No Predictions, Just Observations

• Lots of debt, public and private, has been created and "must be" repaid or refinanced (or not).
• When you "invest" in bonds you're lending money.
• Leveraged share repurchases have substituted productive investment (capex).
• Risk premiums (term, credit, inflation, liquidity) are thin or non existent: we're not being compensated adequately for the risks we're assuming, there's no real margin of safety.
• Today's US equity valuations are extreme and unsustainable unless one believes that the conditions "created" in the last 5 years will be continued indefinitely.
• Today's valuations ALWAYS have an impact on tomorrow's returns.
• There IS a difference between value and price.
• Momentum can be negative too...things that can't continue indefinitely eventually end.
• Complacency and overconfidence are the fruits of incomplete analysis and lack of critical thinking.
• Greece has been a problem for 4 or 5 years.
• Initial conditions matter more than predicting the future.
• Herding behavior exists...crowded trades sew the seeds of there own destruction.
• Liquidity and volume are not the same.
• Liquidability matters.
• There may be a buyer for every seller but perhaps not at every price point or risk level.
• Cash seems like a bargain with respect to the value (and opportunity cost) of other risk free and risky assets.
• Things, as always, are unpredictable and complicated.