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Best of 2005: Where Did the Time Go?


Hey brother, can you spare some time?


Editor's Note: This article was published on 10/14/2005

Conventional wisdom says there is always something to buy in a bear market, and always something to sell in a bull market. But what about a secular bear market that stems from a massive overvaluation of all financial assets due to a long-term financial-asset mania?

If the long-term deflationary thesis is correct, the point of recognition will result in the simultaneous decline of all financial assets. This is a difficult concept to grasp, especially given the length and magnitude of the secular bull market that brought us to this point.

Bear markets exist to "re-adjust" and re-price inflated assets. The conventional wisdom that there is always something to buy in a bear market, sell in a bull market, is indeed grounded in a nugget of truth: manias typically conclude with one asset extremely overvalued at the expense of another asset that is extremely undervalued.

I believe this mania has created the overvaluation of all financial assets. What is undervalued are intangible assets; relationships, time, quietude, reflection - all those things that are difficult to define and whose value deflated in the mania for goods and financial assets.

Since 2000 a number of books have been written from the standpoint that life is about more than work and production. Over the past decade we have seen a compression of time - we do more with less - and the popular perception is increasingly viewing time compression as a consequence of the relentless pursuit of financial assets. Why now? Because social mood is shifting. As a consequence of that shift, certain intangible assets will be re-priced. Perhaps the most important of these intangibles will be time. It is arguably our most precious commodity, and how we spend it may dramatically change as the structural bear market reasserts itself.

Is this thesis tradable? Not really, nor should it be. These macro views are simply the conditions that influence the transactions I make when the indicators I use undergo contextual shifts. Markets inhale and exhale no matter whether the structure is bullish or bearish. The bull and bear coexist on Wall Street. All that changes are the depths of inhales and exhales depending upon which structural element is in place.

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