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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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The signal among the noise

The signal among the noise

Friends, As we approach the end of an eventful 2018, there continues to be a steady torrent of major news stories dropping daily. From CEOs tweeting about taking their companies private, to escalating global trade wars, to bitter battles on Capitol Hill, the financial markets have had a lot to digest. Though the news can …

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Keeping an eye on what matters for the economy, Trade.

Keeping an eye on what matters for the economy, Trade.

Dear Friends, Over the past year and a half, trying to absorb news has felt a bit like drinking water from a fire hose. Like many of you, we have steadily become more concerned and simultaneously more accustomed to the chaos being created by the current US administration. While the actions of our government have deviated from the …

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2018 Q1 letter: Why the roller-coaster market is back.

2018 Q1 letter: Why the roller-coaster market is back.

As we noted in our 2017 year-end review, we expect 2018 to be a tough year for the domestic stock market. Rising interest rates and valuation concerns are going to be the major story for investors this year. Stock market valuations remain elevated, with the S&P 500 currently priced at 24 times last year’s earnings. …

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Income inequality is rising in America, and corporate boards are to blame.

Income inequality is rising in America, and corporate boards are to blame.

That’s what I read into the comprehensive analysis of individual income tax returns by Bakija, Cole and Heim. The Washington Post has coverage of their work. The work is a damning indictment of the manner in which corporate boards have abdicated their responsibility towards shareholders to rein in excess corporate compensation. The compensation process is run …

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What should investors make of the big drops in the stock market.

What should investors make of the big drops in the stock market.

Dear Friends, We rarely deliver a mid-quarter email, but the last two days of large drops in the equities markets and recent conversations with clients have prompted us to provide this update. On Friday, the Dow Jones Industrial Average dropped 666 points (2.6%), which was followed by a 1,175 point drop (4.6%) today. The S&P500 …

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Review of 2017 Themes: The Doldrums

Review of 2017 Themes: The Doldrums

2017 was an uneven year for our market predictions. We were right on five calls, half right on one call and wrong on four calls. Continued bullishness and investor support for the Trump administration (despite abysmal poll numbers) torpedoed three of our calls. ? Fed stays the course: We expect the Federal Reserve will continue …

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Powering down the Fed’s bond buying engine.

Powering down the Fed’s bond buying engine.

We trust you’ve had a restful and enjoyable summer. This was a difficult hurricane season for many of our fellow Americans, especially those in Puerto Rico and across the South. A number of category 4 and 5 hurricanes made landfall in the US, causing enormous damage in Puerto Rico, Houston, Florida and the Virgin Islands. …

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2017 Q2 letter: A threat to human civilization

2017 Q2 letter: A threat to human civilization

Dear Friends, The 2nd quarter saw the Fed continue its strategy of withdrawing stimulus from the US economy. Since December 2016, the Fed has raised rates three times, bringing the target rate up to 1.25%. Their most recent statements suggest the target rate will continue to rise if unemployment and inflation stay relatively stable. There …

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2017 Q1 letter: Renewable energy in the Trump era

2017 Q1 letter: Renewable energy in the Trump era

Dear Friends, The first quarter of 2017 was full of eventful news for markets. We saw a Fed rate hike, record low unemployment rates, all time highs for US equity markets and a new administration sworn in, with Republicans now in full control of Congress. In our view, this likely marks an inflection point for …

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