Strategy Letter - Desengaño

“Desengaño” was noted by one Antonio Garcia Martinez in his most excellent book, Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley, as a unique style of Spanish genre painting. Literally defined as “the un-tricking,” and using his words, it is best translated as the disillusion or the unveiling of a harsh truth. Human deception is revealed, and then an instructive moral lesson in everyday life as the “the tricked one” is shown with an exaggerated expression of betrayal.

That seems to describe the goings on within financial markets globally, as what seemed to be an endless fairy tale world of zero interest rates, nearly free money, and human behavior that defied generations of precedence, history and simple math, has rudely had its financial bandages ripped off to expose painful wounds that seem unlikely to heal quickly. Who can believe it? How could this have happened to us?