A.I.M. Users Bulletin Board

[ls7550]

When interest rates were modest the Central Banks/Fed could revise interest rates up/down at monthly reviews. Nowadays they've resorted to printing/buying assets on a daily reactive basis. Might be best if the Fed/CB's just published a daily figure that they think the market value should be, so they didn't have to bother buying/selling, the simple act of stating a figure that they would buy/sell assets to achieve that level would have the market automatically adjust prices to that level. The EU (Euro) in contrast looks increasingly more inclined to just continue printing money to buy up all assets, a form of grand nationalisation.

350 years ago Feudalism evolved into Capitalism and increasingly its looking like Capitalism is evolving into Post-Capitalism, but where that transition will involve conflicts between post capitalism abundant free goods, services and information, and the 'old' capitalist system of monopolies, banks and governments trying to keep things private, scarce and commercial. What might post capitalism look like ??? With capitalism obsolete, individuals contributing to the whole according to whatever their skills/abilities, where most might 'work' in a occupation purely to keep themselves occupied and robots/technology fills in the gaps.

"Old-money" (generational wealth) style asset allocation (a third, a third, a third ... such as land, art, gold) might win out during such transition. A interesting read is Art as an Asset: Evidence from Keynes the Collector (David Chambers, Elroy Dimson, Christophe Spaenjers) Published: 29 January 2020.

Executive Summary :

John Maynard Keynes (economist (1883–1946)) started building his art collection in 1918, buying works by Cezanne and Delacroix. In later years, he added pieces by Cezanne, Degas, Matisse, Modigliani, Picasso, Renoir and Georges-Pierre Seurat. A study valued the collection over time by using various insurance appraisals conducted over the years as well as estimates commissioned by the authors from specialists in 2013 and 2019. If the combined works had kept pace with inflation, they would have been worth about 500,000 pounds. Instead, they were worth 76.2 million pounds, not too far short of the 90.2 million pounds the authors calculate Keynes would have generated in the U.K. stock market. “The long-term returns from the Keynes collection are substantial,” according to the report’s authors, David Chambers and Elroy Dimson of the University of Cambridge’s Judge Business School and Christophe Spaenjers of HEC Paris. However, the ten most valuable items of the works he amassed account for 88% their total value — and just two of the works account for almost half of the entire collection’s valuation.

“...This translates into a nominal internal rate of return (IRR) of 10.4% (6.1% in real terms). The year 2019 value of the art collection is only 16% lower than what it would have been if Keynes had instead invested his outlays in U.K. equities, reinvesting dividends (costlessly) back into the portfolio; the annualised underperformance relative to the equity market is just 0.2%. The collection performed especially well shortly after purchase, suggesting that Keynes was able to buy art at attractive prices. Yet, even over the last six decades the collection continued to appreciate at an annualised real rate of 4.8%. After procuring additional valuations for the collection’s most important works in both 2013 and 2019, we conclude that our estimate of its performance is robust to averaging across idiosyncratic elements in the valuation of individual artworks.”

Physical desirable assets of limited supply that might be exchanged as a form of currency. And where the value is market driven rather than Fed/CB dictated.