A fascinating discussion a few weeks ago in welling@weeden with Albert Edwards and James Montier of Société Générale is republished below with the necessary permission.

“In the cacophony that is global investment strategy research, Albert Edwards (below left) and James Montier (right) stand out as clearly distinctive voices. And not merely because of their British accents or because they’ve tended to the decidedly bearish side of the scale over the last decade or so.

“Despite long tenure in the rarified top echelons of the investment banking world, for many years with Dresdner Kleinwort and more recently at Société Générale (where they are co-heads of global cross asset strategy) both have managed to retain a natural plain-spoken bluntness.

“Also

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Storage capacity is a key limitation of modern electronic equipment. Though we have come a long way since the days when computers would fill entire rooms, the size, weight, and capacity of a hard disc continues to restrict laptop features. Moving parts are other important drawbacks of modern consumer devices: they require relatively frequent servicing, and can develop faults rather quickly.

The flash memory feature has fuelled important consumer values in recent times. It reduces weight and other physical dimensions, while allowing instant access to voluminous electronic data. Solid state drives will take flash advantages fast-forward, with revolutionary potentials for all portable and mobile computing devices.

Many skeptics scoffed at the single-minded focus of this small-capital upstart from Santa Ana, CA. The company even divested a profitable and investor-friendly consumer business in order to free resources for the development of solid state drives. However, the benefits of this cutting-edge technology have

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I have not written in some time about a theme that I think is an important one. Skeptics could probably argue that the reason I haven’t written about it was that the recent facts have contradicted my belief, though the fact is just that I haven’t gotten around to it. So, to put the cards back on the table, it is time to talk about valuation cycles. Many people can tell you that the average market P/E over the long term is something like 15 times. Of course, “average” doesn’t imply that the P/E is always 15. About half the time it is higher, and about half the time it is lower. The trick is figuring out in advance which half is which. In behavioral finance, some would argue that the market follows long-term trends in valuation. Rising valuations spark investor interest, and additional investors adding money to the market causes ...