Innovations are a Guest that do not willingly visit the Man who avoids controversial Ideas

Monthly Market Commentary: January 1, 2018

Under the title E Pur Si Muove, Sam Altman who is a successful investor in new technologies wrote:

“Earlier this year, I noticed something in China that really surprised me. I realized I felt more comfortable discussing controversial ideas in Beijing than in San Francisco. I didn’t feel completely comfortable - this was China, after all - just more comfortable than at home.

That showed me just how bad things have become, and how much things have changed since I first got started here in 2005.

It seems easier to accidentally speak heresies in San Francisco every year. Debating a controversial idea, even if you 95% agree with the consensus side seems ill-advised. This will be very bad for startups in the Bay Area.”

Altman further observed that, “Restricting speech leads to restricting ideas and therefore restricted innovation - the most successful societies have generally been the most open ones. Usually mainstream ideas are right and heterodox ideas are wrong, but the true and unpopular ideas are what drive the world forward. Also, smart people tend to have an allergic reaction to the restriction of ideas, and I’m now seeing many of the smartest people I know move elsewhere."

I am quoting Altman because there are so many people that believe China's economic success is due to its violations of property rights and the blatant theft of Western trade secrets. The fact is, however, that China as well as other countries have developed their own home bred technologies and knowledge based industries, which was a consequences of the multinationals' process of outsourcing.

Asset markets enjoyed a superb 2017. It is doubtful that in 2018 all asset markets will appreciate in concert as they did in 2017. Rather, I expect that some diverging trends among asset prices will emerge and that the expected change in leadership will bring about some painful downside volatility.

I wish my readers a very happy and successful New Year. Please remember the words of French novelist, playwright, and filmmaker Marcel Pagnol:

"The reason people find it so hard to be happy is that they always see the past better than it was, the present worse than it is, and the future less resolved than it will be."

Kind regards
Yours sincerely

Marc Faber

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