Inflation Archives - Cadence Wealth Management

Jul 17

Low Yields = High Risk

By Casey Clarke Blog

For 95 years since 1902, the cyclically adjusted earnings yield for the S&P 500 has averaged 7.9% and the dividend yield, 4.6%. Since 1997, they have averaged 3.7% and 1.8% respectively. Currently, they are 2.8% and 1.3%. Combined, investors could expect to earn 4.1% from corporate earnings growth and dividends, which is a full 8.4% below the long term, almost 100-year average. It is also below the “risk-free yield” of the 10-year U.S. treasury at 4.25%. Below, we can see just how anomalous this return profile for the market is and has been. Historically, we’ve seen other low points just…

Apr 15

Market Fireworks – What Now?

By Casey Clarke Blog

As of the moment I’m rapping on these keys, the market as measured by the S&P 500 is down roughly -5% so far this year, with its peak to trough drop of around -12% happening from mid-February through mid-March. That’s been enough to get some people anxious that declining portfolio balances could get worse, while others, with plenty of support from financial media, are viewing this decline as an opportunity to buy more of their favorite stocks cheaper. Only time will tell which group is correct with respect to this particular decline and over a short timeframe, but as we…

Mar 17

Remembering Japan – No Sirens

By Casey Clarke Blog

In the decade leading up to the 1989 peak in the Japanese stock market, there was little to complain about. Almost everybody with shares of stock or real estate was watching their net worth rise, month after month, nearly uninterrupted. It became so easy to make money in the stock market that work ethic declined, leisure time increased, and many corporations found it easier and more profitable to augment their core business activities with stock market activity. According to Edward Chancellor in “Devil Take the Hindmost”, “Japanese politicians were not solely guided by public duty in their desire to support…

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…

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 16

A Bendy Road

By Casey Clarke Blog

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…

Jan 11

2022 Asset Class Returns: Year in Review

By Steve DeBoth Blog

Toward the end of last year’s “Year in Review” piece I wrote: “You may be in the camp of investors that sees a year like this year as an opportunity lost as opposed to a sign that we have entered dangerous stock market times.” 2021 was one of those years where the US stock market outperformed most other investment categories by enough that it may have been easy for investors to assume there was less risk in the market than there really was at the end of last year. Unfortunately, to many investors’ surprise, 2022 came along and proved that,…

Jan 12

Pick Your Poison

By Casey Clarke Blog

We typically operate day to day within the guardrails of precedent, making decisions and evaluating outcomes based on what we’ve observed and those things that have played out in the past. Certain rhythms repeat for certain reasons which is why more times than not, this modus operandi not only makes sense, but is wise. There’s a reason we should respect and learn from our elders. There’s also a reason why as we age, we tend to become a little jaded about certain things – we often see the same mistakes being made over and over again. The boom/bust cycle is…

Aug 11

Change Happens

By Cadence WM Blog

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…

May 19

How Serious is This Inflation Thing?

By Cadence WM Blog

Although not everyone fully understands inflation and its pernicious impact on standards of living over time, all of us have experienced it and know what it feels like in the moment. It’s annoying to pay more for something than we did just a little while ago. If it’s the type of price increase that’s part of a temporary ebb and flow based on normal supply and demand of the product in question, no problem – that’s life. When on the other hand, it’s a true lasting price increase on not just one or two of the things that we consume,…

Inflation

Low Yields = High Risk

Market Fireworks – What Now?

Remembering Japan – No Sirens

Incentives, Conflicts, and Capture

Investor or Speculator – Part II

A Bendy Road

2022 Asset Class Returns: Year in Review

Pick Your Poison

Change Happens

How Serious is This Inflation Thing?

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