and future) of recessions.” The study is long and compelling and contains many useful charts and tables on the frequency, depth and duration of recessions in developed markets dating back decades and even centuries. The article's progressive argument is that the post-1982 period of falling rates, low inflation, and long economic expansions is historically anomalous and probably over.
Times” by Peter Turchin, in the New York Times. Turchin's book is based on something called "cliodynamics": in Fukuyama's words, "a variety of big data analysis that makes predictions by Pakistan Phone Number applying mathematical models to a huge database of previous historical crises going back several millennia." Thus described, the method is indistinguishable from the “psychohistory” of Asimov's mid-century imagination. On Wall Street, some great theories and historical narratives come from investors who have made a lot of money, which gives them credibility. It is tempting, for example, to take seriously George Soros's theory of reflexivity or Ray Dalio's speech on the five great forces of history as predictive frameworks. But good investors are no better than the rest of us at seeing the future; his skill is a keen understanding of the present. Whenever someone starts with “I've been reading a lot of history lately ask the waiter for the bill.
We must try to see as far as we can. To the extent that we think that economies and markets are amenable to analysis, it is natural that we try to anticipate not only cyclical changes but also regime changes. The latest to try are Jim Reid, Henry Allen and Galina Pozdnyakova of Deutsche Bank, who published yesterday the third part of their study on long-term asset returns, under the title “The history (and future) of recessions.” The study is long and compelling and contains many useful charts and tables on the frequency, depth and duration of recessions in developed markets dating back decades and even centuries. The article's progressive argument is that the post-1982 period of falling rates, low inflation, and long economic expansions is historically anomalous and probably over.