In the beginning was LTCM, long term capital management. The financial system almost came down in 1998 because of the over leverage of LTCM. The bad paper was absorbed by a consortium of 12 banks. 10 years later 2008 the financial system worldwide almost came apart. The bad debt was absorbed by the FED. Soon we could see strike 3 and only 1 balance sheet remains uncorrupted the IMF. It’s a game of hot potato and it’s what worries me.
James Rickards has written a new book called Aftermath, the 4th in his series on international financial macroeconomics highlighting how he thinks about surviving the next financial crisis. He kicked off the book tour with the following podcast. This guy is smart. He was the general counsel for LTCM and has been at the epicenter ever since.
A second video explains Dr Michael Burry’s equity bubble position regarding passive investing. I have mentioned my concern regarding this but I didn’t know Burry had this position. The guy is kind of annoying but in the video does a good job explaining the problem though he’s hawking his products so you have to look beyond the soap he is selling. I’m tilted small cap value in DFA funds.
Notice how he talks about a 45 year DCA time horizon to lower risk. This is not FIRE. In RE you are not DCA you are spending down.
Here is one debunking the real estate craze and the “it can never go down” notion. Macro Economic trends often last a Long time, but not forever.