COVID-19 and related counteractive policies have had an extremely negative impact on domestic and global economies. Whether or not you believe that the policies weren’t strong enough, or if they were overzealous, we are where we are.
When it comes to predicting the economy, we believe that speculating when things will turn is an exercise in futility and a horrible waste of time; one which meanwhile distracts us all from the task at hand.
Last week, Finance Twitter erupted over a Bloomberg article about Michael Burry [i] and how he likened passive investment in equity markets to the bubble in the synthetic CDO market back in 2007, which he famously – thanks to Michael Lewis and Christian Bale – identified.
Over the past few years, some of the finance literature has started addressing the phenomenon, if not the apparent puzzle, of overnight returns (close-to-open) vs. intraday returns (open-to-close).
Several years ago, we did an analysis of companies starting with a specific starting growth rate, and assumed that they would do a straight-line ten-year fade to a growth rate equalling inflation.