Just managed to read two white papers that James Montier had written in March. One was titled Six Impossible Things to do before breakfast’. He decided to disagree with his Chief Investment Officer, Ben Inker. My sympathies lie with James Montier. I wrote a short piece in January for MINT as to why this time might not be different as Ben Inker and Jeremy Grantham had been inclined to argue, lately. To be clear, there is no presumption that I am right (or James Montier is) and that they are wrong.
The other piece (slightly longer but not very and eminently readable, in any case) was about secular stagnation and neo-liberalism. Again, no marks for guessing where my sympathies lie. I am fully on board with James Montier. If you are reading it, do not miss footnote no. 12.
I was interested in the paper by Asker, et al that James Montier had cited. One complaint about Montier’s pieces is that the references are not fully cited. Not that one is complaining that these good pieces are being made available for free (just a registration required at http://www.gmo.com) and second, it is not that difficult to locate the cited works.
Asker’s piece (co-authored) is about private firms (unlisted) investing more than listed firms in the United States. Very interesting and useful empirical work. Shareholder Value Maximisation has been reinterpreted as Short-term Stock Price Manipulation, in reality and it runs counter to long-term Enterprise Value Added. Only capital investment generates long-term returns and not financial engineering.
All of these are the natural fallout of the neo-liberal agenda that has been in place since the Eighties to which the monetary policy of the Federal Reserve has contributed greatly. Few at the expense of many and markets at the expense of society.
One thought that Donald Trump would fix it, considering how effective and rousing his last campaign advt. was. But, it appears that it is all unravelling too fast. Well, that sad story is another subject for another occasion.