skip to Main Content

Are We There Yet?

Lao Tzu wrote, “A journey of a thousand miles begins with a single step.” In recent months, the financial markets have taken the first step toward normalization. Unfortunately, having taken one step, the most prominent question we hear is “Are we there yet?!?"
Read more

Making Friends with Bears Through Math

Despite the year-to-date decline in the S&P 500, the most reliable valuation measures we monitor remain at levels never observed in market history prior to August 2020. Meanwhile, market internals remain ragged and divergent, suggesting risk-aversion among investors. That combination creates what I've often described as a "trap door" situation. You make friends with bears by understanding them, and by avoiding behavior that will get you eaten.
Read more

Repricing a Market Priced for Zero

The most challenging financial event for investors in the coming decade will be the repricing of securities to valuations that imply adequate long-term returns, following more than a decade of reckless and intentional Fed-induced yield-seeking speculation.
Read more

Quit While You’re Ahead

Valuations do not provide an environment for “intelligent investment” here, nor do market internals provide an environment for “intelligent speculation.” Aside from very minor tactical shifts, the main opportunity that investors have in the current environment is the opportunity for baseless gambling.
Read more

Top Dollar For Top Dollar

Record stock prices here are the product of a) record valuation multiples that have been inflated by a decade of zero interest rate policy, times b) record earnings that embed distorted profit margins inflated by trillions of dollars of temporary deficit spending. Investors are paying top dollar for top dollar.
Read more

Return-Free Risk

By relentlessly depriving investors of risk-free return, the Federal Reserve has spawned an all-asset speculative bubble that we estimate will provide investors little but return-free risk.
Read more

Motherlode

There are certain features of valuation, investor psychology, and price behavior that emerge, to one degree or another, when the fear of missing out becomes particularly extreme and the focus of speculation becomes particularly narrow. We’ve suddenly hit a motherlode of those conditions. Emphatically, this is not a forecast. It's a statement about current, observable conditions.
Read more

When Bubble Meets Trouble

Speculative psychology is the only thing standing between an hypervalued market that continues to advance and a hypervalued market that drops like a rock. Our best gauge of that psychology - the uniformity of market internals - remains divergent enough to keep market conditions in a trap-door situation.
Read more

The Wealth Is In The Denominator

The current perceptions of investors about their own "wealth" are out of line - to a historic extent - with the economic fundamentals that are available to support the claims.
Read more

Maladaptive Beliefs

There’s no question that persistently deranged and activist Federal Reserve policy has required investors to adapt. But the form of that adaptation is crucial. The thing that 'holds the stock market up' isn’t zero-interest liquidity, at least not in any mechanical way. It’s a particularly warped form of speculative psychology that rules out the possibility of loss, regardless of how extreme valuations have become.
Read more
Back To Top