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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…

Nov 18

Ask Cadence: With all of the large forces out there now that affect us yet are out of our control, what can we do to stay grounded and positive?

By Steve DeBoth Blog

When you hold as many meetings each year as we advisors do, you can gain a perspective at times on the general mood out there. After years of COVID protocols, inflation, and a seemingly ever worsening political climate, to name a few, it is understandable if you are one of those feeling a general sense of malaise right now. We’re hearing about it on a very regular basis these days. Though it may be difficult or impossible to take action that will affect the large forces that feel like they are moving against you, taking action on things you actually…

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,…

Mar 19

Investor or Speculator – Which Are You?

By Casey Clarke Blog

Speculative manias are incredibly difficult to navigate without injury. For every millionaire produced by the technology bubble of the late 1990’s, there are countless stories of people losing their life savings or worse. Fast-moving markets that are well beyond any reasonable assessment of fair value can reverse course without warning, reason, or sympathy for the investors who don’t have the good fortune to exit the game before the music stops. This is the problem with speculation: because, like moths to a flame, we’re attracted to those assets that are rapidly going up in price and garnering enthusiastic praise, there is…

Feb 13

Are the Magnificent Seven Stocks a Blessing or a Curse?

By Steve DeBoth Blog

A feature of late-stage bull markets is the dominance of large cap companies. Coming out of recessions, small companies are seen to be more nimble, able to take faster advantage of the conditions present after the excesses of the economy have been painfully cleared. Before too long mid-sized companies start to come into their own, and then finally large companies start to swing around, like oil tankers making a big turn. The advantage being nimble has eventually gives way in a maturing economy to sheer scale – big companies tend to dominate later stages of the economic cycle, with the…

Have A Question?

Incentives, Conflicts, and Capture

Ask Cadence: With all of the large forces out there now that affect us yet are out of our control, what can we do to stay grounded and positive?

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

Investor or Speculator – Which Are You?

Are the Magnificent Seven Stocks a Blessing or a Curse?

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