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A Long Road Ahead

A Long Road Ahead

There are decades where nothing happens; and there are weeks where decades happen — V.I. Lenin We hope you and your family are healthy and safe during this time. The past quarter in the markets has been one of those periods where days can seem like years, and weeks like decades. We entered 2020 with …

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How low can the S&P 500 go?

How low can the S&P 500 go?

The demand shock created by the Coronavirus outbreak has already created historic levels of market volatility. Today, the market plunged after the Fed announced in a call on Sunday that it would cut rates to zero and implement buying programs for US Treasuries and Mortgage Backed Securities. During such periods of market volatility, we keep …

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Market update: Risk assets in a bear market

Market update: Risk assets in a bear market

Friends, The last few weeks have been history-making for global stock markets, but today was especially notable. We’ll let a graphic for the US markets illustrate (see above). Today was the worst day for US stocks since 1987, when markets fell over 20%. But the point drops today are even more extreme. The Dow, a narrow index …

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Market update: Extreme Volatility in financial markets

Market update: Extreme Volatility in financial markets

Dear Friends, The financial markets saw a substantial sell-off in risk assets today as all major US stock market indices closed down over 7%. Current market levels are roughly 1-2% away from levels that would signal a bear market (20% down from recent highs). The decline was so steep, market circuit breakers kicked in this …

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What would a Bernie Sanders administration mean for the economy and markets?

What would a Bernie Sanders administration mean for the economy and markets?

With the Iowa, New Hampshire and Nevada largely behind us, and South Carolina tomorrow, the likelihood that Bernie Sanders will be the Democratic nominee for president has grown. 538 now places this probability at 40%. We believe it is time to meaningfully engage with this possibility and consider what it would mean for the US …

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Market update: Measures to stall Coronavirus’ spread begin to impact global economic activity

Market update: Measures to stall Coronavirus’ spread begin to impact global economic activity

This week has seen two precipitous declines in US stock markets. The volatility has been attributed to fears of the Coronavirus strain named COVID-19. This infectious disease has now spread to several countries and caused over 2700 deaths. The reports of confirmed cases have almost certainly been under-counted as numerous developing countries with weaker health systems lack the resources to …

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As Sen. Sanders and Warren’s portfolios show, divesting from fossil fuels isn’t easy

As Sen. Sanders and Warren’s portfolios show, divesting from fossil fuels isn’t easy

In the last debate between Democratic presidential candidates, moderators challenged billionaire Tom Steyer on his commitment to combating climate change. Steyer made his fortune in the hedge-fund industry by investing in fossil fuel businesses among other things. He said this was before he fully understood the challenge posed by climate change and has since divested of …

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2019 Q4 letter: 20/20 vision may not be perfect

2019 Q4 letter: 20/20 vision may not be perfect

Dear Friends, As we close the books on 2019, we wish you and your family the best for the upcoming year. 2019 was an unexpected year for investors. Despite pressures from trade wars and uncertain policy, stock markets bounced back from a rough close to 2018 and rose significantly (over 25% in the US). GDP …

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Economic Themes for the 2020s: 20/20 Vision May Not Be Perfect

Economic Themes for the 2020s: 20/20 Vision May Not Be Perfect

Since 2020 marks the beginning of a new decade, we focus on themes we expect to play out over the next ten years. Emerging Markets continue to take over the world. Population growth and younger demographics in emerging markets will continue to drive growth through the 20s, as the population in developed market economies continues …

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2019 Economic Themes: Return of the Bear – Reviewed

2019 Economic Themes: Return of the Bear – Reviewed

Bear Market Comes out of Hibernation.  […]  We contend this reversal gains steam this year as stocks globally will finish 2019 in firmly negative territory.  […] –  We were flat out wrong on this one. After being down 4.45% in 2018, total return on the S&P was an eye-watering 31.29% in calendar year 2019. The MSCI …

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Q3 letter: The market can remain irrational…

Q3 letter: The market can remain irrational…

We trust you’ve all had a pleasant summer. As we head into autumn, the question on every investor’s mind seems to be when the longest running bull market in US history will end. For several quarters, we’ve advocated caution based on our view that equity valuations continue to be unreasonably high. We have, however, always …

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Q2 letter: A sugar high

Q2 letter: A sugar high

Friends, We hope you’ve had a good start to the summer. The interest rate outlook has changed considerably since the beginning of the year. Investors entered  2019 with an expectation the Fed was likely to continue raising rates over the course of the year. However, recent comments from Fed officials have made rate hikes far …

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Q1 letter: A Song of Spring

Q1 letter: A Song of Spring

Dear Friends, Spring is in the air. Subir’s younger daughter won’t step outside without checking to see what plants and trees have flowered. It is a special joy to be reminded of the resilience of life and the cycle of the seasons. Back in the more quotidian world of markets, Q1 saw US equities rally …

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2019 Investment Themes: Bear Market Blues

2019 Investment Themes: Bear Market Blues

Dear Friends, We hope you’ve had a restful holiday season with family and a pleasant start to the New Year. The fourth quarter of 2018 saw steep declines in US stocks, with certain indices entering bear markets (20% below their highs). Amid these moves, the Federal Reserve followed through on broadly held expectations and raised …

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Review of 2018 Investment Themes

Review of 2018 Investment Themes

2018 was an uneven year for our market predictions.   We were right on six calls and wrong on four calls.  While we were right about the general market direction, a few of our sector specific calls were off the mark. Slow But Steady Rate Rise: We expect the Fed to maintain the normalization plan and …

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