2022 Q3 Commentary: We're Not in Kansas Anymore

2022 Q3 Commentary: We're Not in Kansas Anymore

In 1964 Henry Littlefield wrote an article explaining the political and economic allegory in the book, The Wonderful Wizard of Oz. The book, written by Lyman Frank Baum and published in 1900 describes a number of metaphors explaining the economic and political realities facing the country in the 1890s. Following the Mid 1800s “Gilded Age” and subsequent depression era, the wealth gap had become untenable and a number of politicians thought that an inflationary expansion of the monetary policy could be the answer to help the average American. Unfortunately, just like today, economic upheaval ensued. The tornado swept up Dorothy and displaced them into the land of OZ and she exclaimed, “We’re not in Kansas anymore.” 

2022 Q2 Commentary: Inflation, the Fed, and Investment Implications

2022 Q2 Commentary: Inflation, the Fed, and Investment Implications

We have written in the past that all eyes are on the US Federal Reserve - and they are in quite the pickle. The Fed funds rate, or the rate at which the Fed regulates the overnight lending rate for the US banking system, is used to set the bar for the valuation of all assets around the globe. The Feds most important mandate is to hold inflation steady at 2% and there by facilitate the orderly functioning of the US (and global) economy. With this over simplified measure, the Fed has failed miserably having held interest rates too low for far too long…

2022 Q1 Commentary - The Rollercoaster: Volatility, Inflation and Opportunity

2022 Q1 Commentary - The Rollercoaster: Volatility, Inflation and Opportunity

Volatility has returned. Nick has lots of thoughts to share in his note below, but this is the highlights from my vantage point:

  1. Inflation is here and we were uncannily positioned to reap the rewards.

  2. Interest rates have soared to the detriment of those that need money to sustain ridiculously high valuations and growth.

  3. We love volatility and times like this! We continue to outperform the market so far and remind ourselves that this is when we sew the seeds for future returns.

Note Against the Backdrop of Ukraine

Note Against the Backdrop of Ukraine

Let me first begin by offering that the humanity of the current developments in Ukraine are not lost on us. While we have been deeply focused on portfolios and the risks and opportunities that we face due to the current conflict, we are saddened for the people of Ukraine and that we find ourselves in this situation. As a global community, I wish we could learn from our past mistakes. My youngest son asked me this morning "how does killing each other solve problems?" To some questions, I do not know the answers.

2021 Q4 Commentary - Groundhog Day: Have We Been Here Before? A Review & Outlook

2021 Q4 Commentary - Groundhog Day: Have We Been Here Before? A Review & Outlook

It has been quite the past 12 months on all fronts. On the personal front, this time last year my family and I were finishing up our home remodel, living in a tiny rental, and helping our kids through online, remote learning. The pandemic had slowed the economy but was starting to come back. Nick and I would Zoom each other discussing the insanely high valuations on technology companies while betting the farm that inflation would impact more than just lumber and construction costs. As we begin 2022…

2021 Q2 Commentary: What A Difference A Year Makes

2021 Q2 Commentary: What A Difference A Year Makes

I’m not sure anyone was prepared for the wild ride that was 2020, let alone the rosy market that we have experienced in the first half of 2021. While technology investors aren’t too happy with their recent losses, we are pleased with our results. Emerging markets, international value and commodities related stocks have done well, but real economic growth (after inflation) is far from certain, as is real returns from bonds. Inflation of course has reared its head, but how stubborn will commodity and labor prices be? And will it be enough to spur longer term inflation? Our non-conventional portfolios have paid off handsomely over the last 12 months. We will likely continue to do well in this Federal Reserve, stimulus driven wonderland we are experiencing.

2021 Q1 Commentary

2021 Q1 Commentary

This quarter has been a wild ride in markets. By just looking at the major indexes (S&P 500 for example) it appears to have been a fairly ordinary, run-of-the-mill quarter. When you look at the sectors and individual names you get a much more turbulent picture, however. This turbulence is important to be aware of and is giving us clues of potential market weakness. Over-valued technology names, excessive leverage in the system and a significant change in inflation expectations foreshadow volatility and necessitate a cautious stance.

2020 Q4 Commentary

2020 Q4 Commentary

This time last year, I was enjoying a few bluebird days at Bandon Dunes Golf Resort with some dear friends. Little did I realize what would soon ensue. The past 12 months have brought us a global pandemic, wildfires throughout the west, mass unemployment, an upended business environment, huge government financial intervention, social unrest, and a quickly changing landscape on nearly all fronts from healthcare to education to shopping.

2020 Q4 Mid-Quarter Update

2020 Q4 Mid-Quarter Update

With the election behind us, many are wondering what’s next in a year that has proven to be a very volatile market. As such, I thought it would be helpful to review what we own and some recent performance. In our last letter I mentioned that we were in a stock market bubble. Why weren’t we reducing our exposure to stocks then? Recall I described a Jekyll and Hyde type scenario where large tech-oriented companies were approaching record over valuation, while other industries and broad asset classes were very reasonably valued.

2020 Q3 Commentary

2020 Q3 Commentary

Election day is finally here. And regardless of outcome, today feels like one of the final chapters in what has proven to be one of the crazier years in modern history. To say we are living through strange times is a gross understatement. Wildfires throughout the west. Global pandemic. Mass unemployment and an upended business environment. Huge government financial intervention. Social unrest. Quickly changing landscape on nearly all fronts from healthcare to education to shopping. 2020 has at times been exhausting, polarizing and can feel like we have lost control.

2019 Year-End Review

2019 Year-End Review

Investing is very similar to golf: both are ultimately a test of patience. The greats practice their craft religiously. And the best are defined not by how good their best shots are, but by how good their bad shots were. The game is ultimately played over 18 holes and rewards consistency and not heroics. Here we see Jason’s oldest son, Christopher, teeing off…and learning that a round of golf is more than just one shot.

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