“Habit rules the unreflecting herd.” – William Wordsworth Perhaps simply out of habit, risk-on trades continued in the third quarter as the herd pushed assets to new highs. Speculative fervor, both man-made and computer generated, drove everything from small cap stocks to junk bonds, cryptocurrencies, real estate and even thoroughbred horses. The rapid growth of […]
“First slowly, then suddenly.” – Ernest Hemmingway It has been another quarter of slow growth with few apparent changes in the market’s “no worries” attitude. The Federal Reserve persists in its gradual campaign to remove emergency accommodative monetary policy still in place, hiking interest rates in March and again in June, the fourth of this […]
Since our last letter to you there have been some notable developments. President Trump was inaugurated, the Fed increased interest rates for the third time and hinted that more hikes are coming, and economic growth appears to have stalled, with the Atlanta Fed now projecting just 0.9% first-quarter GDP growth as of this writing. Hope […]
“…For the loser now Will be later to win For the times they are a-changin’.” – Bob Dylan In trying to characterize the past twelve months, we are struck by one simple word: change. After years of sub-par growth, income inequality and financial repression, populist votes both here and abroad spoke loud and clear for […]
“Patience is bitter, but its fruit is sweet.” ~ Jean-Jacques Rousseau We realize there has been no shortage of pundits with a view on the implications of the U.K. electorate voting to leave the European Union, but with the second quarter now complete, we wanted to take a minute to provide our viewpoint and game […]
In good times, it’s easy to forget that markets are cyclical and investor sentiment, expressed through the market multiple, swings from greed to fear and back again (often at a far more rapid pace than business fundamentals). As the six-year ascent fueled by the Fed’s zero interest-rate policy and cheap credit runs out of steam, […]
The global situation has not changed dramatically since our letter to you in July. We said to expect more volatility to come and boy have we gotten it! Your portfolio is filled with high quality companies that will weather the current squall and emerge stronger than ever when the winds die down. Indeed, that cash […]
The global markets have been on an unusually steady ascent since 2011, with no major corrections in developed markets over this timeframe. The Federal Reserve and other global central banks have been good pilots, providing a measured amount of gentle thrust from low interest rate policy to speed the liftoff of prices. Nearly every asset […]
Newton’s first law of motion states that a body in motion at a constant velocity will remain in motion unless acted upon by an outside force. The first three quarters of 2014 were a period of unusual calm on Wall Street with the equity markets acting like a body in motion ascending at a steady […]
2013 had a healthy start with markets generally rising on the back of improved fundamentals such as higher rates of employment, better consumer sentiment and retail sales, low inflation, and the comfort of $85 billion in monthly asset purchases by the Federal Reserve keeping the system full of liquidity to drive asset prices higher. However, […]
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