The Role of Confidence

Confidence is generally defined as belief in one’s ability to choose a course of action and execute on it. Although it’s not part of the…

The primary impact of confidence on the economy is simple. If people think the economic future will be good, they’ll spend and invest . . . thus…

What will happen when it no longer does? Will rates rise? How much? Will the effect of higher rates on the cost of financing purchases and…

Or will high-volume money printing to make it easier to repay the debt bring on chronic inflation? (The mere fact that intelligent people worry…

Belief in the things listed above largely eliminated uncertainty regarding the future and contributed to an extremely high level of confidence. No…

I often say the riskiest thing in the world is widespread belief that there’s no risk. And certainly that was the prevailing condition in the…

I’m thinking back to 1994, when NAFTA was enacted, easing trade in North America. People were in awe of Mexico: “It’s just like the U.S., but it…

As we’ve seen endless times, investors reach the overconfident state when things have been going well for a while, meaning prices have already soared…

Of course, this house of cards fell apart in short order. Thus that memo was followed by “It’s All Good . . . Really?” two weeks later, on July 30,…

The point is that no mechanical tools can enable investors to prosper under all circumstances. They can provide tilts or reduce exposures, but the…

As mentioned above, I think recently many investors have been holding riskier positions than are natural for them, largely because, thanks to the Fed…

When an economist tells them that growing the nation’s debt over the past 12 years from $6 trillion to $16 trillion is not a problem, and that…