• 401ks

    We’re Getting Old

    In 1965, a Frenchman by the name of Andre-Francois Raffray thought he had made a very good deal; he had purchased an apartment from an elderly widow for about $500 a month. Up until 1975, France had no form of Social Security, and retired individuals had to rely on their savings and a process called En Viager. En Viager allowed a younger person to purchase a home in monthly increments paid until the death of the current resident. Mr. Raffray offered the 90-year-old Jeanne Louise Calment $500 each month in exchange for her apartment, which was worth about $90,000 in ’65. Unfortunately for Mr. Raffray, Ms. Calment lived to be…

  • Mile High View

    Climate Change and Energy Consumption

    Watching the reports on Irma and Harvey, rubbing my eyes from the haze that covered much of Seattle, and having the wettest winter in Seattle’s recorded history to this summer’s longest period without rain all feels like climate change to me. Yet we seem to be plunging forward into a future which will require more natural resources and more energy than ever. I am an optimist, and am confident that we will solve the problem – we will find a way to produce more energy with less damage to the climate. There will be investment opportunities on both sides (energy needs and climate change), and that is what I wanted…

  • Current Events

    Impeachment

    What happens to the markets if President Trump is impeached? It isn’t my intention to give a prediction on if he will or will not be impeached. I am writing this to analyze what would happen if he is impeached, so that you will be prepared in the event. My philosophy is to prepare for the worst and hope for the best. You can decide for yourself what the best- and worse-case scenarios are. That is not the purpose of this eletter; this is about the markets, not the merits (or lack-thereof) of impeachment. Prior to his election as Vice President, Andrew Johnson had been a Senator from Tennessee, and…

  • Current Events

    New Year, New Everything

    The New Year is traditionally a time for self-reflection and New Year resolutions: You’re going go on more walks, lose some weight, cook more, and really buckle down on work – at least until March. It’s not all that different in the financial world. For the months on either side of January 1st, everyone from Barron’s to CNBC is releasing lists of stocks to own or avoid in the New Year. There’s a push to analyze your portfolio and make your predictions for the next twelve months. Honestly, I normally don’t put too much emphasis on the New Year – you shouldn’t be putting together a portfolio once a year…

  • Current Events

    Trump Trade War

    These last few weeks have been a roller coaster, no matter who you voted for. You may be surprised to know that the DOW doesn’t reflect this. On Monday and Tuesday November 7 and 8, when polls were showing Clinton was going to be elected President, the DOW was up over 400 points. On Wednesday, once we knew it would be Trump who was going to be the next President, the DOW was still up over 400 points. The lesson, in my opinion, is that the economy has significant inertia and momentum. Whether the election of Trump will be positive or negative for the economy, we will only know months…

  • Mile High View

    Inflation to Escape Depression

    Howard Marks, investor and writer, said “you can’t predict but you can prepare.” So, today I’m taking a mile-high view of the supercycle (what’s a supercycle? Read more about it in “The Third Supercycle Is Now”) and how I believe it will end, so that we can all be prepared. I believe that we will be able to speculate on how this supercycle will end by looking at previous cycles and the way they ended. By doing so, we’ll have the knowledge we need to prepare for whatever comes. Mind you – I believe that we still have a number of years left in this secular bull market, but it…

  • Current Events,  Mile High View

    The History of Crowdfunding

    In 1958, Harvard economist John Kenneth Galbraith published The Affluent Society, in which he outlined his belief that the US had reached the pinnacle of affluence – that American standards of living had risen as high as they ever would. Most families owned a car, their own 1,100 ft2 (on average) home, and even had refrigerators and telephones in those homes. This, Galbraith said, was as high as affluence in the US would rise. But we know that his assumption was wrong. Look at where we are today – smartphones and PCs and bigger houses and 3-car families, all concepts that Galbraith couldn’t predict. Society did not stagnate in the…

  • Mile High View,  Return on Investment

    The Myth of Excellence – Part Two

    I’ve been talking about how companies are seeing their lifespans shrinking – particularly how short the lifecycles of companies in the S&P500 have become. If you’re an investor that favors the buy-and-hold strategy, this is an intimidating prospect. The days of finding that perfect company, buying it, and tucking it away in the proverbial sock drawer are coming to an end. The average lifespan of a company in the S&P500, a study by Yale Professor Richard Foster found, was only 18 years!1 With such a daunting new world for investors to face, I’ve been studying good business practice, and found myself agreeing with some of the points made by Fred…

  • Mile High View,  Return on Investment

    The Myth of Excellence – Part One

    Buy and Hold was (and sometimes still is) a strategy to find great companies: purchase their stock and put it away to hold for decades. I still believe in buy and hold, but the timeline for the holding period has significantly shortened. I recently read a book by Fred Crawford and Ryan Mathews called The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything, and it got me thinking. In the 2010s, the lifespan of a dominating company is shrinking at a rate that CEOs find alarming. Today, the average lifespan of a company in the S&P 500 is only 18 years1. That is an…

  • Current Events

    Brexit

    The news that overhangs the markets is Brexit – the UK voted to leave the European Union. While I believe that this was a very short-sighted decision, I also believe that the Brexit decision has a historical impetus going back several centuries along with more recent history. During the late 1600s and early 1700s, France and England were in three major and several minor wars. Both England and France financed their wars with borrowings. Initially, they borrowed at 5%, but found it quickly grew to 10%, causing a Great Recession in both countries. France tackled the recession with stimulus and England with austerity. Here we see the first big rift…