"Tails are not becoming “fatter”, the histogram is just growing to include more events. The author’s personal fear is that this complication of the world is not just rendering modern statistics useless, but the whole approach to modern investing. Money managers have strayed further from fundamentals than in previous thought cycles. Value dislodgements of the severity of the GFC have traditionally pushed investors back to the fundamentals and conservatism that create real wealth. Instead of propping up a failing system, it may be the case that CB’s have sanctioned market timing and speculation as real forms of growth.
If this reckless behavior continues, fundamental investors, the “engine” of growth in a properly functioning economy, may not be given the chance to allocate the patient capital needed to sustain growth and combat unnecessary volatility. The leeches (market timers and speculators) that rely on fundamentalists to maintain the sanity of prices and their movements will control the market and values will truly become baseless. For all the ramblings of Zerohedge prophets and gold stockpiling crazies, values are still relatively attached to fundamentals. Actions of central bankers threaten to give speculators a mandate to create a true fiat system where values and prices are only limited by the availability of ink and paper".