Barry Ritholtz Profile picture
Nov 18 4 tweets 2 min read
When Narratives Collapse dlvr.it/SczyHk
"Every now and again, we reach a moment in time when the scales fall from our eyes, and reality is revealed to us. We are now at one of those moments when the stories we tell ourselves have fallen apart.

The dominant narratives are failing."
Narratives matter:

For the vast majority of human history, people were illiterate. We developed story-telling to share information: When animals were around for the hunt; what snakes to avoid + mushrooms not to eat, etc.

It is telling when Narratives begin to fail...
2022 Narrative #fails

The Billionaire Genius
SBF, FTX & Alameda Research
Tech Dominance & the New Economy
The Fed Put
60/40 is dead
DeFi Will Replace Regulations
Russian Military Might
A Red Wave is Coming
The Inevitable Triumph of Trump/MAGA
How About Those Mets?

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More from @ritholtz

Nov 9
Unconventional Wisdom dlvr.it/ScVNd5
Lots of folks got this election very wrong -- @JamesSurowiecki has pulled together a comprehensive list.

But I want to delve into the big-picture misses, the obvious misunderstandings, and the flawed fundamental failures over the course of this election cycle.

Let's pick a few items where the conventional wisdom was very wrong...
Read 12 tweets
Nov 3
Fascinating deep-dive into the mythos of how 1970s-era inflation ended.

TL:DR is the 1970s was a very different pre-globalization era, with powerful labor unions broken by offshoring supply chains + manufacturing.

2020s inflation is wildly dissimilar to 1970s...
Image
Fed economists David Ratner and Jae Sim wrote in a paper wage-taming owed a lot to union busting + labor policy that makes it harder to organize and collectively bargain.

federalreserve.gov/econres/feds/w…
Read 9 tweets
Oct 27
A few thoughts on the upside surprise for 2022 Q3 GDP -- 2.6% versus 2.4% estimates - as told through 10 charts:
Chart of official GDP data via BEA.

Note the scale is still wildly skewed by the outsized 2020 Q2 collapse + subsequent huge fiscal stimulus driven snapback in Q3.

Those 2 Qs are still impacting everything from the recovery to inflation to FOMC policy.
bea.gov/news/2022/gros…
This Qs GDP is now back to the past decade's trend via @RBAdvisors

Read 12 tweets
Oct 26
Can Anyone Catch Nokia? by @ritholtz ritholtz.com/2022/10/can-an…
“Nokia, one billion customers – can anyone catch the cell phone king?”

That was quite an amazing magazine cover, posted online October 26, 2007 — 15 years ago today.
At the time,, Apple had been working on a touchscreen mobile computing device for several years.

They rolled out the first iPhone in 2007 -- the same year as the Forbes cover -- and that marked the beginning of the decline of Nokia’s mobile phone business
Read 9 tweets
Oct 17
Why hasn't gold been able to find a bid since inflation spiked over the past 18 months?

What is the role of Gold in a modern portfolio?

A few thoughts...
If any year should have seen Gold mount a robust rally, it is 2022. But GLD is down 10.5% year-to-date.
Gold has risen over the past 5 years -- about 24%, but it badly lags equities: +40% for the S&P 500 and +75% for the Nasdaq 100.

In fact, Gold lags in every time frame except YTD: Over 3, 5, 10, and 20 years.
Read 10 tweets
Oct 12
Is Loss Aversion about making good decisions or avoiding bad ones?

In Charlie Ellis’ "Winning the Losers Game" we learn in tennis, amateurs should avoid unforced errors, play within their skills, return the ball + not go for the Ace or smash shot.

Just like investing...
Investing errors are more damaging (subtractive) than good decisions are productive (additive).

Have we evolved to do less? Is this why groups wait for leadership to arise? What is an individual's bias towards action -- for or against?

I have more questions than answers.
From an evolutionary perspective, Risk was an existential threat. Loss meant not passing genes along.

Is this why we feel losses more deeply than we appreciate gains? Does this manifest as a bais towards better decision-making (resources) or away from errors (threats)?
Read 6 tweets

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