MiB: David Kotok on pandemics and markets

This week we speak with David R. Kotok, who is co-founder, president and chief investment officer of Cumberland Advisors, which has $4 billion in assets under management. Kotok is also director of the nonprofit Global Interdependence Center, which promotes free trade and international dialogue, and has authored or co-authored four books, including “From Bear to Bull with ETFs” and “Adventures in Muniland: A Guide to Municipal Bond”. Investing in the post-crisis period.

We discuss his recent research on the economic consequences of pandemic shocks; he looks to Antiquity, the Middle Ages and the 20th century ahead, and discovers surprisingly similar economic sequences. The challenge was finding economic data, much of which was buried in economic books, but needed to be correlated with the pandemic health literature. He did this via historical economic data from Sidney Homer’s History of Interest Rates, Allan H. Meltzer’s A History of the Federal Reserve, Volume 1: 1913-1951, and Milton Friedman’s A Monetary History of the United States, 1867-1960 .

The parallels are many: after an initial shock, the supply of labor falls (due to death and disability), which drives up wages. Reallocation leads to a gain in productivity; Interest rates eventually drop and inflationary hits transient. We have yet to fully understand how much the pandemic has changed society and the economy.

The risk in the future is the development of viral mutations, mainly in unvaccinated hosts. It also explains how Long Covid will impact financial markets.

A list of his favorite books is here; A transcript of our conversation is available here on Monday.

You can stream and download our full conversation, including podcast supplements on iTunes, Spotify, Stitcher, Google, Bloomberg and Acast. All of our previous podcasts on your favorite pod hosts can be found here.

Be sure to check out our Master in Business next week with Michelle Seitz, President and CEO of Russell Investments, the 6th largest investment manager in the world. The company manages over $331. billion in assets and advises on another $2.8 trillion.

David Kotok’s Favorite Books

History of the Peloponnesian War by Thucydides

Written on Water: Characters and Mysteries from Beyond Maine by Randy Spencer

The man in Milan by Vito Racanelli

Authored books by David Kotok

From bearish to bullish with ETFs by David Kotok and Talley Leger

Lessons from Thucydides by David Kotok

Adventures in Muniland: A Guide to Investing in Municipal Bonds in the Post-Crisis Era by Michael Comes, David Kotok and John Mousseau

Invest in Europe now! : why European markets will outperform the United States in the years to come by David Kotok and Vincenzo Sciarretta

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