Last week’s missive featured the first of two installments detailing this year’s potentially market-moving issues and events. Providing analysis of ongoing domestic economic and political issues that could move the market winds (here). This week, we broaden our perspective. Moving overseas to consider the regions, issues and events that may influence investment markets before 2021.

While no such list can be exhaustive, we believe this two-part series effectively covers those topics meriting scrutiny. Nor should our list be compared with those contrived within most consumer periodicals. As ours emanate from the investor’s perspective. Not that of the average buff, political junkie or animal lover. We will not spend time on this year’s ballyhooed superhero flicks, favored dog breeds, nor top names for girls.

Last year, TIME magazine chose members of the media, or as they put it, “Guardians of the War on Truth,” as the most influential person(s) of 2018. Even as recent polls and surveys by Gallup, Pew and the Columbia School of Journalism reveal that public trust in the media continues to decline. Which is rather like Wall Street nominating itself as the year’s most influential person in 2009. Right after it helped usher in the Credit Crisis.
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Renown wild man and physicist Richard Feynman said, “Nature uses only the longest threads to weave her patterns, so that each small piece of her fabric reveals the organization of the entire tapestry.”

Traditionally woven by hand on a loom, a tapestry comprises innumerable threads that, though individually hidden in the completed work, aggregate to establish whatever pattern or theme the artisan had in mind.

On its own, each thread remains indiscernible. Insignificant. Together, however, these threads convey a bigger picture. Capturing the imagination through its color, complexity, character and creativity. Adding up to a visual narrative that cannot be ignored.
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In ancient China, a respected military strategist wrote a book in which he infused his lifetime of expertise. General Sun Tzu’s Art of War became a manual on aligning aspirations with capabilities. The strategist set forth principles, selected for their validity across space and time, and then connected them to practices, bound by time and space. The Art of War, therefore, became a compilation of precepts, procedures — and categorical claims.

General Sun’s treatise was written sometime between 771 and 476 BC. Giving the Chinese roughly 2600 years to perfect his art of strategic dominance. Of course, the Chinese always played the long game. Believing that, given their history, size and geographic positioning, they would always have a chance to be at or near the center of the earthly universe, if only they played their cards correctly.

“The nature of water is that it avoids heights and hastens to the lowlands…
If you attack your enemy where he least expects it — if you avoid his strength
and strike his emptiness — then, like water, none can oppose you.” Continue reading →

“There must certainly be a vast fund of stupidity in human nature, else men would not be caught as they are, a thousand times over, by the same snare; and while they yet remember their past misfortunes, go on to court and encourage the causes to which they were owing, and which will again produce them.”

-Cato’s Letters, January 1721
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Since the dawn of civilization, mankind has on occasion caught a fever so rife with speculative euphoria so as to have become the period’s defining event. Nor has mankind ever become inoculated against such conditions.

Yet mankind remains a slow learner, at best.

In the Dutch Republic of the 1630s, such conditions were omnipotent. Simply screaming for an outburst of speculative mania. Amid a period of rising commercial optimism. The fading specter of war following the defeat of the Spanish Armada. And a booming Dutch textile trade. Seemingly a rising tide that would lift all boats. Continue reading →