
So, what do forest fires and market corrections have in common? Hello. My name’s Paul Carroll. I’m the CEO and founder of Efficient Wealth Management, a boutique wealth management firm. California and the western United States have been ravaged by forest fires. Significant research suggests that fire suppression actually builds up the undergrowth and results in even greater fires. Really, the best course of action is regular, controlled burns. Financial markets are very similar, in that correction suppression by the Fed or policy makers creates ever-increasing valuations. Ever greater pressure. And, eventually, ever greater corrections. In the 2000s, Fed policy and regulatory failure led to extremely high valuations and an extremely painful market correction that resulted in subsequent quantitative easing, which was absolutely necessary to avoid a second Great Depression in 100 years. Today, equity markets are rich and bond yields are low. Economic growth and a $1.5 trillion tax...
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