With further rate cuts expected from global central banks this year a new paper from Harvard provides a useful historical context for this ongoing shift lower in rates. They find that this is simply a convergence back to the long-term trend. We review the complete findings of the paper here.
For our second deep dive we turn to the big market delusion – the overconfidence of entrepreneurs, venture capitalists and investors on the unbounded promise of big markets. Vital reading to avoid investing in the next WeWork.
Finally, another reminder to make sure to sign to become a paid member of Macro Hive. It will allow you access the Exclusives and much more. It’s $9/£9 a week, but you get 20% off if you take an annual subscription at $7.20/£7.20. On top of that until the end of January, you get another 10% off using this discount code: “HIVEMEMBER10”. That’s 30% off. And remember, we also donate part of the subscription to the charity WaterAid. You can subscribe here!
Enjoy!
Bilal
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
(total reading time: 4 mins)
With further rate cuts expected from global central banks this year, a new paper from Harvard provides a useful historical context for this ongoing lower shift in rates. They find that this is simply a convergence back to the long-term trend. We review the findings of the paper here.
For our second deep dive we turn to the big market delusion – the overconfidence of entrepreneurs, venture capitalists and investors on the unbounded promise of big markets. Vital reading to avoid investing in the next WeWork.
Finally, another reminder to make sure you sign-up to become a paid member of Macro Hive. It will provide you with access to our Deep Dives and much more. It’s $9/£9 a week, but you get 20% off if you take an annual subscription at $7.20/£7.20. On top of that until the end of January, you get another 10% off using this discount code: “HIVEMEMBER10”. That’s a total of 30% off. And remember, we also donate part of the subscription to the charity WaterAid. You can subscribe here!
Enjoy!
Bilal
Lower Real Rates – It’s A Seven Hundred Year Trend (6 min read) A new paper by Harvard economist Paul Schmelzing, ‘Eight centuries of global real interest rates, R-G, and the ‘suprasecular’ decline, 1311-2018’, puts the secular stagnation debate into a historic context by looking at interest rate trends over the past 700 years. Schmelzing finds that the recent decline in real rates is entirely in-line with long-term trends and irrespective of policy support, permanently negative real rates could occur.
(Mehdi Farooq│15th January, 2020)
How Start-Ups and VCs get fooled by the Big Market Delusion (4 min read) How does one avoid investing in a company like WeWork? Its original IPO valuation was $47bn but it ended up being valued closer to $14bn. The answer lies in understanding “the big market promise” argue Aswath Damodaran and Bradford Cornell in their new paper, ‘The Big Market Delusion: Valuation and Investment Implications’. It’s the promise of unbounded big markets that fuels the overconfidence of entrepreneurs, venture capitalists, and investors at large.
(Abdul Akram│15th January, 2020)
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)