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Not as Interesting as It Sounds

Mark Twain once wrote about a growing number of do it yourself writers, offering that he could have learned to write without a teacher, but it would’ve been risky given his self proclaimed natural clumsiness. In my opinion, analyzing and investing in the global markets presents a similar dilemma for today’s army of financial advisors and coders.
Investing is a tricky sport. It has all of the earmarks of a gamble, but with hints buried deep in balance sheets of the corporate targets. Enter technical analysis, in tactical models as early as 1935 (Elliott Wave*), drawing on a handful of discoveries focusing on sequential numbering found both in science and nature and toyed with by mathematicians (Fibonacci*) as early as the 12th Century. Now we come to the 21st century and much of the previous strategies founded on technical and fundamentals analysis have been poured into computers (algorithms) and instructed (through protocols) to join the game. Hence today we have customary market vol…
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Investing in Work/Life Balance

Over the years I admit to having little patience with so many of the most recent generation who believe technology will replace everything. In short order, beginning with fire, technology has always been on its way to replacing everything, but it hasn’t yet. The stable demands of simple survival that in the past 20 yrs has reached more people in the world than ever, defending against the disruptive impact of change, tech or otherwise, on daily lives may not work for those who may not see the need for a device they can share their intimate secrets with. But I’d be remiss if I didn’t mention the three disruptions of the last 10yrs that I’ve totally embraced. The first, in the realm of fashion, I’ve stopped wearing a tie, second, I no longer carry a briefcase and third is even more important in the embrace of lifestyle that has been cleverly called work/life balance. And I bring this up, because in the world of investment management, growing assets takes work, come up with an idea, rese…

Hedging Human Risk

People invest in their job, their careers, their businesses, whatever it takes to meet the costs of survival while at the same time most invest in their passions as well. These passions are familiar and include relationships, children, sports, cooking, music and a host of hobbies that reflect different outcomes to our different social moods but all exist for the same purpose, to hedge our risks. The point is our lives are the constant management of what we’ve chosen to personally organically invest in so why shouldn’t our financial based investments be managed the same way? Who says they aren’t?
The Beta Factor For those familiar with the term Beta*, it is basically a measure of how a company’s stock in the S&P 500 Index will trade against the S&P 500 Index as a whole. Simply put, beta measures the expected volatility of a given stock in comparison to its index. In the realm of the human condition we sometimes measure volatility as unruliness, and I see this in part stemming f…

Inverted, What Isn’t?

They have no illusions about the system, but plenty of illusions about the way to change our world.” ------ Ralph Waldo Emerson
Much has been written and broadcast lately regarding the recent inversion of the yield curve (3 month yield higher than the 10-year yield). In fact, the first inversion took place in December of last year prompted by Fed insistence on raising rates one last time. Each event gave fuel to the naysayers and nihilists, armed with history, and an expert or two, to bring fear to the markets, all captured beautifully by the social platforms and the algorithms…the recession was near. Sorry, I don’t agree.
The Inversion Curve Yield curve inversion has been a reliable predictor of recessions for my entire career. However, the yield curve is not the cause of recessions. And that’s where the process gets lost. Reasons for inversion are usually the results of excess Federal Reserve rate increases, increases that are exclusively limited to the interbank lending rate (Fed F…

Two Strikes You’re In

Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria" - Sir John Templeton
The markets have spent the first 3 months of 2019 nearly erasing the entire decline of the last 3 months of 2019. In my opinion not nearly as surprising as it may seem. In the month preceding the final quarter of 2019 the economy saw a number of moderating signals from areas of the economy outside of employment. And while the markets were declining in moderation, moderated to the point of seeing increases in areas such as manufacturing, too subtle for the Fed to decide not to raise rates, but not too subtle for the broad markets. The ensuing rally in prices found its starting point.
Pessimism These days pessimism needs very little incentive to rear its ugly head. In the last quarter of last year when the concerns of everything from yield curve behavior* to the challenges faced by Brexit and escalating trade tensions, the problem was not in the detail, in my opinio…

The Interesting Factor

I have to admit that every time I attempted to write to you in the past two weeks the narratives emanating from the media and via vitriolic posturing on social platforms conspired to derail my comments that were rendered obsolete before I even had a chance to comment on them. I also have a natural reluctance to write about the markets when said narrative is focused on one crisis after another especially when that crisis has casualties. But I felt the need to comment, because as the market response to external events has been de rigueur, it has been to ignore the noise going on that had no direct influence on the global economies and the markets that reflect them. But I am increasingly coming to the conclusion that for some companies, there could be genuine impact and therefore listening to the noise is getting more important all the time. This is what I’m hearing.
The Markets Overall the markets have responded well in spite of the challenges that are impacting some of the largest comp…

Two Steps Forward, One Step Back

“There is nothing more deceptive than an obvious fact” – Sherlock Holmes
Coming up with a way to better frame the current state of the markets as an update is becoming very tiresome.  With the near passionate frenzy the media exhibits in the face of declining stock prices more and more often the reasons have more to do with consumer interests than genuinely informative financial news. Today for example I listed to hours on end, not about trade issues with  China, not about economic moderation, not about changing attitude to tax policy, but nonstop conversation on the accusation of bribery from Jeff Bezos to The National Enquirer* over the threat of releasing salacious photos belonging to the Amazon founder. By the way, Amazon (AMZN) is a long term buy and in my opinion among the most strategically original, efficiently managed and gloriously disruptive companies introduced to the world through the technology revolution. So what else looks interesting?
The Economy It seems too easy to …