Jan 31, 2017

Jim Grant reports on the bond bubble: "$13 trillion of bonds are priced with negative yields"

Arbor Quantitative Analytics reports that the 30-year Treasury bond delivered a 10% return in the 10 days ended last week, among the best such sprints on record (it was in the 99.5th percentile).  Tuesday's Financial Times reported a drop in 10-year gilt yields to 0.71%, far below any yield recorded even when the pound was convertible into gold at a fixed price.  "Across the world," the paper said, "government bond yields continue to collapse as economists forecast low global growth and greater stimulus from central banks in spite of years of monetary easing.  Dutch benchmark 10-year rates are now negative, joining those of Japan, Germany and Switzerland."  According to Bank of America Merrill Lynch, $13 trillion of bonds are priced with negative yields, up from just about none two years ago.

~ Jim Grant, Grant's Interesting Rate Observer, "Remember the Shell Oil 2 1/2s of 1971," July 15, 2016

Grant's: "sovereign debt is the biggest bubble since the Bronze Age" (2016)

If practice makes perfect, Grant's is unrivaled in calling the top in bond prices.  We have done so repeatedly over the course of many years, even if not lately; since 2014, our line has rather been "one last gasp" for the bulls.  We now say that the last gasp has been gulped.  With all the fluency that comes with study and repetition, we say that sovereign debt is the biggest bubble since the Bronze Age, or maybe since ancient Sumer.  The notion that negative-yielding bonds, denominated in a fiat currency, are a "safe" asset is a misconception that belongs in the next edition of Extraordinary Popular Delusions and the Madness of Crowds.  We are bearish on bonds, especially the ones that, like new cars on a dealer's lot, positively guarantee the owner a loss as soon as he takes possession of his property.

~ Jim Grant, Grant's Interesting Rate Observer, "Remember the Shell Oil 2 1/2s of 1971," July 15, 2016

Jan 20, 2017

Donald Trump inauguration: protection leads to prosperity

Protection will lead to great prosperity and strength.

~ President Donald J. Trump, inauguration speech, January 20, 2017

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Jan 18, 2017

Fast Money trader thinks every dip is a buying opportunity, even the terrifying 2% variety

When we get a 2% correction we’ll find out who has the stones to buy.

~ John Najarian, as appeared on CNBC’s Fast Money, January 17, 2017

Jan 16, 2017

Tony Hawk on success

My definition of success is doing what you love.  I feel many people do things because they feel they have to, and are hesitant to risk following their passion.

~ Tony Hawk, professional skateboarder and entrepreneur

Grace Hopper on information overload

We’re flooding people with information.  We need to feed it through a processor.  A human must turn information into intelligence or knowledge.  We’ve tended to forget that no computer will ever ask a new question.

~ Grace Hopper, computer scientist and U.S. Navy admiral

Benjamin Disraeli on adversity

There is no education like adversity.

~ Benjamin Disraeli, British statesman

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Mehmet Oz on anger

The opposite of anger is not calmness, it’s empathy.

~ Mehmet Oz, physician

Joe DiMaggio on leadership

A person doing his or her best becomes a natural leader, just by example.

~ Joe DiMaggio

Marilyn vos Savant

Being defeated is often a temporary condition.  Giving up is what makes it permanent.

~ Marilyn vos Savant, columnist

Jan 11, 2017

Scott Peck on white lies

White lies may be every bit as destructive as black ones.  A government that withholds essential information from its people by censorship is no more democratic than one that speaks falsely...  Indeed, because it may seem less reprehensible, the withholding of essential information is the most common form of lying, and because it may be the more difficult to detect and confront, it is often even more pernicious than black-lying.

White-lying is considered socially acceptable in many of our relationships because "we don't want to hurt peoples' feelings.  Yet we may bemoan the fact that our social relationships are generally superficial.  For parents to feed their children a pap of white lies is not only considered acceptable but is thought to be loving and beneficent...  Usually such withholding and lack of openness is rationalized on the basis of a loving desire to protect and shield their children from unnecessary worries...  The result, then, is not protection but deprivation.  The children are deprived of the knowledge they might gain about money, illness, drugs, sex, marriage, their parents, their grandparents and people in general...  Finally, they are deprived of role models of openness and honesty, and are provided instead with role models of partial honesty, incomplete openness and limited courage.

