21 Nov 2022

You might not be surprised to learn that I love investment-related podcasts. I listen to about a dozen of them fairly regularly and am often impressed by the guests they get. A recent episode of the Meb Faber Show featured an hour-long interview with Professor Gene Fama. Fama is probably the most influential academic in modern finance after creating the Efficient Market Hypothesis in the early 1970s and co-creating the… Read More

3 Oct 2022

Returns: Before, During and After Recessions

My article from last week,¬†which you can read here, prompted a few people to ask derivations of, “Why don’t we sell our stocks – or at least reduce them – until the recession is over and sidestep some losses?” It’s an understandable question, but it makes me uncomfortable because I have some powerful memories of the 2008 global financial crisis when clients who bailed out of the market still felt… Read More

8 Aug 2022

Warren Buffet

I heard an amazing statistic a few weeks ago: Berkshire Hathaway, Warren Buffett’s investment vehicle, could lose 99 percent of its value and still enjoy a track record that beats the S&P 500. Over the weekend, Berkshire released their second-quarter earnings, which reminded me of my newfound fact, so I pulled up the data. Sure enough, it’s true. And perhaps even more remarkably, it’s been consistently true since the year… Read More

25 Jul 2022

Looking at Inflation, Backwards and Forwards

Inflation is hard to measure, which is why there are many ways to measure it. In addition to the Consumer Price Inflation (CPI) indexes that I’ve discussed in recent months, there are also Producer Price Indexes (PPI), the Personal Consumption Expenditures (PCE) indexes, the Gross Domestic Product (GDP) purchased price index, the GDP price index, and the GDP Price Deflator index. Oh my! While I don’t intend for this letter… Read More

31 May 2022

A Look at Bear Markets, Part II

What a difference week makes! Last week, with the market down -18.2 percent from its all-time high and dipping into bear market territory at some points during the day, it felt like a bear market was a sure thing. Of course, it may still happen, but with stocks now down -12.8 percent, it doesn’t feel as imminent. Last week’s article focused heavily on bear markets, almost to the point of… Read More

2 May 2022

Ben Franklin on Volatility

I’ll bet you know the old Ben Franklin saying that ‘the only things certain in life are death and taxes.’ While those things are certain, there is, thankfully, much more to life. A full life will mean different things to different people, but there are probably common elements that include family, friends, good health, prosperity, spiritual wellbeing, and fun, among other things. We also know that life can be difficult…. Read More

18 Apr 2022

Socially Responsible Investing

There is a lot of hype in our industry about ESG investing, which is the new way to talk about socially responsible investing (SRI). The new name, ESG, stands for Environmental, Social, and Governance. The last time I wrote about socially responsible investing was in 2014, and you can read the article here. I wrote that we don’t use ESG funds (which I called SRI back then) unless clients direct… Read More

11 Apr 2022

Economists Estimate the Probability of Recession

In the market summary above, I referenced the fact that the yield on the ten-year Treasury note is back above the yield on the two-year Treasury note. There was a relatively brief period where that wasn’t true, and a lot of consternation in the media and among investors that the inverted yield curve (when the shorter-term yield is higher than the longer-term yield) meant a recession was coming. In my… Read More

14 Mar 2022

The High Cost of Hedging

When markets are falling, clients often ask about whether certain ‘risk mitigation’ strategies make sense. Mitigation isn’t a word you use every day unless you’re a lawyer or in the insurance industry, but the meaning is simple: it is an action that reduces the severity, seriousness, or painfulness of something. Usually, when someone talks about it from an investment standpoint, they usually mean some kind of complicated hedging strategy. Over… Read More

28 Feb 2022

The Market Response to Russian Invasion of Ukraine

It feels callous to discuss the market impact of the Russian invasion, amid the human tragedy of people fleeing their home country in the first land war in Europe since WWII. But this is a market newsletter, and the invasion, like previous geopolitical shocks, is having a material impact on markets. Perhaps the first thing to recognize about the Russian invasion is that it didn’t happen in isolation, meaning that… Read More