During the first and second phases/waves of the pandemic, stocks related to innovation, e-commerce, as well as to sectors that deal with digitalization, performed very well, beyond anyone’s expectations. As the pandemic started receding and the economy endeavored into reopening, traditional stocks like those in the financial or traditional energy sectors have taken the lead. Normally then, some portfolios – especially those that rely on momentum – are rotated, in order to take advantage of such momentum.
Like the seasons of the year, portfolios seem to require adjustment based upon some macrotrends. In turn, the latter seem to be contingent upon budgetary priorities. The Biden administration’s plans for infrastructure spending and renewal appear to be uplifting the industrials and the materials sectors (among others), so that wealth managers may be required to do their homework and rebalance portfolios accordingly.
This market/momentum adjustment (along with the need to formulate a strategy) reminds us of the old philosophical problem of “The One and the Many” that philosophers around the world dealt with (see next paragraph). Naturally in market analysis – like in science – there is an impulse and a desire to identify unifying principles behind diversity. It’s part of the attempt to justify assessments and positions and to signify (if not magnify) one’s explanations and theory. If the stock market at large is unknowable, then only one or very few specific things may be known at a time. However, the burning desire to understand the universe of the market in some larger sense than that fuels a desire to find principles that would render most – if not all – situations knowable by taming superficial diversity and the application of an underlying and unifying explanation.
The idea and pursuit of the One can be seen even in the tenth century BCE. In the sixth century BCE, Thales and Anaximander (among others) devoted their lives to assimilating and creatively transforming traditions in geometry, astronomy, and other disciplines. Their work in the Asian coast of Miletus resembles the traditions seen in other parts of the world then, such as in Ancient Egypt (where toward the end of the new Kingdom monistic tendencies gathered momentum and led to a meltdown of a polytheistic mythology, with the Amon-Re tending to become “the one only who has no second”), in Ancient Mesopotamia where the discourse of a macranthropy was exemplified in poems as early as 1000 BCE, as well as in Ancient India (like in the Hymn to the Cosmic Person in the tenth book of the Rg Veda, where the universe is described as a giant human body).
The sectoral market “miracle” in the midst of the pandemic – let alone the stratospheric rise of a few particular stocks along with the cryptos – reminds us of the “miracles” attributed to Empedocles and his flamboyant personality. In a poem that he wrote titled “On Nature/Peri Physeos” he echoes an attempt to mediate Parmenides’ Ways of Truth and Deception, that is between the rigorous logical conception of the One and the ordinary consciousness experience of the Many. It is quite interesting that he interposes the realm of the Few where four substances allocate influence along with a form of determinism that has come to be known as the Four Elements. In addition, Empedocles introduced the idea that the One and the Many are not different realities but recurring phases of a single cyclical process. Each one has a time of dominance then retreats as the dominance of the other returns. The cosmos, according to Empedocles, evolves through four stages which may be repeated indefinitely. In the Age of Love (the Golden Age or the Age of the Great Moderation in the 1990s), everything is melted together into an undifferentiated unity (unipolarity in geopolitical terms), the One (which is similar to Parmenides’ Being), and which he calls it the Sphere. In the second age, the Age of Separation, counterforces gradually or abruptly disrupt the unity, separating things out into different forms (bipolarity or multipolarity like in the period following World War II). In the third age, a.k.a. the Age of Hate, the unifying force disappears from sight, and a universe of hate and strife prevails. This is the time when civility disappears and wars (regional, world, civil) erupt. In the fourth age, the struggle between the Few allows the re-emergence of the One for the Age of Love to reign again, only to be followed by strife thereafter (certainly parallels can be found in Indian Hindu and Jain traditions, as well as elsewhere).
In our commentary last week, we discussed the idea that, in the unfolding era, alpha could be generated if we comprehend the geopolitical evolution of our time (the principle of One). The geopolitical cycle of our time seems to indicate that budgetary priorities may point to particular sectoral gains which, in turn, will assist in unfolding a geopolitical strategy and the pertinent statecraft (budgetary priorities, geopolitical strategy, and statecraft constitute the Few in Empedocles’ terms). We opt to close this commentary with three complimentary thoughts which are unified by the goal of geostrategic growth.
- First, we need better consolidated governmental accounting systems that would properly account for all assets and assign liabilities in a much more reasonable way. The fact that several developed countries (including the US) lack a national consolidated asset registry is absurd and leads to myriad problems (including corruption). The government has a fiduciary responsibility to have a full and updated consolidated account of all State assets along with their values. It is an abomination for the State to not record properly all its assets. Anything else leads to mismanagement, waste, inefficiencies, and the undermining of the people’s potential by vested interests. We focus too narrowly on debt and deficits debates and we miss the big picture. Public wealth is a sacred cause to be sacrificed to vested interests. Public accounts are not simply primitive by ignoring the asset-side of the balance sheet, but they are also deceptive when they are lacking proper capital accounts where capital expenditures are amortized over several years rather than being treated as annual operating outlays, therefore magnifying annual costs/deficits without even reflecting the equivalent assets that are being acquired/created.
