Crash Is King
“You've heard the expression ‘cash is king.’ Very true. But it's equally true that ‘crash is king:’ when speculative excesses collapse under their own extremes, the crash crushes all other narratives and becomes the dominant dynamic. (Notice he is referring to crash. JRD)
Everything that the mainstream uses to predict "value," market action and "the future" is tossed out the window. Price-earnings, ‘growth,’ ‘innovation,’ cash flow, yields, the bat-guano-quatloo carry trade, etc., etc., etc.-- none of it stops the crash or makes sense of the crash, which happens for systemic reasons beyond conventional explanations.
Crashes reveal what's core and what's periphery because the core controls the destiny of the periphery. In systems terminology, the initial conditions set the parameters of potential options and the limits of the efficacy of various choices. The core's initial conditions are considerably more constructive than the initial conditions of the periphery.
The vast majority of the grandiose claims of what's truly core will be revealed as false in a crash. The crash in core assets is less severe and the bounce back is quicker, as the underlying value of the core resets more readily.”