Capital Punishment

"Can we keep this...between us? I'd hate to lose my teaching job."
--Mutant Biker (Weird Science)

Peter Atwater discusses government's increasing influence on managerial decision making. As government gains more control over the processes that oversee production, we move closer toward socialism.

As Peter suggests, the greater we move in this direction, the lower the returns on capital.

The implication for investors is that valuation models need to discount less efficient capital allocation that accompanies a more socialistic structure. If this is done, then stock prices seem to be way too high.

position in SPX