July 8, 2024
THE FUTURE OF INVESTING
Last week, SCOTUS overturned 40 years of precedence under the Chevron doctrine. We discuss this briefly in the RiskBridge Mid-Year Outlook video.
Here’s commentary from Dr. Pippa Malmgren (Dr. Pippa’s Pen & Podcast. “Geopolitical Avalanche,” July 7, 2024. Substack), “The Chevron decision means that the American civil service and agencies will no longer have wide authority to interpret legislation. Now, they will generally require legislation to act. In practical terms, this means that there is no more latitude in engaging in administrative guidance. This means that the kind of bank bailouts and creative financing arrangements that have characterized financial crises in the past are no longer possible. All problems of that magnitude will have to be handled directly by Congress, which has never been known to be very responsive or sympathetic to financial experts making mistakes. Can the Fed even continue to engage in “forward guidance” now? The transfer of power from the administration to Congress is stunning in its importance and consequences.”
My personal takeaway is that many market assumptions to which I’ve grown accustomed to in my investing career may not hold in the coming decades. I don’t know that judicial and/or Congressional oversite of regulations will be any better than regulator oversite of regulations. However, I’ve been around long enough to know that tectonic structural shifts like this can provide massive changes to the market’s liquidity trends. I want to be standing in front of that flow on behalf of our clients.
In our opinion, M&A activity, private equity exits, central bank “forward guidance,” SEC’s private judicial system, government bailouts to dampen the amplitude of the credit/business cycle – all are subject to change. So, too are the way investors allocate wealth to achieve their financial goals.
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