I thought it would be helpful to share an options trade in real time, to give you an idea how it works.  Keep in mind, most junk bonds are yielding around 4% and the 10-year Treasury sits at about 1.7%.  One stock that we like long-term is Lending Club (LC).  This is a fintech company...Read More

Happy New Year and I hope that you have a wonderful and healthy holiday season.  The year is off to an excellent start as value stocks have started to catch fire.  Bond yields have risen quite dramatically in the first few days of the year, which has caused the expensive tech stocks to sell off,...Read More

In our last newsletter written on Friday, we wrote about just how much risk market participants are having to take to target a 7.5% return, mostly due to how low yields are on bonds.  The bailout has been that equity markets have performed exceptionally well, but of course now we are starting at valuations that...Read More

I’ve been writing a lot about elevated valuations for equities and the absolutely horrid risk/reward in almost all bonds.  I’ve kept the same graphics at the top of this email for the last month as I want to emphasize the importance.  We’ve also covered inflation, which is rearing its ugly head, with the September PPI...Read More

Today the Case/Shiller housing price data came out and it showed prices up nearly 20% YoY. Brent crude oil touched $80 per barrel and is on course for its best month since February. Treasury yields have risen quite dramatically over the last week, with the 10-year now above 1.5%, the highest since June.  Natural gas...Read More

Rob Arnott of Research Affiliates is one of the best investment strategists around. He wrote a fantastic article on the opportunity in value investing, so instead of going on about it, I’m just going to let you read it to get a good grasp of the opportunity in front of us.  Here was one quote...Read More

Global markets have sold off pretty hard to start the week.  Most of the narrative surrounds the Chinese property market and one of their largest developers, Evergrande.  China’s government is clamping down on leverage and demanding many industries to buy in, literally, to their social objectives via cash “donations”, cheaper housing, etc.  Both the Shanghai...Read More

  Interest rates are without a doubt one of the most important drivers of investment returns, if not the most significant.  Warren Buffett has mentioned in the past that there is almost a reverse gravitational impact of interest rates, in that lower rates tend to raise equity valuations.  Conversely, higher interest rates tend to pressure...Read More

    The image above shows the S&P Growth/Value ratio. As you can see, this ratio has hit a new marginal high, to an all-time record.  This means that the valuation spread between growth and value has never been more extreme.  Interestingly, we saw a similar pattern occur in 2000, right before the Nasdaq began...Read More

Today the August jobs report came out and was quite disappointing.  The U.S. only added 235,000 jobs, which was well short of expectations that were for over 700,000 new jobs.  Fears regarding the Delta variant likely had a role in this big miss.  Many businesses I’ve talked to have expressed immense frustration about a lack...Read More