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Why It’s Tough to Make Stock Market Predictions (Econ Life, 2 mins) The article argues that the stock market fluctuations echo the business cycle and that it is impossible to predict the business cycle in a timely manner (e.g., NBER confirmed the 2007-2009 recession in 2010). Both notable economists John Maynard Keynes and Irving Fisher’s investment strategy based on the business cycle failed because it was impossible to forecast the trajectory of the economy. [Bearish momentum, timing the market]
Putting Private Equity Dry Powder Into Perspective (A Wealth of Common Sense, 4 mins) This article highlights how PE firms’ cash pile works differently from other investment vehicles. This cash pile is not invested in the money market nor held in an account of PE firms. In fact, it resides in the portfolios of the investors (i.e., endowment, pension funds, soverign wealth funds). This, in effect, hammers their ability to exploit cheaper valuation during downturns. [Bearish PE]