Tag

Natural Resources

Aug 17

The Big Guys Want Your Shares

By Blog
I don’t feel our clients hire us to repeat industry talking points or to project perpetual sunshine, because since forming Cadence, we haven’t. Don’t get me wrong, we are fun-loving, positive people at the office, but we have no interest in ignoring important details that could impact our clients’ lives. Being too myopic in view or playing ostrich in the sand just to keep comfortable helps no one. I do think our clients hire us to help them evaluate the financial world, investment landscape, and achieve and maintain financial freedom – regardless of how unique or seemingly unorthodox that process…
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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…
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Jul 17

Low Yields = High Risk

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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…
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