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When I was 10 years old in 1992, I was worried that America's fiscal deficit was going to destroy the country after watching Ross Perot's charts on live TV.
Investing based on what you think will happen re: the national debt is not a wise investment strategy.
Investing based on what you think will happen re: the national debt is not a wise investment strategy.
Deficit worries were hot. People talked about the possibility of collapse. You see a lot of this if you read 1989's Market Wizards book. The wisdom of the time was that America had a big party in the 1980's and that it was all going to fall apart in the 1990's.
Imagine if you invested based on this belief. Results would have been pretty terrible. No one in 1992 would have predicted that we were about to have one of the greatest booms in American history and that we were going to have budget surpluses in 6 short years.
By 2000, the mentality had completely shifted after 8 years of incredible prosperity and a budget surplus. The mood was that a new era had dawned thanks to the promise of technology. Everyone was bulled up. You would have had a bad 10 years if you invested on that belief.
Macro truly is unpredictable. You have to keep this in mind whenever you read someone making a confident prediction trying to predict what will happen to the macroeconomy, interest rates, the deficits, the power structure of the world, etc.
