The Four Defining Issues of Our Time
It’s hard to narrow down this list to four, but we believe that these are the four most significant trends underway in the financial world at this time. Our entire strategy rests on this belief.
We are constantly thinking about the future and undoubtedly this list will eventually change, but we believe that these are the most salient issues facing investment strategists today, and some of them don’t receive nearly as much attention as they should.
The Global Sovereign Debt Crisis
Governments all around the world have gotten so deep into debt with little realistic prospects for changing course, that some sort of default at this point seems mathematically inevitable. The only question remaining is exactly what form this will take – hard (outright default), or soft (currency debasement and inflation). We think soft is far more likely for most including the United States.
Gold Reasserting its Role
It is now widely understood that the system that has been in place since 1944, and heavilly modified in 1971, is no longer serving the interests of major world powers, including the United States. US Treasuries are no longer seen as a safe haven reserve asset, and we are rapidly moving towards a system that features trade in many local currencies and gold being used as the net settlement and reserve asset of choice.
The Rise of the Passive Bid
What started off as a noble idea – low-cost index funds, have grown so large and dominant that there is very little true price discovery left in the US equity markets. It has become absolutely critical to understand the effects of mechanical, price-insensitive flows on market prices, and the risks that are building up in the process.
Excessive Capital Investment into Artificial Intelligence
The amount of money currently being spent by the major hyperscalers to build out AI capacity is truly breathtaking. While we believe that AI is a very important and potentially revolutionary technology, it is very unlikely that it will generate enough revenues in a timeframe that will allow these companies to earn an adequate return on their investments.
Accordant Advisory Group, Inc. 