Casey Clarke, Author at Cadence Wealth Management

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…

Mar 17

Remembering Japan – No Sirens

By Casey Clarke Blog

In the decade leading up to the 1989 peak in the Japanese stock market, there was little to complain about. Almost everybody with shares of stock or real estate was watching their net worth rise, month after month, nearly uninterrupted. It became so easy to make money in the stock market that work ethic declined, leisure time increased, and many corporations found it easier and more profitable to augment their core business activities with stock market activity. According to Edward Chancellor in “Devil Take the Hindmost”, “Japanese politicians were not solely guided by public duty in their desire to support…

Jan 14

Ask Cadence: What is the Japanese carry trade and is it something to worry about?

By Casey Clarke Blog

A carry trade is when you borrow money and use it to make another investment that you believe will be more profitable than the costs associated with borrowing. In the case of the Japanese yen carry trade, participants with the intention of investing in the U.S. will borrow money at low interest rates in Japan, convert the local currency (yen) to U.S. dollars, then invest those dollars in an asset or assets in the United States they believe will earn more than the cost of the loan in Japan. Assuming currency exchange rates are stable, the math is really quite…

Dec 17

Incentives, Conflicts, and Capture

By Casey Clarke Blog

One of the reasons we formed Cadence back in 2010 was to rid ourselves of the embedded conflicts of interest that are inherent in large, profit-seeking public firms. I’m not suggesting that profit-seeking is bad, after all, it makes our economy go, jobs available, and is a genuinely positive aspect of the American way of life. But what we see every day working in financial markets is that there are immense pressures put on public companies by shareholders and Wall Street to increase profits quarter after quarter to fuel rising stock prices. Stock options within public companies, in many cases…

Oct 17

Ask Cadence: How will current and future geopolitical issues affect the markets?

By Casey Clarke Blog

It’s rational to assume that negative developments like social unrest, violence, and wars would roil the markets, but that’s not necessarily how things have played out historically. To the degree that investors feel confidence in markets rising, and the profitability of certain sectors of the market, financial assets can weather more societal turbulence than we’d think. The real issue for markets, especially from already lofty valuations at the end of a lengthy expansionary cycle, are those two factors just mentioned – confidence and corporate profitability. It’s really not until those two things are disturbed enough that markets go down and…

Sep 17

Ask Cadence: What’s the latest on the economy? Is it growing or shrinking? I hear mixed messages.

By Casey Clarke Blog

The economy, when looked at through a number of activity and production-based data points other than just GDP, decelerated substantially from its peak in 2021, seems to have troughed last year, and has risen modestly since then. We can say, in looking at our index of economic activity below, that although overall activity doesn’t seem to be weakening meaningfully in recent months, it’s anything but robust. Our index puts us right around the flatline, reflecting stagnation. What’s important to note, however, is that the popular definition for recession is when unemployment rises to match the underlying economic weakness. On this…

Jul 17

Market Risk in One Chart

By Casey Clarke Blog

There is no such thing as a “market” crystal ball, or a perfect indicator, measure, or data point, but if we were to pick one tool from our “market conditions toolbox” to give us a sense of potentially imminent risk present in the stock market and broader financial system, it would probably be the Hindenburg Omen metric. We spoke about this briefly in our May Cadence Clips newsletter, but given the importance of it coupled with the fact that we’ve tacked on more than ten additional Omen days since then, we figured we’d bring it back into consciousness. Popularized by…

Jun 17

Market Update – “Investing” is Winning

By Casey Clarke Blog

If you’ve ever wondered why financial media doesn’t talk more about things other than stocks and bonds, it’s generally because it doesn’t serve the business model that allows them to survive, which is another way of saying, there isn’t as much money in it. If risk-adjusted opportunity was most important, or those things that could benefit the viewer most, we’d be hearing a lot more about gold, silver, and other natural resource investments, especially given their performance so far this year. The chart below tells a pretty interesting story – the major stock market indexes are up about 11% (SPY…

May 15

Market Topping Conditions

By Casey Clarke Blog

One of the data points we follow to help us gain insight into the current condition of the stock market is called the Hindenburg Omen count. Originally created by James Miekka, its primary criteria is for at least 2.2% of stocks trading in the stock market to be both making new highs and new lows on the same days. Those days are tallied and looked at cumulatively to identify periods of divergence within a particular stock market index. The idea is that when you get disagreement within the stock market, it could mark a potential turning point. Below, is our…

Apr 16

Investor or Speculator – Part II

By Casey Clarke Blog

If you think about the last time we had widespread social strife and turmoil in the United States in tandem with expensive financial markets, your recollection will probably take you back to the sixties. Between anti-war protests, the civil rights movement, entitlement reform, and a re-tooling of criminal justice policies and laws, there was plenty of fodder for calm, dispassionate chats with friends and family. It’s probably no coincidence that this swell of activity came toward the end of a post-World War II economic expansion that brought economic comfort to many and stock markets to rather lofty heights. What followed,…

Casey Clarke

Market Fireworks – What Now?

Remembering Japan – No Sirens

Ask Cadence: What is the Japanese carry trade and is it something to worry about?

Incentives, Conflicts, and Capture

Ask Cadence: How will current and future geopolitical issues affect the markets?

Ask Cadence: What’s the latest on the economy? Is it growing or shrinking? I hear mixed messages.

Market Risk in One Chart

Market Update – “Investing” is Winning

Market Topping Conditions

Investor or Speculator – Part II

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