Can we apply the Stockdale Paradox to equity markets?

HOPE OVER REALITY?

Taking a lesson from the Stockdale Paradox, Joe Roseman says the only means of survival is to confront the brutal fact there is no palatable way of addressing mass insolvency.

As an asset class, the past decade has been abysmal for equities in the developed world. The decade, as a whole, would rank as one of the poorest since records began. Yet, the cult of the equity still lives on. Equities remain the mainstay of most portfolios. A part of this ‘cult’ derives from the fact that between 1980 and 2000, just about anything that could go right for equities did go right. Investors became convinced that central banks had (to a significant extent) mastered the business cycle. The subsequent decade since 2000 has thrown somewhat of a spanner in that thinking. Yet...