If economists are so smart, how come theyâre not richer? Name me a billionaire economist.
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You canât, because the hard truth is that there are no more billionaire economists than there are billionaire newsletter writers (namely, zero).Â
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The last time a couple of economists tried to hit it big, they formed the hedge fund Long-term Capital Management (LTCM), which nearly sank the financial system.
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And those were Nobel Laureates, the best of the best!
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Why, then, do we keep listening to them?Â
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The economists at the Fed told us inflation was transitory, and it wasnât. And then they told us it wasnât, and now it is.
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The only thing that hasnât been transitory is economistsâ persistent calls for a recession â which keeps not happening.
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Maybe we should try listening to the billionaires instead?
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Billionaire Steve Cohen is bullish: âIâm making a prognostication â weâre going up,â he said at a conference this week, citing the salutary effects of AI on corporate margins.
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But billionaire Stan Druckenmiller is bearish: Heâs so worried about the US deficit he thinks defaulting on Treasuries now would be the lesser of two evils.
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And billionaire Carl Icahn is ⊠ready to give up? This week he admitted to having lost $9 billion shorting the market since 2017.
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âIâve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis,â Icahn told the FT.Â
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And that may be the only advice we should be following (even if he couldnât follow it himself).
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Druckenmiller, too, is realistic about his forecasting ability: "I can make a case in three years for inflation being at 8%, or deflation."
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Which doesnât do much good: Per Peter Lynch, the opportunity cost of waiting three years to find out might be greater than the cost of being long for an inevitable correction.
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If we canât trust the worldâs top economists â and we canât trust the marketâs legendary billionaires, what are we left with?
Charts, of course.
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So, letâs see what they have to say.
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Unexpected: