The future of the global economy will likely be dominated by delevering, deglobalization, and reregulating, yet if so, it is important to state at the outset that we do not envision a mean reversion, cyclically oriented future, but instead a new world where players assume different roles, and models relying on bell-shaped/thin-tailed outcomes based on historical data are less relevant. Historical models look backward while modern-day finance is being fast forwarded and reconstituted almost as we speak.
Based on these principles, Bill presents a very interesting macro-scenario (similar in many ways to Fragmented Protectionism) then addresses the implications and strategic options for investors in this world. Worth looking at!
But I think a key question is whether, by making claims like “…there should be no doubt that the bull markets as we’ve known them are over and that the revolution is on. Investing is no longer child’s play”, he might be in danger of doing the opposite of those that who claimed that there had been a ‘paradigm shift’ to lower risk and moderation in markets back around 2004-2005?
Interesting scenarios like this are excellent opportunities for discussion and reflection, as well as stimuli for preparing contingency plans. And his assertion that it is time to shift away from bell-curve-shaped models is an important one. But keeping somewhere in mind that there exist other, multiple scenarios are nevertheless still needed to emphasise the fact that we can’t ever know for sure that “bull markets as we’ve known them are over”. A black-swan-bull is always possible.