“No bubbles. Because it’s normal for large liquid asset classes to nearly double in value over less than a year and then drop 10% in a day.”
- Tweet from financial journalist Alen Mattich, 23 May 2013.
“An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”
- Benjamin Graham and David Dodd, ‘Security Analysis’.
“No warning can save people determined to grow suddenly rich.”
- Lord Overstone.
At the height of the financial crisis (i.e. 2008) it was easy to despise just the bankers for their serial and colossal ineptitude and rank hypocrisy. Now, five years into one of history’s most alarming bubbles, it’s easy to despise just about everyone in a position of financial or political authority, and for the same reasons. Take the FT front page from last Wednesday: “America’s corporate titans fight back”. With just a cursory look at the layout of the page, one could be forgiven for thinking that “America’s corporate titans” were somehow fighting against a common foe. But on closer reading it transpired that JP Morgan’s Jamie Dimon had merely succeeded in defending his own interests – as chairman and CEO of America’s most iconic bank – versus those of the people who notionally own his company, i.e. JP Morgan’s shareholders. Apple’s CEO, Tim Cook, on the other hand, was defending his company against the predations of some of America’s biggest crooks, a.k.a. the US government. “We pay all the taxes we owe,” said Mr Cook; “every single dollar. We not only comply with the laws but we comply with the spirit of the laws.” In sympathy with Mr Cook, the Republican senator Rand Paul added,
“I’m offended by the spectacle of dragging in executives from an
American company for doing nothing illegal. If anyone should be on trial here
it should be Congress.”
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