Iron Capital’s quarterly review of capital markets performance and updated market forecast.
Trade and the Fed: These two items were the top stories of the third quarter. The Fed has begun easing rates to help a slowing economy, but the slow growth is coming from the trade war.
The Index is not the Market. The idea behind index investing is that the index is supposed to represent the market. One problem with this concept is that the index is just a sample of the market and, like any investment portfolio, it is a sample selected by someone. Often the index does not really tell the full story.
Ultimately all these ideas persist because of the fatal flaw of economics as a science. In the hard sciences the scientific method requires a control – this group gets the experimental treatment while this other group gets a placebo. The treatment works or it does not. There is no control group in economics. So what are investors to do?
The market can in fact be wrong, and I believe it is wrong right now. However, John Maynard Keynes was also correct when he famously said, “The market can stay irrational much longer than you can stay solvent.”
The gap between growth stocks and value stocks is becoming alarming. This has not happened since the market boom leading up to the Dot-Com bust.
