Tag

Gold

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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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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May 16

Certainty

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One of the things we’re heavily deficient in these days is certainty. Whether one views current events as good, bad, or indifferent, most would agree that the ability to predict where we’ll be in six to twelve months with any confidence is more difficult than it’s been in quite some time. This is anxiety-provoking, and as homo-sapiens, we don’t like to feel anxious or scared. Fear leads to poorly calculated decisions, and bad investment decisions, especially when made repeatedly, can set one back irreparably on their financial path. As ephemeral as it might be to obtain in reality, the perception…
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Apr 16

Investor or Speculator – Part II

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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,…
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Mar 16

A Bendy Road

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The experience one expects to have in financial markets comes down largely to whether he or she believes market forces are more natural or artificial in nature. By natural, I’m referring to more free-flowing, random, and at times chaotic, whereas artificial represents controlled, planned, and efficient. An investor couldn’t be blamed for thinking the latter given the tremendous efforts monetary authorities and governments generally have made in recent years to steer favorable market outcomes. This effort to control markets, to create a straighter path, has led many to believe that positive investment results are assured and risks of meaningful losses…
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Jan 23

What Lies Ahead in 2023

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This year was a year where effective defense made the difference. To come out of it with positive returns, as nice as that would be, simply wasn’t in the cards without a healthy dose of risk and even more luck. To lose much less than others, or more importantly, what popular asset classes lost, was a huge victory. The question now of course is where does this leave us as we head into 2023? To answer this question, it might be most helpful to think about it within the context of time. In weather, it’s pretty well established that forecasting…
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Aug 11

Change Happens

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Change is a funny thing. It’s one of the only constants in life; something we can depend on. Whether we’re talking about the four seasons, aging, health, or quality of life, we can depend on change to shuffle things up on us before we have a chance to get too comfortable. The optimist would say “discomfort and stress lead to growth”, while the cynic might prefer to resist change or deny that it lies ahead. As humans, most of us are the latter. Recency bias has us believing the present can continue on at least until tomorrow, and when taken…
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