Published on March 27, 2023
“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem. – J. Paul Getty
Robert Frost was a fortuitous man, as he only had 2 diverging paths in the woods to choose from. If only we were so lucky. Right now, it feels like the dispersion of potential market outcomes is growing at a rapid and expanding pace. Recent banking events have stressed the markets, specifically the financial and energy sectors. Yet, equities have remained resilient in the face of 2 bank failures and Credit Suisse doing Credit Suisse things. Even though participants have access to the same data at the same time (earnings releases, economic data updates, breaking news etc.) markets have multiple ways one can analyze data and forecast the future. Hindsight is always 20-20 but every manager has a preferred way of looking at information and weighing the probability of return in the future. Investors are currently confronted with extremely muddled data and no clear signals to follow. How do you read the road signs when the signs are all pointing in different directions?
Published on December 28, 2022
“All will be well. We have, I believe, within us the life-strength and guiding light by which the tormented world around us may find the harbor of safety, after a storm-beaten voyage.” Winston Churchill, 9 November 1954
2022 has been a year most of us would like to forget. Markets brought losses, anxiety, pain and suffering to investors. The horizon currently looks very cloudy, and it feels as if it is hard to find anything to be excited about. The world, in a nutshell, feels grim. War, discord, growing wealth gap, sticky inflation, rising rates, and the specter of a recession with rising unemployment loom over the World. Both bond and stock markets were decisively negative for investors this year, with the broad bond averages looking to log their worst returns in 50+ years. While we recognize these headwinds and feel we are not out of the woods yet, we are not perma-bears for 2023. There will be green shoots and possibilities, and the best investment opportunities come in bear markets, not in bull markets. Buy low, sell high. Easier said than done for most. In 2023 we feel the worst will happen in Q1-Q2, then markets find their footing and we rally out to flat or slightly positive for equities on the year.
Published on September 27, 2022
“Prepare for the unknown by studying how other in the past have coped with the unforeseeable and the unpredictable.” – General George. S Patton
2022 has been a very difficult year for investors. Gone are the easy returns of the last decade, and doubt is creeping in about what the next decade may hold. The world feels fairly terrible at this point in time. Political discourse in the United States is feverish, the country feels divided and broken, and Black Swans seem to be lurking in every corner of the market. The list of what-ifs feels daunting and overwhelming. It may help to step back and review the current state of markets against a historical backdrop. Remember, the United States of America has made it through difficult periods in the past, and we warn against the most dangerous phrase, “this time it’s different.”
Published on June 28, 2022
The stages of a bear market often mirror the grieving process. Denial at first, followed by anger, bargaining, depression [current stage] and finally, acceptance. For investors, frequently instead of acceptance there is an overwhelming desire to capitulate. The world feels darkest before the dawn, but it is terrifying in the dark. Controlling our fear of the future, the unknown, and the losses piling up can be difficult. None of us have a crystal ball, but we do our best to make predictions about the future based on sound historical data and patterns. We warned back in March we thought we would have a recession and a bear market, and now that we are bearing the brunt of a bear market, the million-dollar question is when do we hit bottom?
Published on March 28, 2022
Without a doubt, what is happening in Ukraine is a tragedy and a reminder of the fragile balance of the World. Due to the continued conflict, sanctions, and inflation, we are revising down our 2022 market outlook from Moderately Bullish to Moderately Bearish. G Squared now feels we will have a recession in the next 18-24 months. This does not mean an automatic repeat of 2008. We may have a milder recession; however, we feel it’s important to downshift into more defensive portfolio positions.
Published on December 27, 2021
2022 is the year of the Tiger according to Chinese astrology. The Tiger is a symbol of strength, exorcising evils and braveness. After the past two years, exorcising evils seems like a fitting theme for 2022. As we limp into the final days of 2021, it has been filled with a Ying-and-Yang dichotomy of good and bad making it a taxing year for many.
Published on September 27, 2021
Moore’s Law states that the number of transistors on a microchip double about every two years, though the cost of computers is halved. Gordon E. Moore was the co-founder of Intel and made this observation in 1965. The basic tenant being that the growth of microprocessors is exponential.
Published on July 1, 2021
As we look forward to the second half of 2021, the world seems torn between optimism about reopening and economic growth, and despair over inflation and the Fed’s potential courses of action. Like most things, the truth most likely lies in the middle between hope and pessimism.
Published on April 1, 2021
Life begins again, for most Americans, at vaccination dose two. It is entertaining to think about what we will do with newly granted freedom of movement; seeing family is often top of the list, followed close behind by travel. As we all look forward to turning the page on COVID, we should realize this restart is not necessarily pushing us back to normal but forging forward into the new normal. So, what might 2021 have in store for us? We outline 5 main themes for the rest of the year: Improving Economy, Pent up Demand, Inflation Fears, COVID Trends to Stick Around, and Market Bubble Questions.
Published on January 1, 2021
As we turn the page on 2020 and look forward to a new and better year, it is hard not to feel anxiety about our future. The “what-if” virus has bitten us hard this year, as for the first time in a long time, the worst-case scenarios that run through our heads were realized, if not over-delivered.