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We routinely publish news, information and insights to keep our clients informed while also deepening their understanding of a variety of wealth management topics.

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May 15

Short-term Returns, Longer-term Cycles, and the Role of De-Dollarization

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Those watching the performance of risk assets like stocks and commodities since the beginning of the year can be forgiven if their heads are spinning.  Most risk assets were up the first two months of the year, with the S&P barely so.  March saw most risk assets sell off, except oil which continued its upward climb, only for stocks to rebound in April while precious metals continued seeing more sellers than buyers, and oil moved sideways.  Up, up, sideways for oil; up, down, down for precious metals; and, up, down, up for stocks.  Every month there’s a new winner and…
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Feb 11

What Happens When You Catch the Tiger by the Tail?

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There’s more to responsible investing than just diversification.  Buying, holding, and rebalancing investments has certainly produced solid results over many investment periods, but by choosing a static allocation and never wavering from it, an investor is very beholden to the time period in which they are investing.  Consider that for the 25-year period from 1956 through 1981, an investor who was half in stocks and half in bonds, rebalancing religiously, earned an average of 6.1% per year, which was only 1.1% higher than inflation.  However, the investor who started investing in the exact same portfolio beginning right after that in…
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Jan 15

A Year for the Non-Conformists

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“Twice two times four is not life. It is the beginning of death.” - Fyodor Dostoyevsky, Notes From The Underground Cadence was founded with the philosophy that cycles, valuations, and the sentiment of crowds matter far more than mainstream financial services and media would have you believe. Not necessarily at first, or even for most of the time, but eventually with rather abrupt suddenness, they matter supremely. It’s not lost on our clients that we are still in the midst of the biggest stock bull market in history as measured by time and gain – we’ve been guarding them from…
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Dec 15

The Clean Energy Deception

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There aren’t many people out there that don’t care about the environment. There also aren’t many people out there who would willingly pay more for an energy source that didn’t offer clear advantages over less expensive ones, but a narrative can go a long way toward shaping perception and behavior despite the facts underlying it. Take the “clean energy” movement that created almost as much hype among investors as it did profit for Wall Street. The gist, as we’re all very familiar with given its proximity to the Climate Change narrative, is that traditional oil and gas energy is dirty,…
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Nov 14

Questioning Conventional Wisdom – Limitless Market Growth

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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…
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Oct 15

Middle of the Night Financial Thoughts

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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…
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Sep 23

Risk Hides in Complacency

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We humans aren’t great at evaluating risk.  Take the person who habitually texts while driving.  We all know that’s a risk, but we have a way of rationalizing behavior like that.  Texting on a country road doesn’t carry the risk of texting in front of a school, and texting while driving alone doesn’t carry the risk of texting with children in the car, for example.  Our brains find ways to give us permission, and I’m sure the person texting with kids in the car WHILE driving through a school zone also finds a way to give themselves the permission to…
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Sep 12

Employment and Stocks

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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 –…
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Aug 21

Unstable Bitcoin Narrative

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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…
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Aug 14

Return of Capital

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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…
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