Global Investment Strategy

GIS October 10 (Clarity of Thought)

Date: 2016-10-09 - Prepared by: The GISI

Please consider the following three-step analogy.

Step one: from 2001 until 2007 most banks aggressively expanded into new countries and industries (and raised leverage). Instead, they should have carefully managed their impending decline. They understood their mistake in 2008, but it was too late. 

What could have been a gradual decline of banking—with a comfortable life for shareholders and employees—ended up being a collapse for shareholders, employees and also for society. The 2001 to 2007 expansion planted the seeds of the 2008 collapse.

Step two: from 2009 until 2014, energy companies—just like banks—aggressively expanded into new countries, territories and industries. Instead, they should have carefully managed their impending decline. They understood this in 2014, but it was too late. 

What could have been a gradual decline—with a comfortable life for shareholders and employees—ended up being a collapse for shareholders, employees and many societies. The 2009 to 2014 expansion planted the seeds of the 2015 collapse.

Step three: from 1993 until 2015, Western democracies have aggressively expanded into different regions. Instead, they should have carefully managed their impending decline. They still haven’t grasped this and are on their moral high horse trying to expand...

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