FNArena’s Weekly Insights – June 24 2024
Traditional Value Is A Flawed Narrative
By Rudi Filapek-Vandyck, Editor
We don’t need to read Yuval Noah Harari’s ‘Sapiens‘ to understand how people unite behind narratives.
It happens in financial markets all the time.
Not that popular narratives are also required to be accurate or able to withstand the test of time. The US has been on the verge of going bankrupt for multiple decades now, and the end of the US dollar as the world’s reserve currency has been “imminent” for all this time.
Another popular prediction sees a replay of the stagflation 1970s, with bond yields reverting back into the double-digit percentages as the price of crude oil jumps to US$200/bbl and those mean-spirited central bankers can no longer contain inflation.
Not all narratives are equally flawed. If they were, we’d probably be no longer treating them as gospel, though maybe I am now putting too much faith in the intelligence of my peers and contemporaries. Certainly, social media has been a genuine eye-opener.
The most dominant narrative in the world of investing is that, in order to achieve the best return in the long run, we must buy assets at a discount. Buy something that’s worth a dollar for less, preferably a lot less, so the adage goes, and you cannot go wrong.
