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'... Famous Last Words: No More Crises'

Bill Kort profile picture
Bill Kort

"Would I say there will never, ever be another financial crisis?" Federal Reserve Chair Janet Yellen said at a London conference last week. "You know probably that would be going too far, but I do think we're much safer, and I hope it will not be in our lifetimes, and I don't believe it will be."

- Barron's, 7/1/2017

I am not certain about the context of this quote (it was probably an answer to a question from her audience), but I will speculate that Chairman Yellen was speaking of a financial crisis a la 2008/2009. Why? Because existential meltdowns like that (i.e., 1929) are generational in nature as opposed to garden variety collapses that anyone who has been around the market for a while has become accustomed to. Some version of '08-'09 will happen again, guaranteed, but they generally take a long time - decades maybe - to bubble up. Over the years, people will always forget the hard lessons learned from the last debacle, greed will trump common sense, and the finance crowd will create a new way to blow up the economy... usually based on the overextension of credit. It is the way of the world.

Randall Forsyth, in this week's Barron's, gives us a brief run-down of some of the more run-of-the-mill crises we've experienced in the past five decades:

"To review some these greatest hits, there was the Penn Central failure in 1970; the failure of Franklin National Bank and Germany's Bankhaus Herstatt in 1974; the collapse of the Hunt Brothers' silver bubble in 1980; the Mexico financial crisis in 1982; the collapse of Continental Illinois in 1984; the Black Monday crash of Oct. 19, 1987; the savings-and-loan crisis that crested in 1990; and in 1994, the mortgage-backed-securities plunge, the bankruptcy of Orange County, Calif., and the Mexican peso Tequila Crisis."

This article was written by

Bill Kort profile picture
Fifty-plus years common stock investing experience. Worked forty-two years on the sell side in institutional equity sales positions with Kidder, Peabody, A. G. Edwards and Wells Fargo. My goal with Kortsessions.com is to provide a rational and a balanced counterpoint to what seems to be a constant barrage of media hype and misinformation on the markets.

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Comments (6)

EK1949 profile picture
I don't think anything comes down to what people think about markets as much as what the economy does to markets and what people think.

Since I just own stocks and I'm not continuously in the market for them my focus is on the economy.

'No more boom and bust'

Booms and busts will be there in any case. The economy grows through them at different rates. My concern is how policy can affect the growth rate and what in the way of public investment should be done. Some of this is disinterested, I'm curious about what's to be done, when and how it will happen. Some of it is self-interested, as a long term investor I know how long term public investment can make my investments more valuable.

I spend less time worrying about how worried people are about how worried other people are and how worried I should be about that. :-)
Bill Kort profile picture
Thank you EK1949. I am a long-term investor too and think your approach is very sound. I took up writing my blog, kortsessions.com, to help those not soundly grounded in the investment process... people constantly bombarded by the noise and bad advice that emanates from the media. It is obvious that you have run that gaunlet successfully.

Thank you for checking in.

'No more boom and bust'
turboelec profile picture
I always preferred, 'It ain't over till the fat lady sings', but Yogi Berra didn't say that.

There is a lot of disagreement on who's worried, who isn't and who should be. And this problem of perception is becoming a heated issue, but it usually comes down to your own experience and intuition which are not reliable gauges of reality at the best of times.

Having taken this into account, the Nasdaq going down while the DJIA keeps going up is a divergence that can't last. And if it does with the Nasdaq following the bond market any further down, then there may be a lot to worry about.

The traditional blue-chip shareholders may find it quite lonely at the top.

A little cash might go a long way this summer.

take care
Bill Kort profile picture
Re, Thank you for the comment. With regards to your comment about keeping some extra cash around this summer, I am not at all opposed to that. My main beef is with the media. If this were the first time that Randall Forsyth posted a cautionary article it might have significant credibility. Unfortunately, Mr. Forsyth has continually posted cautionary articles for as long as I have read Up and Down Wall Street. This includes 2009 (under the pen of ALAN Abelson, his predecessor) to the present. This type of counsel benefits no one.


Tiki Bar Capital profile picture
I don't know why Barron's employees so many seeming perma-bears. Kopin Tan is even worse. I read Forsyth and Tan to figure out what NOT to do the following week.
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