A Classic Bank Run
A Classic Bank Run By now you’ve likely seen the headlines or done some deeper digging into the recent collapse of Silicon Valley Bank (SVB). As of Sunday, March 12th the Federal Reserve (Fed), in coordination with the US Treasury and Federal Depository Insurance Corporation (FDIC), has implemented a new program to provide liquidity to…
Is the Bear Market Over?
Is the Bear Market Over? The better question might be – did the bull market ever end? When you pull back and look at long-term averages for stock market indices like the S&P 500, the pullback in 2022 looks fairly benign. The 200-week simple moving average (SMA) is still pointing up and to the right,…
Why We Own Stocks
Why We Own Stocks “Because profits go up 8% a year, and stocks will follow. That’s all there is to it.” -Peter Lynch The latest tug of war in the financial punditry is between the “recession camp” and the “soft-landing camp”. In the recession camp we have consumers and corporations lowering their plans to…
Not-So-Boring Bonds
Not-So-Boring Bonds At the top of 2022, we wrote that stock market multiples were precariously perched after soaring well above historical averages. Since then, multiples have pulled back to more benign averages: Source: J.P. Morgan Asset Management, Guide to the Markets, 12/15/2022 We had also noted that after a relatively calm year in the S&P…
Would You Buy All of the Bitcoin in the World for $25?
The recent debacle at FTX and the broader selloff in cryptocurrencies over the past year have us thinking a lot about our investment discipline and why we believe in owning productive assets. What makes for a good investment strategy? In our view, the simple answer is to buy productive assets. No doubt there are a…
Discounted Cash Woes
Discounted Cash Woes It’s earnings season on Wall Street, an opportunity for investors to peer into the latest financial results of publicly traded companies. When Amazon reported earnings on October 27th, the stock dropped about 20% the following day. Joe Weisenthal at Bloomberg quipped that after looking at their numbers, “back-of-the-envelope math would suggest that…
Quarterly Client Letter: Q3 2022
We have to get supply and demand back into alignment and the way we do that is by slowing the economy. Federal Reserve Chair Jerome Powell 09/21/22 Press Conference The Stock Market and Speculation Deflation The stock market closed the 3rd quarter at the low for the year. As measured by the S&P 500 (with…
CHIPS+ in Semiconductor Supply Chains
In light of the passage of the CHIPS+ act and recent news about tensions between China and Taiwan, I’d like to shed some light on microchip manufacturing trends in the US and around the world. The strength of the semiconductor supply chain is a national security issue akin to ensuring a strong US energy supply.…
Economic Tug of War
Economic Tug of War On Wednesday August 10th, the stock market rallied on news that inflation, as measured by the Consumer Price Index (CPI), may be starting to cool down. The YoY increase in CPI for July of 8.5% was down from the 9.1% print for June, a welcome change in direction and a lower…
Stock Review: Booking Holdings
Stock Review: Booking Holdings Broad stock market indices have been under pressure through the first half of 2022. As the indices slide (see the chart below), we often look to our individual stock holdings for clarity and confidence in our long-term allocations to risk assets. Directly owning businesses with strong balance sheets and healthy free…