~ M. Scott Peck, M.D., The Road Less Traveled, "Withholding Truth," pp. 59-60

Scott Peck on the link between lies and mental illness

One of the roots of mental illness is invariably an interlocking system of lies we have been told and lies we have told ourselves.

~ M. Scott Peck, M.D., The Road Less Traveled, "Openness to Challenge," p. 58

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Scott Peck on the paths to reality and delusion

A life of total dedication to the truth also means a life of willingness to be personally challenged.  The only way that we can be certain that our map of reality is valid is to expose it to the criticism and challenge of other map-makers.  Otherwise we live in a closed system - within a bell jar, to use Sylvia Plath's analogy, rebreathing only our own fetid air, more and more subject to delusion.

~ M. Scott Peck, M.D., The Road Less Traveled, "Openness to Challenge," p. 52

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Scott Peck: truth is more vital to our self-interest than comfort

We must always hold truth, as best we can determine it, to be more important, more vital to our self-interest, than our comfort.  Conversely, we must always consider our personal discomfort relatively unimportant and, indeed, even welcome it in the service of the search for truth.  Mental health is an ongoing process of dedication to reality at all costs.

~ M. Scott Peck, M.D., The Road Less Traveled, p. 50

Scott Peck on personal roadmaps and dedication to reality

Our view of reality is like a map with which to negotiate the terrain of life.  If the map is true and accurate, we will generally know where we are, and if we have decided where we want to go, we will generally know how to get there.  If the map is false and inaccurate, we generally will be lost. (p. 44)


By the end of middle age people have given up the effort.  They feel certain that their maps are complete and their Weltanschauug is correct (indeed, even sacrosanct), and they are no longer interested in new information.  It is as if they are tired.  Only a relative and fortunate few continue until the moment of death exploring the mystery of reality, ever enlarging and refining their understanding of the world and what is true. (p. 45)


Rather than try to change the map, an individual may try to destroy the new reality.  Sadly, such a person may expend much more energy ultimately in defending an outmoded view of the world than would have been required to revise and correct it in the first place. (p. 46)

~ M. Scott Peck, M.D., The Road Less Traveled (1978), "Dedication to Reality"

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Jan 9, 2017

Rodney Stark on why the fall of Rome was a blessing

The fall of Rome was not a tragic setback; had the empire prevailed, there would be nothing to call Western Civilization. If Rome still ruled, Europe would be mired in a brutal command economy, there would have been very little innovation of any kind, and the rest of the world probably would be much as Europeans found it in the fifteenth and sixteenth centuries. Empires are the enemies of progress!

 ~ Rodney Stark, The Victory of Reason, page 75

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Jan 7, 2017

Stephanie Pomboy is bullish on fiscal stimulus under Trump

We can finally get back to the business of real economic growth - real men building real things.  It all sounds fabulous.  And it will be - if and when it happens.

~ Stephanie Pomboy, MacroMavens, January 7, 2017
(as quoted by Kopin Tan in the Jan. 9th issue of Barron's)

Peter Drucker on leadership

Effective leadership is not about making speeches or being liked; leadership is defined by results, not attributes.

~ Peter Drucker, management consultant

Nelson Mandela on change

One of the things I learned when I was negotiating was that until I changed myself I could not change others.

~ Nelson Mandela

Gail Ayers on technology

Technology is simply a tool supporting human brilliance.

~ Gail Ayers, business executive

Carl Jung on action

You are what you do, not what you say you'll do.

~ Carl Jung, psychotherapist

Robert Louis Stevenson on achievement

Don't judge each day by the harvest you reap but by the seeds that you plant.

~ Robert Louis Stevenson

Christopher Morley on persistence

Big shots are only little shots who keep shooting.

~ Christopher Morley, novelist

Twyla Tharp on communication

It is extremely arrogant and very foolish to think that you can ever outwit your audience.

~ Twyla Tharp, dancer

B.C. Forbes on reading

The man who is too busy to read is never likely to lead.

~ B.C. Forbes, magazine editor

Caterina Fake on working hard vs. working smart

So often people are working hard at the wrong thing.  Working on the right thing is probably more important than working hard.

~ Caterina Fake, entrepreneur

Charles Munger on reading and wisdom

In my whole life, I have known no wise people who didn’t read all the time—none, zero.

~ Charles Munger

Jan 5, 2017

Frederic Bastiat

The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.

~ Frederic Bastiat

Pablo Picasso on procrastination

Only put off until tomorrow what your are willing to die having left undone.

~ Pablo Picasso