If economists are so smart, how come they’re not richer? Name me a billionaire economist.
You can’t, because the hard truth is that there are no more billionaire economists than there are billionaire newsletter writers (namely, zero).
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.
And those were Nobel Laureates, the best of the best!
Why, then, do we keep listening to them?
The economists at the Fed told us inflation was transitory, and it wasn’t. And then they told us it wasn’t, and now it is.
The only thing that hasn’t been transitory is economists’ persistent calls for a recession — which keeps not happening.
Maybe we should try listening to the billionaires instead?
Billionaire Steve Cohen is bullish: “I’m making a prognostication — we’re going up,” he said at a conference this week, citing the salutary effects of AI on corporate margins.
But billionaire Stan Druckenmiller is bearish: He’s so worried about the US deficit he thinks defaulting on Treasuries now would be the lesser of two evils.
And billionaire Carl Icahn is … ready to give up? This week he admitted to having lost $9 billion shorting the market since 2017.
“I’ve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis,” Icahn told the FT.
And that may be the only advice we should be following (even if he couldn’t follow it himself).
Druckenmiller, too, is realistic about his forecasting ability: "I can make a case in three years for inflation being at 8%, or deflation."
Which doesn’t 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.
If we can’t trust the world’s top economists — and we can’t trust the market’s legendary billionaires, what are we left with?
Charts, of course.
So, let’s see what they have to say.