Re: Marxist Financial Advice

[Sabri Oncu <soncu@xxxxxxxxxxx>]

Jim:

> The guidance I gave, as Michael Perelman noted, was 
> simply common sense, not something from Marx (though 
> I doubt Marx would reject the advice).
 
Put differently, it was simply common nonsense. If Roach is right and "the
equity bubble of the late 1990s was a transforming event in many ways for
the US economy", then that guidance is misguidance: 

http://www.morganstanley.com/GEFdata/digests/20040621-mon.html#anchor0

As he calls it, this "asset economy", the genesis of which according to him
can be traced back to the late eighties, is dependent on wealth-effects
driven by "asset price inflation", itself driven by the poring money from
foreign investors, central banks and US households who have been
indoctrinated by that "common nonsense" into the US asset markets. I go one
step further and claim that the genesis of this asset economy can be traced
backed to 1971, when the Bretton Woods system was dismantled and the US
dollar became the world reserve currency.

Although I have no means of knowing what Marx would have done had he been
alive, I have doubts that he would agree with the advice. It is my view that
the period we are going through is not a good time for diversification, if
by diversification what is meant is diversification into US assets such as
"well-diversified" US fixed income and equity index funds or funds of funds
holding such index and even actively managed funds in some proportions.

This is not diversification at all. It is a single bet, a bet on the US
dollar hegemony, whose future is more uncertain than ever.

Sabri