5/28/2023 0 Comments Wealth tracker consuelo mack![]() ![]() JEAN-MARIE EVEILLARD: As I said before, it has stabilized matters. And on the fiscal side, the government and Congress decided to increase government spending so that the budget deficit ballooned as well, and government debt, of course, as a result, you know, went up tremendously, to the point where, you know, recently, Standard & Poor’s decided to downgrade Treasury notes and bonds.ĬONSUELO MACK:So, where has that left us? All of this intervention and this credit bust? Short-term interest rates have been at practically zip for almost three years now. They took short-term interest rates down to zero. They ballooned the balance sheet of the Fed. The Federal Reserve took unprecedented steps, steps that had never been taken by the Federal Reserve since its creation in 1913. When they realized what was happening, they took steps, admittedly, to stabilize matters. And, what they didn’t pay attention to is that, if you let the credit boom go on too long and be too strong, then at some point it will turn into a credit bust, just like night follows day.Īnd when the credit boom turned into a credit bust, it’s not just that the authorities didn’t see it coming. What they didn’t notice was that the overall prosperity was built upon tremendous increases in debt. So, the authorities felt self-satisfied, very happy with themselves. ![]() For 15 years, we had low inflation, at least as measured by the Consumer Price Index. Because they looked at the ‘90s, beginning of the 21st century, and for 15 years, we had overall prosperity. JEAN-MARIE EVEILLARD: Many academics, economists with Wall Street firms, didn’t see it coming. ![]() He believes we are seeing a fundamental shift in the economic landscape. ![]() A student of financial markets and a well-known worrywort, Eveillard’s latest concern is the fragile state of recovery in the developed world. Until the financial meltdown in 2008 when the Global Fund experienced a 21% loss, still far better than competitors and the markets, the Global Fund had suffered only two years of small losses. But unlike some of his peers, he is loath to place big bets that could result in large losses, even over the short term. Jean-Marie is a deep value investor, with a history of investing against the herd. Eveillard’s exceptional track record and risk-averse approach earned him two Morningstar Fund Manager of the Year awards and its lifetime achievement award as well. He is Jean-Marie Eveillard, now senior investment advisor for the First Eagle Funds, but until 2009 portfolio manager for several of its funds, including nearly 30 years running the flagship five-star First Eagle Global Fund, one of the pioneers in international investing. How do you navigate these kinds of landmines as investors? This week we decided to consult a legendary investor who has one of the best long term track records in the business. The subprime implosion in August of 2007 Īnd the September 2008 collapse of Lehman Brothers occurred in the transition period from late summer to fall.Īnd as we all know now, some leading European bankers and officials have been predicting the Eurozone’s sovereign debt crisis has the makings of another financial crisis of similar magnitude. The bursting of the NASDAQ bubble in 2000 The 1998 Russian/Long Term Capital Management meltdown As their list illustrates, the five most recent market tsunamis past: According to ISI, almost all of the great financial crises in history have occurred between late August and mid-October. That is the sobering reminder recently brought to my attention by Wall Street’s long time number one independent research firm, ISI Group. In case you didn’t know it already- its hard to miss- the market is still in a danger zone. I’m Consuelo Mack, at the Museum of American Finance in the heart of the Financial District on Wall Street. Hello and welcome to this edition of WealthTrack. ![]()
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