- Second, assuming that the government’s accounting system is properly revised, manage government assets by hiring apolitical competent professionals. Their job would be to derive value out of dormant assets, and therefore advance the formation of capital as cash flow generation would contribute to higher growth, yields, incomes, and employment. It’s time to declare that the era of clientelism and of the abuse of the public cookie jar is over.
- Third, endeavor into an ambitious infrastructure agenda that will advance the geopolitical aspirations of liberty and democracy against the oppressive forces of autocratic regimes.
We believe that the adoption of such a triple mechanism will strengthen the country, allow growth to flourish, lead to higher productivity, while also affording the government to cut taxes.
Portfolio Rotation and Budgetary Considerations: Reflections from Pre-Socratic Thinkers
Author : John E. Charalambakis
Date : June 1, 2021
During the first and second phases/waves of the pandemic, stocks related to innovation, e-commerce, as well as to sectors that deal with digitalization, performed very well, beyond anyone’s expectations. As the pandemic started receding and the economy endeavored into reopening, traditional stocks like those in the financial or traditional energy sectors have taken the lead. Normally then, some portfolios – especially those that rely on momentum – are rotated, in order to take advantage of such momentum.
Like the seasons of the year, portfolios seem to require adjustment based upon some macrotrends. In turn, the latter seem to be contingent upon budgetary priorities. The Biden administration’s plans for infrastructure spending and renewal appear to be uplifting the industrials and the materials sectors (among others), so that wealth managers may be required to do their homework and rebalance portfolios accordingly.
This market/momentum adjustment (along with the need to formulate a strategy) reminds us of the old philosophical problem of “The One and the Many” that philosophers around the world dealt with (see next paragraph). Naturally in market analysis – like in science – there is an impulse and a desire to identify unifying principles behind diversity. It’s part of the attempt to justify assessments and positions and to signify (if not magnify) one’s explanations and theory. If the stock market at large is unknowable, then only one or very few specific things may be known at a time. However, the burning desire to understand the universe of the market in some larger sense than that fuels a desire to find principles that would render most – if not all – situations knowable by taming superficial diversity and the application of an underlying and unifying explanation.
The idea and pursuit of the One can be seen even in the tenth century BCE. In the sixth century BCE, Thales and Anaximander (among others) devoted their lives to assimilating and creatively transforming traditions in geometry, astronomy, and other disciplines. Their work in the Asian coast of Miletus resembles the traditions seen in other parts of the world then, such as in Ancient Egypt (where toward the end of the new Kingdom monistic tendencies gathered momentum and led to a meltdown of a polytheistic mythology, with the Amon-Re tending to become “the one only who has no second”), in Ancient Mesopotamia where the discourse of a macranthropy was exemplified in poems as early as 1000 BCE, as well as in Ancient India (like in the Hymn to the Cosmic Person in the tenth book of the Rg Veda, where the universe is described as a giant human body).
The sectoral market “miracle” in the midst of the pandemic – let alone the stratospheric rise of a few particular stocks along with the cryptos – reminds us of the “miracles” attributed to Empedocles and his flamboyant personality. In a poem that he wrote titled “On Nature/Peri Physeos” he echoes an attempt to mediate Parmenides’ Ways of Truth and Deception, that is between the rigorous logical conception of the One and the ordinary consciousness experience of the Many. It is quite interesting that he interposes the realm of the Few where four substances allocate influence along with a form of determinism that has come to be known as the Four Elements. In addition, Empedocles introduced the idea that the One and the Many are not different realities but recurring phases of a single cyclical process. Each one has a time of dominance then retreats as the dominance of the other returns. The cosmos, according to Empedocles, evolves through four stages which may be repeated indefinitely. In the Age of Love (the Golden Age or the Age of the Great Moderation in the 1990s), everything is melted together into an undifferentiated unity (unipolarity in geopolitical terms), the One (which is similar to Parmenides’ Being), and which he calls it the Sphere. In the second age, the Age of Separation, counterforces gradually or abruptly disrupt the unity, separating things out into different forms (bipolarity or multipolarity like in the period following World War II). In the third age, a.k.a. the Age of Hate, the unifying force disappears from sight, and a universe of hate and strife prevails. This is the time when civility disappears and wars (regional, world, civil) erupt. In the fourth age, the struggle between the Few allows the re-emergence of the One for the Age of Love to reign again, only to be followed by strife thereafter (certainly parallels can be found in Indian Hindu and Jain traditions, as well as elsewhere).
In our commentary last week, we discussed the idea that, in the unfolding era, alpha could be generated if we comprehend the geopolitical evolution of our time (the principle of One). The geopolitical cycle of our time seems to indicate that budgetary priorities may point to particular sectoral gains which, in turn, will assist in unfolding a geopolitical strategy and the pertinent statecraft (budgetary priorities, geopolitical strategy, and statecraft constitute the Few in Empedocles’ terms). We opt to close this commentary with three complimentary thoughts which are unified by the goal of geostrategic growth.
We believe that the adoption of such a triple mechanism will strengthen the country, allow growth to flourish, lead to higher productivity, while also affording the government to cut taxes.