201505.25
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The Pretense Of Knowledge

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will…

201505.25
1
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Japanese Banks

Japanese bank stocks surged over 50% from December 2012 through the first half of 2013. Since, they have been in what one might call a consolidation phase. The initial surge coincided with expectations of the effects of Abenomics. The consolidation was a 1.5 – 2 year wait and see period, somewhat of a battle between believers…

201505.17
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10 Year Expected Returns and the Taylor Rule

After 3 decades of disinflation and 15 years of very aggressive monetary policy, asset prices are high. Returns are expected to be below average for the next decade. Given the hyper-aggressive monetary policy of the last 6 years, the historically low yields on bonds means multi-asset class portfolios will be hampered by low returns on…

201505.10
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Allocating to Global Growth is a Value Play

America is a powerful economy. Its health and appetite can determine the direction of the global economy. Macro factors show building momentum in the global economy. At the same time, the investment marketplace has a near term obsession with equities coined “safe plays” or “defensive stocks.” This obsession, to me, appears frothy; safe plays have become perceived…

201505.10
2
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Greatly Exaggerated

The reports of my death are greatly exaggerated. Mark Twain Over the last few years I’ve read a plethora of articles about this supposedly hated bull market in stocks. It is said that this is the most hated bull market in history and while I’d argue with that a bit, it isn’t far off the…

201505.03
3
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A Considerable Transitory Period

Transitory: 1. tending to pass away; not persistent 2. of brief duration Transitory is the term the FOMC used to describe the factors that held back the US economy in the 1st quarter. With the GDP report coming earlier in the day the FOMC had no choice but to acknowledge the slowdown but as many seem…

201505.03
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Monitoring Markets

A look at relative value for the 2 major asset classes. Historic valuation measures indicate more risk currently in bonds than stocks. Momentum favors equities over bonds. The macro economic backdrop is likely to be more favorable for equities than bonds. The macro economic backdrop suggests that one should look for yield by taking on more credit…

201504.26
2
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Down The Rabbit Hole

When logic and proportion have fallen sloppy dead And the white knight is talking backwards And the red queen’s off with her head… Grace Slick, White Rabbit ‘Twas brilling, and the slithy toves Did gyre and gimble in the wabe: All mimsy were the borogoves, And the mome raths ougrabe Lewis Carrol, Jabberwocky For those…

201504.19
2
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A Canary In The Coal Mine?

What does GE know that we don’t? That was my initial reaction to the news this week that GE is exiting the finance business that has provided it a seemingly endless stream of profits over the last three decades. Well, except for that little interruption that has come to be known as the Great Recession….