Category

Blog

Jul 17

Understanding Today’s Commodity Cycle

By Blog
A colleague asked some good questions about a dollar cycle/commodities chart I shared last week (first chart below). The chart showed commodities (gold line) rising over the last five years while the dollar (black and red line) has been rising and stocks (gray line) have also been rising. This is abnormal, as historically the broad commodity cycle tends to be inversely related to stocks and dollar strength. This aberration could be explained by the enormity of passive investing, indexation, and intense actions to keep stocks afloat by the powers that be in an effort to stave off a very messy…
Read More
Jun 23

U.S. Energy Independence Is A Myth

By Blog
We’ve been hearing from multiple sources for a few years now that the United States is energy independent because we export more energy than we import.  If all energy sources were interchangeable, say you could power your car with petroleum, natural gas, or coal, then maybe we’d be independent, but they’re sadly not.  Likewise, even if they were interchangeable, those companies sucking petroleum and natural gas out of the ground, or gouging coal out of the earth, have the ability to sell to the highest bidders all over the world.  If Australia is willing to pay $5 per gallon for…
Read More
Jun 05

The Gathering Divide

By Blog
Below are the changes in share of net worth for the following socioeconomic categories between 1990 and the end of 2025: Bottom 50%: -26% 50-90%: -18% 90-99%: -4% Top 1%: +39% Top 0.1%: +67% It’s not so much the share of wealth that matters most—it’s a common debate where the optimal level should be—but rather the direction of that share over time. Those categories at the top of the economic strata that hold the bulk of financial assets tend to be held in check by recessions and market corrections...until they figure out how to commandeer government institutions to minimize them…
Read More
May 20

Chugging Along? The Charts Disagree.

By Blog
I heard a wholesaler tell someone the other day that the economy’s chugging along, all is fairly good, employment is decent, and so long as Hormuz gets opened soon, things should be back to normal in no time. I also heard him say that a Nasdaq 100 ETF that writes covered calls and generates an 11% yield is more on the conservative side.  I told this person after their conversation that if he said this to 90% of Americans, he’d get punched in the nose. Here are three charts that suggest a different story… First, full-time work. Back to negative…
Read More
May 15

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

By Blog
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…
Read More
Feb 11

What Happens When You Catch the Tiger by the Tail?

By Blog
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…
Read More
Jan 15

A Year for the Non-Conformists

By Blog
“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…
Read More
Dec 15

The Clean Energy Deception

By Blog
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,…
Read More
Nov 14

Questioning Conventional Wisdom – Limitless Market Growth

By 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…
Read More
Oct 15

Middle of the Night Financial Thoughts

By 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…
Read More