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It’s a canary in the coal mine IMO. Sure, he’s early; but he’s not wrong. A very significant portion of growth over the last decade has been the growing ability

It’s a canary in the coal mine IMO. Sure, he’s early; but he’s not wrong. A very significant portion of growth over the last decade has been the growing ability of US companies to avoid paying US taxes. That growth eventually caps out until you reach a 0% corporate tax rate — the problem here is that shifts the tax burden 100% onto the populace, which absolutely destroys consumer spending and ultimately the economy as a whole. Right now they’re just turning these changes in the tax rate into enterprise value, but it’s a one-time shot. And if you do too much of it, you undermine the economy. But the corporations can’t help themselves, so we will have yet another boom-bust cycle.

junkscience2017 9y ago
sorry but the only answer any investor should care about is achieving their financial goals over the expected investment timeframe. markets tend to rise and as a result market declines tend to be temporary the permabear thesis appeared in the early 80s when the US was in a rut and we also became a debtor nation. the permabear thesis -that debt and fiat currency would produce an economy favoring the pessimistic (but not completely imploding to the point of collapse, because you can't invest in that), proved to be wrong over a thirty year window if you have an axe to grind, you will always find a permabear manager willing to tell you tales of doom...it will cost you your financial goals though
- exelius 9y ago
  I think these funds are useful as a risk hedge — there is some non-zero risk every year that the economy will collapse. If you invest in a fund that will help offset some of that risk by performing above average in a downturn, you might want to do it as part of a portfolio strategy. Nobody should be putting their life savings into one of these. Hedge funds like this aren’t for that; they’re a risk management lever that gets set according to the economic model an investor is using.
  - junkscience2017 9y ago
    lots of people here keep using the term "hedge"...none of the permabears market these as hedge funds...they do not internally hedge their own risk positions these are what they appear to be - bear market funds
    - oarsinsync 9y ago
      Giving a bear market fund a % of your total investment capital is the hedge. They don't need to be hedging their positions, you've already done that on the macro level by diversifying your investment portfolio.
perl4ever 9y ago
I'm in favor of a (more) progressive tax system, but I'm not sure that means we should tax corporations heavily or at all. The thing about a corporation is that its costs are borne by some combination of customers, employees, and shareholders, some of whom are rich and some of whom aren't. If we want to soak the rich, we should do that, rather than go after entities that are imperfectly correlated. Of course, it is then important to not let rich people shield their income with corporations.

junkscience2017 9y ago

sorry but the only answer any investor should care about is achieving their financial goals over the expected investment timeframe. markets tend to rise and as a result market declines tend to be temporary the permabear thesis appeared in the early 80s when the US was in a rut and we also became a debtor nation. the permabear thesis -that debt and fiat currency would produce an economy favoring the pessimistic (but not completely imploding to the point of collapse, because you can't invest in that), proved to be wrong over a thirty year window if you have an axe to grind, you will always find a permabear manager willing to tell you tales of doom...it will cost you your financial goals though

exelius 9y ago
I think these funds are useful as a risk hedge — there is some non-zero risk every year that the economy will collapse. If you invest in a fund that will help offset some of that risk by performing above average in a downturn, you might want to do it as part of a portfolio strategy. Nobody should be putting their life savings into one of these. Hedge funds like this aren’t for that; they’re a risk management lever that gets set according to the economic model an investor is using.
- junkscience2017 9y ago
  lots of people here keep using the term "hedge"...none of the permabears market these as hedge funds...they do not internally hedge their own risk positions these are what they appear to be - bear market funds
  - oarsinsync 9y ago
    Giving a bear market fund a % of your total investment capital is the hedge. They don't need to be hedging their positions, you've already done that on the macro level by diversifying your investment portfolio.

perl4ever 9y ago

I'm in favor of a (more) progressive tax system, but I'm not sure that means we should tax corporations heavily or at all. The thing about a corporation is that its costs are borne by some combination of customers, employees, and shareholders, some of whom are rich and some of whom aren't. If we want to soak the rich, we should do that, rather than go after entities that are imperfectly correlated. Of course, it is then important to not let rich people shield their income with corporations.