Quarterly Newsletter – The Advisor

For as long as modern trade has existed, there have been tariffs – duties, levies or taxes – that have been applied to goods entering a country.

Early in the 19th century, the English economist David Ricardo introduced his Theory of Comparative Advantage. The theory posits that countries benefit from foreign trade by specializing in and exporting goods where they have a relative advantage, even if they are not the most efficient producers of those goods. In other words, trading freely would help countries and their peoples prosper. The argument was a strong counter to the mercantilist dogma of the day. Mostly free trade brought unprecedented prosperity to Great Britain, propelling it into the rank of first amongst nations.

Read the Spring 2025 Advisor

“In the beginning was the loan, and the loan carried interest.”

So opens Edward Chancellor’s fascinating book, The Price of Time: The Real Story of Interest, a historical analysis of the most important number in finance and economics. “All economic and financial activities take place across time. Interest is often described as the ‘price of money’ but it is better called the ‘price of time’: time is scarce, time has value, interest is the time value of money.”

Read the Winter 2024 Advisor

Recently, estimates of American stock market valuations reached their most extreme in US financial history.

The Wilshire 5000-to-GDP ratio sits at around 200% — higher than the ratio preceding the 1929 stock market mania, the 2000 dot-com bubble as well as the 2007-2009 Global Financial Crisis. At the same time, American households are loaded up on stocks. In fact, equities account for 40% of US households’ total allocation of financial assets, which is more than at previous market peaks.

Read the Autumn 2024 Advisor

If following the typical financial bubble we get the usual bust, what might follow an epic bubble?

Generally, three asset classes account for most wealth – bonds, property and equities (leaving aside more esoteric assets) – and for most bubbles. What funds bubbles is credit expansion.
Nothing in the markets is ever certain, especially analysing “bubbles”. Nevertheless, we shall attempt a brief assessment of the current situation.

Read the Summer 2024 Advisor