Prof. Racket wrote:
agip wrote:
Bond market is saying inflation is over and so is strong growth.
Bond market has been wrong for 20 years. It's basically a bunch of Igys just waiting for the mother of all "I Told You So" moments that's never gonna come.
My guess is inflation is here to stay for a while although it's just hard to separate actual inflation from just plain old inefficiency shocks (like massive port backups and truck shortages). People have a TON of money and they're willing to spend it, plus companies are moving back to more robust supply chains where they can have a bit more control (which I actually support). It'll take a while to make manufacturing as cheap as it was pre-pandemic.
“One of the striking features of the past five years has been the domination of the financial scene by purely psychological elements. In previous bull markets the rise in stock prices remained in fairly close relationship with the improvement in business during the greater part of the cycle; it was only in its invariably short-lived culminating phase that quotations were forced to disproportionate heights by the unbridled optimism of the speculative contingent. But in the 1921-1933 cycle this ‘culminating phase’ lasted for years instead of months, and it drew its support not from a group of speculators but from the entire financial community. The ‘new era’ doctrine – that ‘good’ stocks were sound investments regardless of how high the price paid for them – was at bottom only a means of rationalizing under the title of ‘investment’ the well-nigh universal capitulation to the gambling fever.
That enormous profits should have turned into still more colossal losses, that new theories should have been developed and later discredited, that unlimited optimism should have been succeeded by the deepest despair are all in strict accord with age-old tradition.”
– Benjamin Graham & David Dodd, Security Analysis, 1934