It also follows, as noted, that duration and liquidity should typically correlate together: more liquidity forces investors into longer duration investments. Another irony in this story is that technology stocks are long duration i.e. high P/E investments and largely outside the ‘value’ framework. However, they are exactly the assets that gain most... See more

Consider cash to have a zero duration, technology stocks to have long duration (because they pay-off far into the future), counted, say, in decades, and Bitcoin to have a near infinite duration, because it pays no dividends and is never redeemed. If follows that, with just these three asset choices, an investor with an investment time horizon of,... See more

The only decisions investors can realistically make are: (a) how much to commit and (b) over what time horizon ?

Not only have finance and economics lately drifted even further apart, it gets worse: rather than economics (or economic expectations) driving finance as the textbooks tell us, finance seems to increasingly drive economics . Bitcoin and crypto, for example, fit badly into the traditional framework because they lack conventional ‘fundamentals’.... See more

What value investors implicitly assume is ‘perfect liquidity’ (at least when they need to sell), but the history of investment over recent decades confirms that market liquidity is highly cyclical moving over a 5-6 year frequency from abundance to scarcity. The chart below demonstrates the close correlation between weekly changes in Global... See more