• Current Events

    Chinese Trade Talks

    There is growing concern that the US will find its way into a trade war with China. The US government announced tariffs on steel, aluminum, and possibly on other products as well. China has announced their “Made in China 2025” a plan by which Chinese leaders intend China to be the leading nation in robotics, biotechnology, etc. China was an agricultural society less than 50 years ago. Today they are the second-largest economy, behind only the United States. They are on a path that could make them the largest economy in the world, and surpassing the United States. How did that happen in such a short time? If you have…

  • Current Events,  Mile High View

    Bond Vigilantes

    The Economist recently compared watching the market in 2018 to watching a horror movie. There is the character that walks out into the dark, the floor boards creaking and the swell of haunting music to build the tension. Is it Freddy Krueger or only the wind? In response to the drama of the market, the so-called “bond vigilantes” have reappeared. I have not heard mention of the bond vigilantes in over a decade, maybe two. My family sometimes questions my taste in novels, specifically when I started The History of Interest Rates by Sidney Homer. It goes back to 1988-89, when I was first in the business; I moved out…

  • Current Events

    Tulips, Bubbles, and Bitcoin

    It is tulip season in Mt. Vernon, and for me that brings to mind a book. One of the classic investment books is Extraordinary Popular Delusions and Other Madness of the Crowd by Charles Mackay. Despite being first published in 1841, it is one of those books that I think has not only withstood the test of time, but is also, and unfortunately, relevant to modern investing every few years. The book begins in the 1600s and works its way through famous bubbles, such as the South Sea Bubble from 1719, John Law’s French Mississippi Scheme, and, perhaps most famously, Tulip Mania. Tulip Mania swept through Europe in the 1630s.…

  • Current Events,  Mile High View

    2017 In Review

    One of the things that I believe sets me apart from other talking heads commenting on the state of the markets is that I hold myself accountable for my predictions. 2017 is over now, and that means that most people are talking about 2018, and prepared to let bygones be bygones – whether they were right or wrong. I think it is important to take stock of what I said back in 2016 about the year just passed, and critique myself. I said at the end of 2016 that I believed 2017 would see the stock market continue to grow, not from any short-term political ramifications, but because we are…

  • Return on Investment

    When To Sell a Stock

    I got my MBA at Carnegie Mellon University back when it was Carnegie Institute of Technology, and the MBA was called a Master of Science in Industrial Administration. Carnegie is located in Pittsburgh Pennsylvania, where the Monongahela and Allegheny Rivers meet to former the Ohio River. In those days, one of the most beautiful sites, in my opinion, was to take the tram up Mt. Washington and look down into the city. Mt Washington is not really a mountain, it’s only a hill, but the vista was so impressive. The smokestacks of Jones and Laughlin Steel spewed tongues of dancing fire streams in hundreds, if not thousands, of colors. It…

  • Return on Investment

    Potemkin Village

    In my opinion Modern Portfolio Theory is a Potemkin Village. What does that mean? In the 1700s Catherine the Great, ruler of Russia, invited a number of foreign dignitaries to visit Russia. But in viewing the countryside she saw the villages of Russia were unimpressive to say the least. So, she commissioned Field Marshall Griorgi Potemkin to build all new villages to give the impression that the citizens of Russia lived a comparatively good life. It was completely illusionary. A “Potemkin Village” is something made to look elaborate and impressive but has no substance at all. Modern Portfolio Theory sounds like it is new and rational and “modern.” In fact the concept…

  • Current Events

    Oil and Commodities Drop

    2016 has been off to a rough start – in fact it is the worst start in history and for many, 2016 is stirring up memories of 2008. I believe that this fear is unfounded and stemming from misinterpreting the oil and commodities drop. They are symptoms, I believe, of the credit bubble bursting and the overproduction which stemmed from futures contracts in the 1990s and 2000s. Despite this, I still think that we are in a super cycle, and as with previous super cycles, there will be some winners and some losers. We wouldn’t be in a super cycle if everything was going smoothly. Where oil and other commodities…

  • Current Events

    Mute the T.V.

    As of January 14, the stock market had its worst start in history. Are we headed to another 2008? NO! In fact, I believe we will probably see a decent to very good market in 2016. But is that what you will hear during the presidential and congressional campaigns? No, you will be hearing doom and gloom. But how accurate is all the doom and gloom? Last December, Richard Bernstein published an article in Financial Advisor Magazine titled “Mute the TV,” in which he said “…2016 might be a difficult year for investors…not necessarily for investing.”[1] Again, it could be a hard year for investors, but not for investing. Why…

  • Return on Investment

    Let’s Play A Game

    Imagine you are invited to play a game. You are given $20,000, and can bet $1,000, you win based on the flip of a coin. Heads, you would win $1,500; tails, you lose your $1,000 bet. Imagine you agree to the game and bet $1,000. The coin comes up tails. You bet again and the coin comes up tails and you lose another $1,000. Would you continue to play? If you do and the next flip comes up tails, would you continue? You have lost three straight times. Would you stop and walk away with your $17,000? What if you tried one more time and again lost. Would you call…