Paul Singer correctly diagnoses one of the most important issues besides climate change that societies face today (“Investors who hoard risk set to fall”, Opinion, December 7).
A combination of monetary and fiscal stimulus has inflated asset and other prices to extraordinary levels. The inevitable deflation that follows will undoubtedly create disruption, as the authorities are unable to fulfill their traditional role of compensation because they have already exhausted their options. But I dispute a few points in Singer’s article.
It’s not just that money inflates risky assets for fear of missing out: the enormous amount of money that has been created is forced into risk and other assets because there is no no alternative; it has to go somewhere.
Singer says “almost” all risky assets are at high levels, but I challenge him to find one risky asset that isn’t. Even the assets that were chosen as alternatives are inflated, with blockchain currencies being just one example. In addition, goods and services that are scarce experience disproportionate price increases.
The problems resulting from this phenomenon affect everyone, but especially investors, and Singer does not provide a solution. I don’t have one either. But I have a partial one: the task is to find that class of financial assets, other assets, goods or services that have shown the characteristics of a financial asset in the past, and may do so in the future. , but are not currently considered or classified as active.
There are some, although unfortunately their size is tiny compared to the money that could fetch them. Here are a few examples: paintings by old masters, antiques of most types and jewelry. Apart from the more expensive items in these categories, these have not experienced the price inflation of other assets as they are currently hardly considered assets, yet have a store of value.
Chief Executive Officer, Tail Wind Advisory & Management
London WC2, United Kingdom