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Hope you all had an enjoyable and safe Memorial Day weekend celebrating those that paid the ultimate sacrifice for our country! I’m glad to see a debt ceiling deal seems to have been agreed upon in principle over the weekend, which hopefully will remove a major headline risk. It certainly doesn’t resolve any of the...Read More
One of the hardest aspects of investing is dealing with the psychological challenges financial markets present. Mr. Market’s extreme pessimism or optimism can be contagious at exactly the wrong time, leading to big losses and permanent losses of capital, which are precisely what we are most focused on avoiding. The current market is being dominated...Read More
In our last article we covered the Bubble in “Safe” Stocks, where investors are paying outrageously high multiples for companies that are believed to be more recession resistant such as consumer staples. In this article I figured I’d cover a stock Mr. Market and the doom and gloom propagandists view to be “risky” based on...Read More
Since early March, the stock market has been far more driven by fear than fundamentals, which has led to what I believe to be a bubble in stocks perceived as being “safe.” When you pay 50% too much for a stock, a simple reversion to the mean can cause disastrous permanent losses of capital. Conversely,...Read More
This weekend, Warren Buffett’s Berkshire Hathaway holds its annual meeting where investors flock to Omaha Nebraska to listen to the valuable insights offered by Buffett and his partner Charlie Munger. It’s a great time to reflect on why these investors have been so successful and how it can be applied to our own investments. Today,...Read More
This morning we woke up to the news that JP Morgan has purchased the vast majority of the assets and deposits of First Republic with the help of the FDIC bank-funded insurance fund. This deal removes the last lingering overhang from the panic-induced bank runs that we saw in early March, which led to the...Read More
On Friday several of the big banks reported earnings that were exceptionally strong, highlighting their strength in times of turmoil. I believe that much of hysteria we saw in March was manufactured panic to a large extent. Several horribly managed banks were taken out by bank runs and the problems were extrapolated incorrectly to the...Read More
Last week for Spring Break, I had the good fortune to take my family to Miami and then on a cruise to the Eastern Caribbean. It was a great experience with many memories made. On our first day, I took my two daughters to South Beach where we went swimming in the waves, which...Read More
Investors and market participants often get told that the way to get rich is buying quality companies or properties. Firstly, it is important to define quality. For many, quality is conflated with credit risk. For example, U.S. government debt is often seen as having the least chance of a default than any other bonds, mostly...Read More
The last two weeks have been about as volatile and fear-driven as we’ve seen since March 2020. While these crises always seem existential at the time, the reality is that we get these periods of high stress just about every year, and the reasons are always different. Just last year, the Russian/Ukraine war and rampant...Read More
Markets remain quite chaotic after the events of the past week lingering in the air. As more information has come out, the more obvious the problem becomes. You had 3 idiosyncratic banks that had grown deposits like crazy based on the backs of crypto and venture capital money flowing in. These New Age banks, invested...Read More
A decade-long policy of virtually zero interest rates impacted assets globally and built the everything bubble. It would be naive of us to think that the unraveling of this would not cause things to break. Last week, we saw it occur with the implosion of two large crypto and venture capital-focused banks. These institutions (Silvergate...Read More
Markets continue to exhibit higher volatility due to economic data that indicates that higher for longer Federal Reserve interest rate policies are more likely. At TTCM, we view predicting macroeconomic data as being a rather pyrrhic enterprise, as success rates for even supposed experts, are far less than 50%. By focusing on individual securities and...Read More
Volatility has begun to pick up in equity markets as bond yields have continued to creep higher, based on fears of higher for longer inflationary pressures. I’ve warned before about being too aggressive in this environment. Too many people expect equity markets to perform like they did in exceptionally low interest rate periods and that...Read More
In early 2023, we have seen a bit of a return of the speculative euphoria that was so pervasive in 2020 and 2021, which has driven up asset prices once again. Market participants are more optimistic about things based on the belief that inflationary pressures are headed far lower, which should result in the end...Read More
