
The Earnings Crucible
After sharp equity market declines this year, many market observers are of the belief that the stock market is now “fairly valued.” We hear it all the time. Some people even say that the market is cheap. Usually, people who espouse this view are referencing the price today compared to the forecasted earnings in twelve…

Maximum Uncertainty
Several weeks ago, we wrote a piece called “Money Heaven.” In it, we considered how money is created and destroyed. To recap, money is destroyed via two primary mechanisms: 1) Asset Devaluation, and 2) Inflation. We also discussed the root cause of inflation being a monetary phenomenon made worse in the present day by supply…

Courage
The Fed meets again this week to determine its policy track with respect to interest rates and its balance sheet. What is clearer, heading into this week’s meeting than it has been before prior meetings, is that the inflation problem is WAY WORSE than the Fed has acknowledged up to this point. Inflation is not…

Do you have a plan and is it robust enough?
We’ve been writing a lot this year about girding oneself for heightened uncertainty, heightened volatility, and market returns far below what many of us are accustomed to. This year has certainly provided a good measure of those PLUS additional doses of geopolitical conflict and supply chain problems just to round out the financial anxiety. As…

Thoughtfully Doing Nothing
This phrase captures an idea developed over the course of many years of collective institutional investment management experience during challenging performance periods not dissimilar to what we are experiencing today. The principle we are espousing is that doing nothing is not the same as thoughtfully doing nothing. It isn’t meant to be dismissive or snarky;…

Talk Is Cheap?
We’ve all heard the phrase, “Talk is cheap.” Lately, Fed chair Jerome Powell has been giving inflation fighting a great deal of “lip service.” “What we need to see,” Powell said, “is clear and convincing evidence that inflation pressures are abating, and inflation is coming down. And if we don’t see that, then we’ll have…

Don’t Fight the Fed
Stocks were mixed last week as the market narrative remains the same. Namely, the market is grappling with an increasingly hawkish Fed. It is a relatively quiet week ahead for macro-economic and corporate earnings announcements as the market continues to digest the implications of continuing high inflation. At this juncture, there seems to be broad-based…

Play The Long Game
Monday, May 9th, 2022 “He who stands on his tiptoes does not stand firm; he who stretches his legs does not walk easily…Thus it is that the Great man abides by what is solid, and eschews what is flimsy; dwells with the fruit and not with the flower.” –Assorted passages…

Money Heaven
Years ago, during the Great Financial Crisis of 2008-2009, a client asked me: “where does money go when the stock market declines?” I thought about it for a minute, and responded facetiously, “Money Heaven.” Meaning that it vanishes and leaves this world. Literally. Since I uttered those words, the idea of money heaven resonates with…

An Important Week for Gaining Perspective
It’s a big week for corporate earnings announcements with approximately 2,500 companies reporting earnings. We will have a good idea by the end of the week how rising costs are affecting trailing earnings as well as forward earnings guidance. On the economic data front, it is also a big week. Over the course of the…

Understanding the Present
We all know markets were down in the first quarter of this year. We started the second quarter right where we left off in the first quarter. The two charts below show an array of indexes across two separate time frames: 1) The first chart shows the markets for April so far. 2) The second…
Investor Mailbag: Hot topics
Why was the market down at the end of June? It seemed like it was going to rally back up. Markets ended their two-week rally in June after the Bureau of Economic Analysis released their March 3 estimate of the US real GDP growth for Q1, updating the estimate to -1.6% annually (-0.4% growth for…