Three Conclusions and the Past 12-months

Accordingly with Bill Gross based on Reinhart & Rogoff This Time is Different:

"[…] Banking crises are followed by deleveraging of the private sector accompanied by a substitution and escalation of government debt, which in turn slows economic growth and lowers returns on investment and financial assets". [See the Chart]

"What then is an investor to do? If, instead of econometric models founded on the past 30–40 years, an analysis must depend on centuries-old examples of deleveraging economies in the aftermath of a financial crisis, how does one select and then time an investment theme that can be expected to generate outperformance, or what professionals label “alpha?” Carefully and cautiously with regard to timing, I suppose, but rather aggressively in the selection process under the assumption that it’s never “different this time” and that history repeats as well as rhymes. Reinhart and Rogoff’s book, if anything, points to the inescapable conclusion that human nature is the one defining constant in history and that the cycles of greed, fear and their economic consequences paint an indelible landscape for investors to observe. If so, then investors should focus on the following 30,000-foot observations in the selection of global assets."