Insights Blog

Analysts used to say things like: “This ain’t your grandfather’s market…or [his] economy, or bond market, war, or U.S. government debt profile, etc." Well, in some ways, it’s more my grandfather’s geopolitical backdrop than at maybe any other time in my lifetime I’ll say.

If you’ve been a client for any length of time at all, and if you’ve ever listened to (or been bored by), me on my diatribe about Price to Sales as a way to avoid catastrophic results in investing, this chart is for you and partly defends the reason I pay such close attention to the Price to Sales ratios of stocks.

Over the last dozen or so years, most of the junky debt (I’ll roughly call it the single B down to the CCC- or lower (PIK (payment-in-kind bonds)), are not publicly-traded, they’re private now; and so you don’t get information on it like we used to get it from the public markets.  You have to be a dinosaur like me and be in this every day, or you have to trade in that private market and/or do your research to discover when that market’s going south.  That’s why I have been trying to sound the alarm on that stuff for a while now.

If you’ve got enough income to retire, you can retire, and you can stay retired.  If you don’t have enough income, you can’t.  It’s not only about how large your nest egg is.  That’s of course part of it, but sometimes it’s more about the certainty of your income than the potential for your growth.  And the idea that your income needs to outlive you, instead of the other way around, is alive and well today; that’s for sure.

April 2, 2024

If you’re a client, you’re SO well positioned for this pre-recessionary-recessionary phase.  I have been preparing for this since 2022.  We were close to being in a recession already, anyways, (as I’ve been saying for quite some time as you know), and I’m not trying to hyper-criticize any of these Trump administration moves so far (though I don’t mind doing so; it IS a free country after all)), but you should know:  nearly all of the moves thus far, are, in fact, recessionary. 

December 11, 2024

The momentum-chasing growth bulls and inflation-istas are not considering a slowdown in demand. They’re not considering the over-indebtedness within the economy, softness of the U.S. consumer, the fragility of the Chinese economy, and much of the rest of the world, and where we are in the economic cycle. Cycles have not been repealed. Sorry. This isn’t a ‘new era’.  

June 25, 2024

In the next downturn, you’ll be very glad that a good chunk of your assets are in bonds.  I know it doesn’t seem so at the present time.  But a recent survey showed that in May 2024 the average 60-70 year old retiree in the United States has 70% of their financial assets invested in equities and only 8% allocated to bonds.  That 70% is a record.  When things go that extreme, it’s historically best to go the other way (in statistics, what’s about to happen is called a ‘regression to the mean’).

January 12, 2024

Reflation is the act of stimulating the economy by increasing the money supply, lowering interest rates, reducing taxes, and/or providing other stimulus seeking to bring the economy (specifically price level), back up to the long-term trend, following a dip in the business cycle.

August 3, 2023

Interest rates, (like a train), DRIVE a credit-dependent economy.  Period. As I've insisted for years, there are clear, definitive, observable, interest rate cycles observed in the financial economies of the world.  Interest rate cycles are certainly influenced by both inflation (excesses), and disinflation (corrections).

March 24, 2023

Chaos and weakness cause a severe RE-EVALUATION of asset values (a good thing, but is painful during the process). Remember me saying in November 2022 that the magnitude and duration of this increase in the Fed Funds rate was historic and that they did in 9 months what last time took them 26 months?  Well...here we are. 

November 11, 2022

Analogously, with the exception of several bear market rallies in the stock market in 2022, and stocks in the traditional energy sector, it's been a quite frigid investment climate for stocks year to date.  The same has held true until, call it yesterday, for the bond markets.  This has been an absolutely brutal bond bear market year with borrowing costs / interest rates increasing 100% YoY (year over year), in many cases for borrowers.

May 9, 2022

This is the worst 4 months for global bond markets that I can remember outside of the Great Financial Crisis.  Oh, I guess, thanks, Dave-since 1792 (see above).  It's overdone.  As you probably know if you think about it:  markets go too high and they go too low.  Most bond markets around the globe were too expensive heading into 2022 and many (not all), are now way too cheap.

November 11, 2021

A type of recession that occurs when high levels of private sector debt cause individuals or companies to collectively focus on saving by paying down debt rather than spending or investing causing economic growth to slow or decline.

June 10, 2021

The number one Google search for several weeks this year has been 'what is inflation?' In my nearly 25 years in this business, I've never seen so many economists, pundits, strategists and investors trying to "call" inflation.  WOW.  The cover of Barron's last month showed the "I" word.  Smart people like Bootle, Gundlach and Boockvar are saying inflation is not going to be transitory; that it's here to stay.  "Look out!  The invisible virus is gonna get you and the visible inflation is gonna get you!"

January 25, 2021

The Credit Markets in the United States are currently functioning as well as they are due to the heavy-hand of government.  Presently, they more closely resemble credit markets in Japan and China where their economies function as 'command economies'.

November 9, 2020

The Credit Markets in the United States are currently functioning as well as they are due to the heavy-hand of government.  Presently, they more closely resemble credit markets in Japan and China where their economies function as 'command economies'.

June 12, 2020

By way of review, overall, Corporate balance sheets (some exceptions of course), BEFORE Covid-19 were not in great shape and most corporations were already saddled with a TON of debt.  As you may know, much of that debt was used to buy back shares of their stock to promote earnings per share growth.  In addition, valuations on popular growth stocks on a price to sales basis were really, really expensive.