by James Rickards
F. Scott Fitzgerald, author of The Great Gatsby, famously said, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”
My update on Fitzgerald is that investors today who want to be first-rate need to hold three opposed ideas in mind at the same time. Those three ideas are the real world, the Fed’s world, and the markets. As always, retaining the ability to function is essential.
Let’s take these three ideas one at a time.
The real world of the economy is bleak. Global growth is slowing both because of weakness in developed economies (Europe and Japan), and weakness in some of the emerging markets champions (China, Brazil and Russia).