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- ➤ The World is dividing into two blocs - the Plutonomy and the rest. The U.S.,
- UK, and Canada are the key Plutonomies - economies powered by the wealthy.
- Continental Europe (ex-Italy) and Japan are in the egalitarian bloc.
- ➤ Equity risk premium embedded in “global imbalances” are unwarranted. In
- plutonomies the rich absorb a disproportionate chunk of the economy and have
- a massive impact on reported aggregate numbers like savings rates, current
- account deficits, consumption levels, etc. This imbalance in inequality
- expresses itself in the standard scary “ global imbalances”. We worry less.
- ➤ There is no “average consumer” in a Plutonomy. Consensus analyses focusing
- on the “average” consumer are flawed from the start. The Plutonomy Stock
- Basket outperformed MSCI AC World by 6.8% per year since 1985. Does
- even better if equities beat housing. Select names: Julius Baer, Bulgari,
- Richemont, Kuoni, and Toll Brothers.
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