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  • Rbrt September 2020
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The Fiscal Dance

Summary

° Household equity allocations (as a % of household assets) are near the high end of their historical range.

° An analysis of corporate capital structures in terms of equity and debt, and how it changed over time.

° Why fiscal policy is a key variable to consider within any tactical investment framework, at this particularly juncture.

By Lyn Alden Schwartzer at SA

Comments

  • edited September 2020
    Thanks for posting
    I need to dig into this, or maybe someone else will do it for me. There seem to be relationships here that I have never seen before, for instance, why does she think total (non-business) assets per national (including business) annual output is a valid thing to track?

    Equally, she notes this coincidence — “ When equities were over 20% of household assets in the late 1960's, the result over the next 10 years was about 2-3% annualized returns, which is not even adjusted for inflation. Then, when equities fell to cheap levels in the 1970's and 1980's, down to well below 10% of household assets, the annualized forward returns were over 15%, which even after adjusting for inflation were great.” — is the implication here that the crowd tends to be wrong? I don’t believe she says.

    Finally, she notes — corporate equity value outweighs debt value by more than average. These seem to me to be 2 very different things. What if a corporation had only debt and no equity, think Koch Industries? Or what if an old line publicly traded company did not have any debt?
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