Blog

THE DISTILLERY

Declaration of the Rights of France

Europe’s future hangs on the nation-state’s ability to respond to the concerns of individuals. The first round of voting in France’s presidential election is over, and pre-election polls seem to have predicted the correct outcome. As of this writing, exit polls show Emmanuel Macron won 23.7 percent of the vote, while Marine Le Pen received 21.7 percent. The two candidates will now go head-to-head in a May 7 runoff. This does not mean Le Pen will… Read More >

Those Other Stocks

The majority of discussion about the stock market in the financial media these days is directional. This makes sense in the context of a world in which the indices are all that matter to most people and political uncertainty is widely believed to be the biggest risk factor (as opposed to financial conditions or profit concerns).   And so the discussion returns to – again and again – whether or not the next 5% move in the S&P 500 is up or down. It’s not a question of fundamentals, but of sentiment. Which way will the wind blow?   But the S&P 500 isn’t the only opportunity set in the world of equities. US stocks account for… Read More >

Prudent Investing: Keep Calm and Carry On

The discipline it takes to be a prudent investor, especially during times of heightened uncertainty, has been a common theme in many of our conversations with clients lately. Emotions can run high; it is a natural response to find yourself tempted into taking action. The non-stop news cycle and the siren call of social media updates also help fuel this sense of urgency.   At times like these, we are often asked to share our insight on navigating challenging environments and what we’ve learned from many years in the investment management business. Here are a few things we believe investors can do to help instill a long-term mindset... Read More >

Here are the ages you peak at everything throughout life

Aging can seem like a scary prospect, but a wealth of scientific studies have found that youth isn't all it's cracked up to be. There are plenty of cases in which human beings peak well into middle and old age. Teenagers, for instance, may have vitality on their side, but older people are generally more psychologically stable. And so it goes with several phenomena people experience as they age… Read More >

The Fed’s Rate Hike

The U.S. Federal Reserve Board’s Open Market Committee just raised the Fed Funds rate from 0.75% to 1.00%—the second rate hike in three months.  So what should you do with your investment portfolio in light of this change?   Nothing.   Why?  First of all, the rate change was laughably minor, considering all the press coverage it received.  In the mid-2000s, Fed Chairman Alan Greenspan raised interest rates 17 times in quarter-point jumps, finally taking Fed Funds to a 5% rate.  This time around, the economists at America’s central bank are behaving extremely cautiously.   Second, although you may read that any raise in interest rates is depressing for stocks.  It’s true that borrowing will be incrementally more expensive for American corporations than they were last week.  But the bigger picture is, this move was actually... Read More >

What a Market Top Looks Like

The current bull market in stocks reached its 8th anniversary last Wednesday, and for about the last four years, professional investors and financial planners have been scratching their heads.  The markets have gone up and up and up, and we all know that they won’t go up forever, which means there’s a correction looming somewhere on the horizon.   The problem is that the wisest professionals generally know what a market top looks like—and what it doesn’t.  For most of those eight years, investors were constantly looking over their shoulders, waiting for the next shoe to fall, being very cautious about their stock allocations.  As long as that generalized anxiety persisted, it was unlikely that we would see the exuberance and overconfidence that typically precedes a major market decline.   The markets generally top out when the average person starts feeling like he or she is missing out on future returns.  Suddenly money that has been on the sidelines for years starts to flow back into the market, causing it to rise faster than it ever did during the buildup early years of a bull market.  You start to see pundits, touts and market prognosticators get really enthusiastic.  Nobody could see any sign of that swell of overconfidence—     Until now, with what Wall Street has been calling The Trump Trade.  The trade means that people everywhere are investing in anticipation of lower corporate taxes and fewer regulations. An excellent description of how to spot a market top was published on the MarketWatch website, entitled “7 Signs We’re Near a Market Top, and What to Do Now.”   What are the signs?  The first one is... Read More >

Longer Lives, Here and Abroad

For years, the U.S. life expectancy was among the longest in the world, a natural byproduct of the fact that the U.S. is wealthier, per capita, than other nations.  Indeed, a research report in the medical journal The Lancet projects that between now and 2030, women in the U.S. will live an average 83.3 years (up from 81.2 today) and men an average of 79.5 years (up from 76.5 today). The report analyzed data on… Read More >

The $74 Trillion Global Economy and The $60 Trillion of World Debt

This week’s installment of The Distillery comes from The Visual Capitalist and is a pair of well-designed charts that illustrate the world GDP and debt in single charts.  The first visual provides the world GDP by breaking down the relative share of the global economy by nation.  Continents are also grouped together and sorted by color.  The second visual is the world’s debt by nation.  The numbers that stand out the most, when comparing the two graphics:
  • The United States constitutes 23.3% of the world economy but 29.1% of world debt. It’s debt-to-GDP ratio is 103.4% using IMF figures.
  • Japan makes up only 6.18% of total economic production, but has amounted 19.99% of global debt.
  • China, the world’s second largest economy (and largest by other measures), accounts for 13.9% of production. They only have 6.25% of world debt and a debt-to-GDP ratio of 39.4%.
  • 7 of the 15 countries with the most total debt are European. Together, excluding Russia, the European continent holds over 26% of total world debt.
Combining the debt of the United States, Japan, and Europe together accounts for 75% of total global debt.  Read More >

Presidential Drawdowns

Not “If;” “When” You’re starting to hear people talk about “if” there’s a bear market during the Trump Administration, when the real truth is they should be talking about “when.”  And it won’t necessarily be triggered by a poorly-worded tweet, a global-trade-stopping new tariff regime or tax and entitlement reform.  Every presidential cycle has its share of market drawdowns, seemingly regardless of presidential policies. You don’t believe it?  The accompanying chart shows the worst Read More >

Thinking Through Trump’s Views on the Islamic State

During President Donald Trump’s inauguration speech last Friday, he reiterated his promise to destroy the Islamic State. Previously, he also pledged to reduce international commitments that don’t benefit the United States. The two statements are not incompatible. Trump is simply saying... Read More >