01 Jul Boiling Seas, Sour Wine, & Mad Dogs
As I write this note, Greece has just defaulted on its 1.5 billion euro loan payment to the IMF, Puerto Rico’s governor has indicated the island cannot pay its $72 billion in debt, and the Chinese stock market has been falling despite recent government actions to support prices. While this may seem like a far cry from the “dog days of summer” in which general malaise accompanies high thermometer readings in July and August, it’s actually more representative of what was originally meant by “dog days.”
Consider the origins of the phrase. The first reference to the “dog days” was in a Greek poem called “Phaenomena” believed to have been written by Aratus around 300 BC. Wikipedia notes that “Dog Days,” according to Brady’s Clavis Calendria, were thought to be an uncomfortable time when “the Sea boiled, the Wine turned sour, Dogs grew mad, and all other creatures became languid; causing to man, among other diseases, burning fevers, hysterics, and phrensies.” Hardly the stuff of lethargic or lackadaisical July and August days…
In fact, the prospect of economic chaos at a time of summer holidays may portend more than boiling seas, sour wine, and mad dogs. Could the 20% drop in Chinese equity prices in roughly a month be the beginning of what I call vicious vacation volatility? After all, financial markets tend to be less liquid during July and August, increasing the probability of very disruptive and volatile price activity for weeks to come.
As I’ve indicated before, markets prices do not appear generically cheap, and as such, the most prudent course of action is to exercise caution. Better to miss gains than capture losses, and to make errors of omission rather than of commission.
I’ll continue to comment on developments I find interesting and noteworthy. In addition to posting my thoughts every Wednesday on my website, I have also begun posting them to LinkedIn, Facebook, and Twitter. Listed below are links to my most recent comments. As always, I’d welcome feedback!
Asia’s Devotion to Specialists
The most ambitious experiment in education today is taking place in Singapore where the Yale-NUS College is attempting to introduce a residential liberal arts program in the heart of Asia, a region known to highly value specialization and expertise. Click HERE for my comment.
Medical Tourism Boom!
The emerging market middle class is booming, and as it does, it will consume more and more healthcare services. At the same time, the developed world is aging and faces financial pressures to support underfunded retirees. The result: people will increasingly travel to find capabilities within their medical and financial constraints. Click HERE for my thoughts on globalization meeting healthcare.
In early June, I attended a National Association of Corporate Directors Master Class. What I heard over discussions bothered me a bit — corporate boards in general are so focused on depth of expertise that they’re minimizing breadth of experience. I believe the pendulum has swung too far in the direction of depth and it’s time to more highly value breadth. Click HERE for my piece.
Colombian Peace Coming?
Colombia has been making, albeit less rapid than hoped, progress towards ending its 50+ year domestic civil war between government forces and the FARC guerrillas. When reviewing statistics, I was struck by the amazing progress the country has made over the past decade or so — economically, socially, and in terms of security. Is it possible that prosperity can produce peace, rather than vice versa? Click HERE for more.
Within the Gloom, A Travel Boom?
As the emerging market middle class continues to boom, one of the areas that seems destined to grow with Energizer bunny consistency is travel and tourism. In this short piece, I dig into the tourist arrival data gathered by the US Department of Commerce in their Office of Tourism and Travel Industries. What I find suggests a forthcoming boom in global travel. Click HERE to read my note.
The “Art” of Spotting Bubbles
This past May broke many art market records, leading me to ask the question of “So What?” World record prices are a wonderful indicator of confidence, possibly even overconfidence. The short piece I wrote concluded that arts markets were flashing a warning signing, which when combined with full market valuations, implied that the risk-reward tradeoff in financial markets was not favorable. CNBC Europe picked up my piece and had me on air discussing the implications of art market exuberance. Click HERE for an excerpt from my CNBC interview, or HERE for the piece I wrote.