Casey Clarke, Author at Cadence Wealth Management

Nov 14

Questioning Conventional Wisdom – Limitless Market Growth

By Casey Clarke Blog

If you read our letters fairly regularly, you’ve probably picked up on the fact that we like to question the conventional, especially when our observations don’t confirm it, and even more so when embedded conflicts and incentives provide support for that convention. Take for example the notion that stocks can somehow return double digits even though the economy is growing at a substantially slower rate. How is this possible? Don’t think and just accept, some might say. Thinking only delays your ability and dampens your enthusiasm to invest blindly in something that is good for the goose. And as we…

Oct 15

Middle of the Night Financial Thoughts

By Casey Clarke Blog

Yes, our clients pay us to lie awake in the middle of the night so that they don’t have to – at least when it comes to financial markets and economic matters that could affect them. We’re not talking anxiety-filled nights, but rather quiet, pondering nights where the chaos of the day has subsided, the routine-related boxes have been checked, and the brain can run free. In somewhat random, freewheeling fashion, here are a few of the thoughts I’ve recently spent time spinning. Asymmetry The notion of asymmetry is an important one when it comes to investing: the condition where…

Sep 12

Employment and Stocks

By Casey Clarke Blog

Markets seem to be ignoring the incredibly large and record-setting downward adjustment to jobs (>900k for 2024). However, the state of employment over a long period of time, it turns out, is incredibly important to the stock market. Below we see a four-year rate of change for both the employment to population statistics (now negative for almost two years year over year) and the S&P 500. Extremely well correlated. The little red and green blips on the far right of the chart show how the trends will change in the coming months assuming the current levels stay the same –…

Aug 21

Unstable Bitcoin Narrative

By Casey Clarke Blog

This notion that Bitcoin is digital gold continues not to hold up when looking at how it behaves in “risk-off” environments. As much as I like the fundamental premise of it being the people’s currency, decentralized and at arms-length from government control, the fact is that it acts more as a speculative asset than any type of store of value. Maybe that will change, but for the moment, that narrative is secondary to Bitcoin being a speculation. The chart below shows Bitcoin in blue, Nasdaq 100 in red, and Gold in yellow. Visually, you can see that Bitcoin seems to…

Aug 14

Return of Capital

By Casey Clarke Blog

There have always been and will always be points in time where investors pivot from wanting return on their capital to just plain wanting their money back. The exact factors that take the collective emotional state from greed to fear are different every time and impossible to predict, but so long as humans remain in control of their own decision-making, along with their full array of emotions, arrive they will. We can think about these swings between greed and fear over multiple timeframes – ranging anywhere from intra-day to the very long term, almost generational cycles. We can also think…

Jul 22

Higher Rates

By Casey Clarke Blog

A simple macro observation… In the past, recessions followed inverted yield curves – when long-term market rates dip below short-term market rates. That hasn’t been true this time around, yet, probably because that phenomenon typically involves aggressive Fed rate cuts to help normalize the yield curve (bring it back into positive territory). This time, the yield curve has begun normalization without those cuts, mostly due to long duration rates rising because of inflation fears, solvency concerns, and other factors. Probably a cleaner and more accurate way to think about interest rates and their effect on the economy is to look…

Jul 17

Low Yields = High Risk

By Casey Clarke Blog

For 95 years since 1902, the cyclically adjusted earnings yield for the S&P 500 has averaged 7.9% and the dividend yield, 4.6%. Since 1997, they have averaged 3.7% and 1.8% respectively. Currently, they are 2.8% and 1.3%. Combined, investors could expect to earn 4.1% from corporate earnings growth and dividends, which is a full 8.4% below the long term, almost 100-year average. It is also below the “risk-free yield” of the 10-year U.S. treasury at 4.25%. Below, we can see just how anomalous this return profile for the market is and has been. Historically, we’ve seen other low points just…

Jun 13

Economic Indicators: Employment

By Casey Clarke Blog

A couple data points to ponder… First is an update of disabilities across the general population, and more relevant to the economy, within the U.S. workforce. You can see the trend continues to rise since early 2021. Some would have ideas around what might have contributed to this rise. Regardless, there are fewer healthy, productive people available within the workforce to drive economic productivity. AI couldn’t come quickly enough, but with more people sidelined, it begs the question as to the ability of the consumer to spend tomorrow the same way it did yesterday. The below chart looks at disabilities…

May 16

Certainty

By Casey Clarke Blog

One of the things we’re heavily deficient in these days is certainty. Whether one views current events as good, bad, or indifferent, most would agree that the ability to predict where we’ll be in six to twelve months with any confidence is more difficult than it’s been in quite some time. This is anxiety-provoking, and as homo-sapiens, we don’t like to feel anxious or scared. Fear leads to poorly calculated decisions, and bad investment decisions, especially when made repeatedly, can set one back irreparably on their financial path. As ephemeral as it might be to obtain in reality, the perception…

Apr 15

Market Fireworks – What Now?

By Casey Clarke Blog

As of the moment I’m rapping on these keys, the market as measured by the S&P 500 is down roughly -5% so far this year, with its peak to trough drop of around -12% happening from mid-February through mid-March. That’s been enough to get some people anxious that declining portfolio balances could get worse, while others, with plenty of support from financial media, are viewing this decline as an opportunity to buy more of their favorite stocks cheaper. Only time will tell which group is correct with respect to this particular decline and over a short timeframe, but as we…

Casey Clarke

Questioning Conventional Wisdom – Limitless Market Growth

Middle of the Night Financial Thoughts

Employment and Stocks

Unstable Bitcoin Narrative

Return of Capital

Higher Rates

Low Yields = High Risk

Economic Indicators: Employment

Certainty

Market Fireworks – What Now?

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