The Biggest If Of All

I continue to see the comforting myth of ‘returning to normal’ show up in all sorts of discussions. Today, in a NY Times piece on where investment fund managers are finding good opportunities to invest the central point was that fund managers can’t find good investment opportunities, because high uncertainty. But – don’t worry! – everything will be fine as soon as we get back to normal:

Managers of World Allocation Funds Are Finding Few Bargains – Carla Fried via

It’s not just that many asset classes have already rebounded sharply from their financial-crisis lows and are no longer great values. What concerns Mr. [Dennis] Stattman [manager at BloackRock Global Allocation fund for more than 20 years] is that those asset prices have risen partly because of a protracted central-bank easing policy that is increasingly viewed as being closer to the end than the beginning.

“We’ve already had the beneficial effects of fiscal and monetary easing, so the question now is what happens when normal returns,” he says. “Never before in my investing experience has uncertainty been greater, or more important to the markets.”

My interest isn’t really where these finds are investing, or will in the near future. What I am interested in is the deep story, never examined or questioned: we are in a downturn like other downturns, and we will return to postmodern growth patterns: the typical boom/bust cycle that defined the past few hundred years of the modern and post modern economies.

But what if this is a new postnormal world? (It is.) A new sort of economy with a new hyperbolic logic? What if we’ve crossed over into a world we don’t have a handle on? What if we aren’t going back to the old boom/bust? What if volatility, uncertainty, complexity, and ambiguity are here to stay? What if it became impossible to apply old approaches to analyze the situation, or worse yet, analytic techniques in general couldn’t pierce the fog of this postnormal economy?

What if?

Well, one observation is that finding investment opportunities will involve abductive logic now: guessing and experimenting, instead of analytic number crunching. Maybe that what these fund managers are trying now, but they aren’t saying.

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