Commentary

Universal Capitulation and No Margin of Safety

Based on the valuation measures we find best-correlated with actual subsequent S&P 500 total returns across a century of market cycles, the stock market presently stands at valuation extremes matched only twice in U.S. financial history.

Commentary

Speculative Euphoria and the Fear of Missing Out

If you’re losing your mind and plagued by fear of missing out, it might be that you’re best served with some passive investment exposure in your portfolio. Not because it will do well, at least not in our estimation, but so you don’t lose your mind.

Commentary

Cluster of Woe

As I observed last month, the strongest stock market returns in the coming decade, perhaps longer, are likely to emerge during advances in the S&P 500 that attempt to catch up with the cumulative return of risk-free Treasury bills.

Commentary

The Return of Buy-Low Sell-High

The strongest stock market returns in the coming decade, perhaps longer, are likely to emerge during advances in the S&P 500 that attempt to catch up with the cumulative return of risk-free Treasury bills.

Commentary

The Secret Life of Fed Pivots

It’s worth noting that despite the recent market advance, our own investment discipline, and even Treasury bills, have outpaced the S&P 500 and Nasdaq 100 during this period, with less volatility.

Commentary

Soft Selling a Hard Landing

For the better part of two years, investors have been primed with hope of a “Fed pivot” that will presumably restore easy monetary policy and supportive conditions for the financial markets.

Commentary

Seven Reminders While on Recession Watch

A recent survey asking economists about the probability of recession next quarter shows a retreat in expectations from a high of 47 percent at the end of 2022 to just 34 percent, according to the Philadelphia Federal Reserve.

Commentary

When the Bough Breaks

Value-conscious, historically-informed, full-cycle investors place a great deal of emphasis on the relationship between the price an investor pays today and the cash flows they can expect to receive in the future. The reason is simple.

Commentary

Central Bankers Wandering in the Woods

On the interest rate front, the Federal funds rate is now close to systematic benchmarks that have historically been consistent with prevailing core inflation, nominal GDP growth, and unemployment.

Commentary

Air Pockets, Free Falls, and More Cowbell

There is a particular “setup” that we’ve historically found to be associated with abrupt “air pockets” and “free falls” in the S&P 500. It combines hostile conditions in all three features most central to our investment discipline: rich valuations, unfavorable market internals, and extreme overextension.

Commentary

Grasping at the Suds of Yesterday’s Bubble

Bull markets and bear markets can’t be identified in real-time – only in hindsight. More importantly, the return/risk profile of a “bull market” or a “bear market” can change dramatically depending on whether valuations are consistent with the beginning of a market cycle or the end of one.

Commentary

Money, Banking, and Markets – Connecting the Dots

Most of us spent moments of our childhood, crayon in hand, connecting numbered dots that gradually revealed a picture that we couldn’t deduce simply by looking at the separate dots. With experience, we got better at looking at those isolated dots and mentally connecting them into a coherent “gestalt.”

Commentary

Fabricated Fairy Tales and Section 2A

Amid the overabundance of economic opinion, unexamined clichés, and unverified assertions, and nutrient-free word salad dispensed by talking heads on television, market observers, and even Federal Reserve officials, I often wonder how many of them have ever taken the time to carefully examine historical data.

Commentary

Edge of the Edge

The simplest thing that can be said about current financial market and banking conditions is this: the unwinding of this Fed-induced, yield-seeking speculative bubble is proceeding as one would expect, and it’s not over by a longshot.

Commentary

Headed For The Tail

The extreme “tail” risk ahead may be disorienting.