non-paywall access: non-paywalled here: https://archive.md/rpWzU
As a credentialled "expert" in history -- my university degrees are in econ and economic history -- I always recoil when someone mentions "the lessons of history."
One of the coolest books in my oversized library is How History Gets Things Wrong by Alex Rosenberg. This idea that as societies we somehow "distill" the pure lessons from the past and try to carry them with us is PURE B-S. Run away.
History isn't any different from the "now," the "present" -- it was just the present back then. And we all see the present being interpreted differently, facts or theories invoked to shape what happen. We can't even make sense of what happens in Israel-Gaza-The Levant-Palestine right now; You think the muddle of time and memory and evidence 20 years hence gonna make that easier...?
Plus, in twenty years, what will be "the lessons" of the Covid p(l)andemic? More to the point, accordingly to who?!
The past-present happened in a past that often operated under different regimes -- political, monetary, institutional, social -- that are very different than those operating today. So there might be lessons, in general, according to someone... but who the hell can arrive at the lessons?!
Now, what does emerge in this article that I think a sane person in the present can look at is
"Among several valuation measures setting record highs is one that has reliably been a gauge for the subsequent returns and potential losses of the S&P 500 index over the following 10 to 12 years: the ratio of the market capitalisation of US non-financial companies to “gross value-added” or corporate revenues generated incrementally at each stage of production. Since early 2022, this metric has rivalled and now exceeds the peaks of **both 1929 and 2000." **
Spooky years, there. Nice model: Also, there are hundred of these metrics that ostensibly inform us about impending doom, the yield curve inversion being a favorite among popular finance press. They are usually hopelessly overfit.
Another crystal ball-type metric, the Warren Buffet indicator (see e.g. here), also operates on comparing aggregate stock market valuation to U.S. GDP/real corporates. And it's been screaming bubble for 10-12 years.
I'm not sure what to do with metrics like that... broken clock is right twice a day type of thing.
Plus, this new era stuff is nice
The problem is not that investors believe in a new era. Rather, the problem is the failure to recognise that the entire history of entrepreneurial capitalism is made of no substance other than the repeated succession of new eras, one upon the next, like layers of sedimentary rock, or rings in the trunk of an ancient tree.
...predicated, of course, on the hidden assumption that nothing ever changes. Actually, sometimes there are new eras; actually, sometimes the rules changes; actually, sometimes the regimes switch. And the nature of free market capitalism is that the people who correctly spot that -- and can hold the right assets through it1 -- profit massively, and those who cried wolf too many times get wiped out.
All is well.
My two sats? Recession might be incoming, stocks may fall, Trumpie may soon be Trumpying; but sky ain't falling.
And this time, bitcoin is here for it.
Whatcha think, stackers? We bout to blow up?