ScratchPad: 2024-05-10 Fr:
A scratchpad…
Economic History: As I get older, I find myself more attracted to Patricia Crone’s observation that we should not measure other high erasion societies against a Dover-Circle yardstick, but should rather recognize that they were very successful at what their leaders intended them to do, which was to maintain and perfect their particular modes of societies of domination. In a stable and well-functioning society of domination nobody who holds any concentration of social power—whether ideological, political, or military—wants there to be long-lasting and powerful business organizations:
Mark Koyama: Review of Timur Kuran, “The long divergence: how Islamic law held back the Middle East”: ‘The book demonstrates how dynamic institutional analysis should be conducted…. Kuran is… able to show how separate institutions… egalitarian Islamic inheritance practices, polygyny, and the structural of Islamic partnerships mutually supported one another, making it difficult to establish long-lasting economic organizations. Institutions, in this view, do not exist in isolation but are rather systems of mutually reinforcing ‘interrelated elements’…. Had any one Islamic institutionexisted in isolation, reform would have been feasible. However, reform of any single insti-tution was likely to fail unless other institutions were also transformed. Hence Islamic legalinstitutions formed a mutually self-reinforcing set of institutional arrangements… <https://www.dropbox.com/scl/fi/0xqkwli8nnmm1qbbck3zv/Review-of-the-Long-Divergence-PC.pdf?rlkey=pq3bi7t61ujqikfy3pgyxoz0c&e=1&dl=0>
Economics: Over time. the earnings yield on stocks has trended downward. That means that pretty much any market timing rule for the equity proportion of your portfolio will fail. Price-earnings ratios that appear high today from the perspective of past generations will, if this trend continues, appear low in a generation. In this context, the sheer size of the equity return premium is going to make any but the most finely tuned and crafted equity-share market-timing portfolio strategy into a loser. And the finely tuned and crafted strategies that are winners on historical data are very unlikely to be properly robust:
John Authers: It’s Dangerous to Stay Out of Stocks: ‘Research from Barclays provides fresh evidence that you should almost always have some money in equities…. Over no 20-year period since 1925, a span that includes both the stock market crash of 1929 and the global financial crisis of 2008, have [U.S.] equities failed to beat inflation. That cannot be said of any other asset class:… The same pattern is confirmed in Barclays’ home market of the UK, for which its data stretches back to 1899. The last 125 years have been much less kind to Britain’s economy and financial markets than they have been to the US, and so there was one 20-year period over which stocks lagged inflation… <https://www.bloomberg.com/opinion/articles/2024-05-09/skipping-stocks-is-a-very-risky-investment-strategy>