Clive Hale

Clive has been involved with the investment industry for over 40 years as a fund manager, funds researcher, non-exec director, investment co

Jan 2, 2017
2 min read
Goodbye to all that – January 2nd 2017

If we had said at the beginning of 2016 that the UK would vote for Brexit, the US would vote for Trump and that Leicester City would win the Premiership you might not have taken the bet; a pity as a £10 accumulator would have netted £45 million…. According to Ladbrokes no one took that bet, which reinforces our view that a forecast, at any time of the year, is just someone else’s opinion and not fact as all some politicians, economists and central bankers would have us believe. These opinions are then promulgated by the main stream media and thus miraculously become true as far as most unthinking readers are concerned.

Both the Brexit campaign and the US election were two classic examples of the Fourth Estate swallowing every blue pill given to them and then having the nerve to report on the “growing threat” of fake news! Who to believe? Not the press that’s for sure! Central bankers are no better; Carney’s admonition that a vote for Brexit would mean a rise in interest rates lay in tatters mere days after the result along with the chancellor’s threat of higher taxes; politicians are ever economical with the truth are they not?

One thing we can “look forward to” in 2017 is more political uncertainty. We have no idea what a Trump administration will spring upon us, but the markets seem to have voted already and new all-time highs in the US are not very far away at all. The bulls are in charge and have admonished the Cassandras by reminding us of what didn’t happen in 2016. We should also be very aware that “didn’t is not the same as hasn’t”; a quote from Grant Williams at RealVision highlighting one of the many subtleties of linguistics not to mention market action. So instead of divining the financial tea leaves here is a selection of quotes that we have stumbled across during 2016 that seemed quite relevant at the time.

“A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result that the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship.” – Alexander Fraser Tytler – a variation relevant today would be that the “minority discovers it can vote itself largesse and then contrives to control the majority” Rule by the 1%?

How many things served us yesterday as articles of faith, which today are fables for us? – Michel de Montaigne, eg a flat earth, the heliocentric universe and in the not too distant future central bank omnipotence.

Reliance on monetary policy as an effective stabilising device would involve a high degree of instability in the capital market. The capital market would become far more speculative and longer run considerations of profitability would play a subordinate role. As Keynes said, “when the capital investment of a country becomes the by-product of the activities of a casino, the job is likely to be ill-done.” — Kaldor, 1958. A classic example of history repeating.

An inferno that sadly lacks the poetry of Dante – Brigitte Granville economist at Queen Mary University talking about the effect of negative interest rates on the pensions industry. One of the many consequences of QE; unintended or otherwise…

The effects of quantitative easing may be diminishing compared with a few years ago, but “what we should say is, ‘Effects are diminishing, so let’s do more.’ This is the spirit of Abenomics.” Etsuro Honda, an advisor to Japanese prime minister Shinzo Abe bless him…

“The art of financiering consists principally in multiplying and confusing accounts, till, at last, no one has courage to undertake an examination of them.” William Cobbett “The Budget”, 1805.

In the end the Party would announce that two and two made five, and you would have to believe it. … The heresy of heresies was common sense. And what was terrifying was not that they would kill you for thinking otherwise, but that they might be right. – George Orwell, “1984” (1949) Have no doubt, “1984” is no longer a work of fiction.

If you don’t trust gold, do you trust the logic of taking a pine tree, worth $4,000-$5,000, cutting it up, turning it into pulp, putting some ink on it and then calling it one billion dollars? Kenneth J Gerbino. Name me a fiat currency that has survived and you can have all my gold and don’t forget Grant Williams quote mentioned above. “Didn’t is not the same as hasn’t”.

Gold; a zero-coupon irredeemable bond with no credit risk and where the issuer is God

Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened. Sir Winston Churchill

Either you repeat the same conventional doctrines everybody is saying, or else you say something true and it will sound like it’s from Neptune. Noam Chomsky

I predict future happiness for Americans if they can prevent the government from wasting the labours of the people under the pretence of taking care of them. Thomas Jefferson

I don’t make jokes. I just watch the government and report the facts. Will Rogers

Some people see the glass half full. Others see it half empty. I see a glass that’s twice as big as it needs to be. – George Carlin (1937 – 2008)

Some little known Zen teachings

No one is listening until you pass wind.

Experience is something you don’t get until just after you need it.

Light travels faster than sound. This is why some people appear bright until you hear them speak.

The fact that there is a highway to hell but only a stairway to heaven tells you something about the anticipated traffic…

There are two excellent theories for arguing with women. Neither one works.

And finally – “The trouble with quotes on the internet is that it’s difficult to determine whether they are genuine” Abraham Lincoln

And my favourite in these highly interesting times

“You can live in fear….or you can dance with her.” Unknown

May 2017 bring everything that you wish for – Happy New Year

Clive Hale –The View from the Bridge – January 2nd 2017

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