Insights

Occasionally markets are priced at more extreme levels due to excessive optimism or pessimism. Presently, the excitement surrounding the potential benefits related to Artificial Intelligence (AI) has elevated prices paid for many assets to high levels. Alternatively, as it relates to the bond markets, the potential pessimism towards sovereign debt stability, due to high deficits […]

Inflation is rising, but your bank is paying you less. There’s a better option. The Fed has cut rates six times since September 2024, pulling CD and deposit rates down with it, even as inflation climbs. TIPS offer a compelling alternative, but not all are created equal. Learn which factors determine the right TIPS for […]

“Doubt is not a pleasant condition, but certainty is absurd” — Voltaire Covid started 5 years ago. At the time, the future was cloudy, confusing and “more uncertain” Day by day, week by week and month by month the pandemic gave way to normalcy. The world appeared more normal until Liberation Day. The process of […]

“I can calculate the motion of heavenly bodies, but not the madness of people” Isaac Newton On December 31, 2024, The Wall Street Journal reported “Stocks Cap Best Two Years in a Quarter-Century.” The story reports investors are far richer, increasingly bullish with expectations of continued interest rate reductions, strong economy and market gains.There are […]

The night before the D-Day invasion, Franklin Roosevelt asked Eleanor how she felt about not knowing what would happen next. Eleanor replied; “To be sixty and still rebel at uncertainty is ridiculous, isn’t it?” But we all do it. The future is uncertain and occasionally intimidating. And its easier to believe one can predict, anticipate […]

The standard of living depends on the ability to produce goods and services and is described by the size of Gross Domestic Product (GDP), in total, and per person. The advancement of living standards depends on the “growth” of GDP, which is the combination of population change and productivity change. And “real growth” of GDP […]

“The investor’s chief problem – and even his worst enemy – is likely to be himself” – Ben Graham Ben Graham discussed the difference between amateurs (generally speculators) and professionals (or “true investors”). In the introduction of The Intelligent Investor, Graham explains the predominant process of amateurs being “generalizations and prejudices justified by past history”. […]

“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotions under control. You need patience and discipline and an ability to take adversity without going […]

“Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.” –Charlie Munger The following is a tribute to Charlie Munger who passed 33 days short of his 100th birthday on November 28, 2023. The term “renaissance man” originates from the Renaissance era where the efforts of […]

“In the short run, the market is a voting machine but in the long run, it is a weighing machine” Ben Graham The following visual should further aid in seeing the concept described collectively by Graham and Buffett. Proper investment temperament will help protect investors from themselves by executing decisions rooted in successful investing principles. […]

“The essence of investment management is the management of risks, not the management of returns.” –Ben Graham Since 1982, the investing world has only experienced declining interest rates – due primarily to low and containedlevels of inflation. Since the Great Financial Recession of 2007-09, the world has largely only experienced quantitative easing and abundant liquidity […]

“Forecasts create the mirage that the future is knowable.”–Peter Bernstein The investing year of 2022 shocked most investors with inflationary forces as the primary root cause. Since 1982, the investing world has experienced declining interest rates – due primarily to declining inflationary forces. In addition, the developed markets have become accustomed to high levels of […]

“The essence of investment management is the management of risks……not the management of returns” –Ben Graham The current investing environment may be classified as “increasing uncertainty” given high inflation, increased geopolitical conflicts, materially higher interest rates, and potential recession among other headwinds. A successful investment operation will own various securities, assets, and businesses that are […]

Interest rates are like gravity in determining the overall stock and bond market valuations. A high interest rate increases the gravitational pull-on valuation. Conversely a low interest rate has less gravitational pull. Translation, higher interest rates equal lower prices and lower interest rates equal higher prices. Since 1982, asset prices have been increasing, due partly […]

Growth Expectations Often Overly Optimistic The analysis of historical growth rates is best illustrated by the McKinsey book “Valuation.” McKinsey categorized all companies into 1 of 5 portfolios depending on their respective growth rate in the base year. As the following exhibit shows, high growth is not sustainable and quickly decays within 5 years, but […]

Adequate Diversification = Insurance A poor outcome may occur at the individual security level even though an adequate margin of safety appeared to exist. But as the number of holdings increases, the more certain it becomes that the aggregate performance will result in positive outcomes over time. The element of diversification is the same basis […]

INFLATION RISK Inflation is too much money chasing too few things. Inflation results in the decline of purchasing power of a currency over time and measures the rate which the value of a currency is falling or being debased. The Federal Reserve has a stated target of 2.0% inflation……which means the dollar will be worth […]