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Blog

Jun 23

U.S. Energy Independence Is A Myth

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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…
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Jun 05

The Gathering Divide

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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…
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May 20

Chugging Along? The Charts Disagree.

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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…
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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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