I discovered the observations of Daniel R. Moore when I stumbled across his blog while I was researching royalty trusts. His website had the most cogent analysis of royalty trust valuation I could find anywhere, so I added his page to my RSS feed.
Daniel is who I like to call The Most Interesting Man in the Financial World. Not because he earned his MBA from from Duke’s Fuqua School of Business, but because of his experience.
During the 1980’s – Daniel worked for North Carolina National Bank, which would become Nations Bank, which would become Bank of America. His employer was on an acquisition run to make the biggest bank in the States, with unmatched economies of scale. Daniel did not know it at the time, but this desire for bank size and scale led to a bank (Bank of America) that would become ‘too big to fail’.
During the 1990’s – Daniel went to work for telecom carrier Northern Telecom (which would be come household name NORTEL Networks). He saw the wave of change from analog to digital control of the telecom industry switching equipment. Unfortunately, a government ruling (Telecom Act of 1996) made Nortel’s business model unsustainable- eventually leading to Nortel’s bankruptcy.
During the 1990’s to early 2000’s – Daniel had a front row seat for the Silicon Valley feeding frenzy that fueled the internet bubble. Simply put, there was too much cash chasing too few companies that had too few earnings. By 2004 Daniel had seen enough- He cashed in his California house 2 years prior to the housing peak, but he had held his house long enough to watch it double in value in 5 years.
This life experience led to Daniel’s financial opus – The Theory of Financial Relativity. Loosely paraphrasing, the Theory is:
1 – Nominal GDP is the nucleus in the United States financial market
2- Interest rates are the yardstick by which Financial Relativity is measured
4- Inflation and asset bubbles are always linked to government fiscal policy excess
Daniel has some more highly useful market observations, like defining the ‘Dow Signal’- Which almost always foretells when a market correction is imminent and when the recovery is imminent. However, unlike most prognosticators of Market Timing Methods, Daniel is wise enough to state that his Theory of Financial Relativity is solid, but not iron-clad. He recommends use his Theory rules to re-balance or overweight stocks, but not to time absolute entry and exit points from the stock market.
Overall, The Theory of Financial Relativity gets a bit technical in some spots, but it is still an interesting and insightful read. I highly recommend you grab or borrow a copy on Amazon today!
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