James Grant on WealthTrack: Surprisingly Strong Recovery Ahead

Consuelo Mack of WealthTrack interviews James Grant, Editor of Grant's Interest Rate Observer. By nature, James Grant is a glass is half empty type of person, yet he believes the economy will surprise to the upside and be surprisingly strong.

In the interview, Grant cites a quote from English economist, A.C. Pigou,

The error of optimism dies in the crisis but in dying it ‘gives birth to an error of pessimism. This new error is born, not an infant, but a giant; for (the) boom has necessarily been a period of strong emotional excitement, and an excited man passes from one form of excitement to another more rapidly than he passes to quiescence.’

One other noteworthy piece of advice to investors is that Wall Street is not an investor's friend. Investors should buy investments not when they feel good, but when they feel the worst about a particular investment.

The interview is a worthwhile one that investors should view.

Comments

[DW Reid:]

Nobody invests in the economy. This is where he's off base. People invested in the economy with the ASSUMPTION that he's right and only now are they realizing that he may be overstating it a bit.

Nov 02 03:09 PM

[yellowhoard:]

Grant is one of a kind.

I've read him for half my life and found him to be usually very right in his take on things.

Nov 02 03:26 PM

[Sovestor:]

We would characterize the recovery as tepid instead of strong. Tons of potholes ahead. In some days, some weeks, the markets could sink your holding to miniscule amounts. Be careful with the current markets. Risks are escalating.

Nov 02 05:00 PM

[Joe Shareho...:]

This market will go up for a short period of time. Fundamentals always win, however and the market will return to the depths we saw in March or even lower. Explain to me how we're going to wean private companies off the public teat? Explain to me how people who bought houses from 2005-2008 will pay off their bubbled mortgages? Explain to me how the banks will survive when the real deleveraging begins. Explain to me how cap and trade will help the US get more competitive on a global basis. Explain to me how the current tensions between China and the Federal Reserve bank will play out in a positive way? Explain to me how the government run health care will benefit the US economy? Explain to me how Bank of America, Citi, and WFC will pay off its debt and make money when the QE ends.....

Too many unanswered questions, with possibly the biggest dagger being a public that has lost its desire to spend money for fear of the unknown future. Believe me, the future will get a lot nastier. There should be total chaos within ten years. Wars are inevitable when times get tough. Everybody is looking to blame somebody else. Guess who will be blamed for this global recession? USA maybe? It's time to impeach Obama and get some responsibility and accountability into the office and halls of congress.

Nov 02 10:35 PM

[Swashbuckler:]

Grant says 10% growth next year. Never happen. No chance. Bigger chance that Charles Manson will be pardoned and elected chairman of the fed.

Nov 02 10:47 PM

[Ricard:]

Excellent video, thank you.

I especially liked Grant's take on Wall Street after 20:00.

Nov 02 11:00 PM

[Swashbuckler:]

On second thought, Obama handles pardons, and Obama appoints fed chiefs.....


On Nov 02 10:47 PM Swashbuckler wrote:

> Grant says 10% growth next year. Never happen. No chance. Bigger
> chance that Charles Manson will be pardoned and elected chairman
> of the fed.

Nov 02 11:14 PM

[sheople:]

Grant might "usually be right", but you can't export your jobs and inport labor and expect a recovery. This time he's a bust.


On Nov 02 03:26 PM yellowhoard wrote:

> Grant is one of a kind.
>
> I've read him for half my life and found him to be usually very right
> in his take on things.

Nov 02 11:18 PM

[The Good Ne...:]

James Grant is right on again, particularly with the concept of the "errors of pessimism and optimism"... much of his analysis is based on studying emotion and its effects on markets... many who completely rely on "fundamentals", data, and charts, are completely baffled when emotions take control.

Nov 03 12:01 AM

[Moon Kil Woong:]

I would not consider this run up a crisis of pessimism. Thus according to his logic, the next emotional rollercoaster is down. Does he even consider his own logic when saying there will be an emotional bull due to overly pessimistic outlooks? Right now the optimists are the ones worrying after their low volume bizzaro dollar deflated rally.

Nov 03 12:10 AM

[FB5000:]

As usual. Incorrect.

You and the other clowns on this thread prove his point.


On Nov 03 12:10 AM Moon Kil Woong wrote:

> I would not consider this run up a crisis of pessimism. Thus according
> to his logic, the next emotional rollercoaster is down. Does he even
> consider his own logic when saying there will be an emotional bull
> due to overly pessimistic outlooks? Right now the optimists are the
> ones worrying after their low volume bizzaro dollar deflated rally.

Nov 03 06:36 AM

[Michael Clark:]

Moon: good comment. This rally has been financed by the government, for the government (and banks, who now run the government).

seekingalpha.com/insta...

Ultrashort ETFs are bottoming, which one would expect to happen when the bull is beginning to lose his horns.


On Nov 03 12:10 AM Moon Kil Woong wrote:

> I would not consider this run up a crisis of pessimism. Thus according
> to his logic, the next emotional rollercoaster is down. Does he even
> consider his own logic when saying there will be an emotional bull
> due to overly pessimistic outlooks? Right now the optimists are the
> ones worrying after their low volume bizzaro dollar deflated rally.

Nov 03 07:13 AM

[Michael Clark:]

Fundamentalist rule the Day-Cycle when rising tides (lower interest rates) raise 90% of the boats. But during the Night-Cycle, you really need technical analysis, since technical analysis measures the 'emotions of the markets'.

Speaking of which: Ultrashort ETFs seem to be bottoming now, as stocks seem to be making a top in this government-purchased rally.

seekingalpha.com/insta...


On Nov 03 12:01 AM The Good News Economist wrote:

> James Grant is right on again, particularly with the concept of the
> "errors of pessimism and optimism"... much of his analysis is based
> on studying emotion and its effects on markets... many who completely
> rely on "fundamentals", data, and charts, are completely baffled
> when emotions take control.

Nov 03 07:15 AM

[Michael Clark:]

I've always liked Jim Grant, because he's a bit goofy in a country and a profession that does not usually reward goofy (American television seems to value only slick and shallow, the magazine cover look).... But Jim Grant hasn't always been right. In fact, he's often been wrong. But he is almost always entertaining.

Nov 03 07:18 AM

[Harry Tuttle:]

Except the investor class is as optimistic as ever. The pessimists are in the non-investor class.

Thus, following Grant's argument the investor class will be disappointed because they EXPECT everything to go back to 2006.

On the other hand, those who think their lives are over and want their children to learn Chinese may be pleasantly surprised.

Nov 03 01:49 PM