A number of years ago, a submarine being tested was submerged for several hours.  Upon returning to the harbor, the captain was asked, “How did that terrible storm last night affect you?”  Surprised, the captain exclaimed, “Storm?  We didn’t even know there was one!”  The submarine was so far beneath the surface that it reached what sailors refer to as “the cushion of the sea” – a depth in the ocean where the waters below are never stirred despite commotion on the surface.  While not possible to duplicate with investments, we try to “slowdown” the oft-fast paced world of “do-anything, go-everywhere, get-it-done” that creates undue stress in life.  Can we deliver financial peace of mind allowing one to remain calm within “the cushion of the sea?”  The proven way is through a disciplined & repeatable process – “buckets of time” and LIVING LIFE financial planning.  We offer several ideas to highlight important themes for investors to consider approaching the mid-point of 2024 – providing comfort in “the cushion of the sea.”Continue reading→

What child doesn’t know the story of “Goldilocks and the Three Bears”? In the classic fairytale, Goldilocks explores the home of three Bears who are out for a walk. In the story, Goldilocks created some problems for the Bear family; breaking a chair, sampling and eating all of another bears’ breakfast. She is ultimately found asleep in one of the bear’s beds but manages to quickly escape out the window and avoid disciplinary consequences for her trespass. Much like enjoying porridge of a perfect temperature, investors experienced attractive advance in their investments during Q1 of 2024 due to an economic landscape that seemed “just right”: lower inflation and a resilient economy. It was believed these favorable dynamics would permit the Federal Reserve to not only stop raising interest rates but cut them multiple times in 2024, bringing relief to those with elevated debt before any painful “discipline” was experienced.Continue reading→

How long can you hold your breath? Can you hold it longer under water, or does the anxiousness of being submerged lessen your ability? Taking this analogy into the economic world of interest rates…when interest rates are at levels above inflation, defined as “positive real interest rates,” it’s akin to holding your breath underwater. Building further on this idea, are Artificial Intelligence (AI) stocks like an oxygen tank providing the financial markets the ability to keep swimming? How long can this condition last; how long will the oxygen tank allow us to remain underwater?

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In 1970, baseball great Ted Williams was quoted saying “a good hitter can hit a pitch that is over the plate three times better than a great hitter with a questionable ball in a tough spot.”  And second, “Obviously you don’t just ‘guess’ curve or ‘guess’ fastball – you work with a frame of reference, you learn what you might expect in certain instances, and you go from there.”  Perhaps it’s the coaching of my two sons’ baseball teams, but isn’t it interesting the parallels between sports and investing?  Successful investors strive to identify “fat pitches” to hit instead of chasing bad ones.  If playing basketball, it’s taking the “lay up” instead of shooting for 3-points.  Why take increased risks by hitting pitches out of the strike zone, or shooting for 3-points?  Why not seek the “fat pitch” or “lay-up” areas of the market that appear ripe for accelerating performance?  After many years of repeated leadership, the most expensive areas of the market (mega-cap tech stocks) seem overdue for a break.  They are priced to perfection, and thereby risky.  Should you swing at the risky-to-hit pitch regardless of the count or game situation?

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Shipping and logistics firms often cite that it is the last mile of delivery which is the most expensive and complex in coordinating.  And seasoned runners report that it is the last mile of a race that often seems most difficult.  Some may say the middle mile is challenging – too far to turn back and yet a long way to go.  Nevertheless, it is that final mile which requires every drop of will power and can seem significantly greater in distance compared to earlier miles. As one who does not run long distances regularly, I participated in a Thanksgiving Day “Turkey Trot” with my family and neighbors, perhaps to justify eating too much and watching football later that day.  It seemed do-able and fun when signing up a month before.  And as we began, it seemed easy at first to keep pace with my 11-year-old son; but fatigue seemed to set in early.  I’m certain there are other examples where the challenge seems to grow toward the finish.  Might the same prove true with respect to lowering inflation without causing significant economic pain?Continue reading→

Bruce Wayne and Peter Parker were seemingly ordinary citizens that took it upon themselves to correct wrongs they observed.  To most, they were viewed as heroes but others felt they were disruptive and no better than the criminals they were squaring off against.  In the last couple months, there is talk of bond vigilantes in the financial markets.  Who are they – blamed for exacting pain on both stocks and bonds?  Are they villains or heroes?  The term “bond vigilantes” was coined by analyst Ed Yardeni in 1983 to describe the role bond investors played in disciplining governments by issuing bonds to finance spending, that looked irresponsible.  At the time Yardeni wrote, “if the fiscal and monetary authorities won’t regulate the economy, the bond investors will.”  With both stocks and bonds suffering a 3^rd consecutive month of pressure and significantly erasing what were nice YTD gains to end July, let’s pose the question: are bond vigilantes a hero or villain?

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