Three Dependable Warning Signs Compel Rotation to Value
Three ominous metrics compel a strategic rotation into out-of-favor equity and commodity sectors to preserve long-term investment capital. With the return of inflation and a generational shift out of low interest rates, overlooked small, value, foreign and high-yield equities, as well as inflationary- hedges offer compelling new investment sectors to preserve your long-term capital. With […]
Tellurian’s Tremendous Turnaround
Tellurian Inc.’s investment potential has always been contingent on the successful financing of its Driftwood LNG facility which we estimate could generate $2 billion to $4 billion in cash flow a year in the 2030 timeframe. Tellurian’s announcements that it is selling its Haynesville natural gas assets, evaluating alternative sources of cheap natural gas, and […]
Real Yields and Real Returns
The S&P 500 and Magnificent 7 stocks are expensive and at their all-time highs. We believe inflation will remain stubbornly persistent and not return to a 2% inflation rate this year, resulting in both stocks and bonds losing their appeal due to their duration and interest rate risk. Consequently, we are reallocating from the popular […]
Investment and Strategies for 2024
The four decade era of declining or abnormally low interest rates is over. Both short-term and long-term interest rates are now meaningfully higher, and stock, bond, and real estate prices will no longer be significant beneficiaries of accommodative interest rates as they were in the past. Consequently, asset allocation strategies like the 60% equity 40% […]
Year-End Tax Bounces and Market Crosscurrents
Geopolitical conflicts, inflation, and higher interest rates are adding uncertainty to the popular soft landing scenario as we enter into 2024. Conversely, death and taxes are certain, so this letter will review some tax bounce opportunities that only occur this time of year. From a historical perspective, assets like stocks, bonds, and real estate have […]
Major Asset Classes Are at a Generational Inflection Point
Since 1982, 10-year US Treasury yields have declined from 15.8% to 0.55% in 2020. During this four decade period of declining rates, the three major asset classes of stocks, bonds, and real estate enjoyed unusually high returns that benefitted from the secular decline in interest rates. These three asset classes all share the common characteristic […]
The Changing Market and Investment Cycle of the 2020’s
The yield curve or “term structure of interest rates” has changed profoundly since 2019 with the rise in inflation and the federal government’s response to the COVID-19 crisis. The combination of profligate fiscal spending, excessive monetary accommodation, and high fossil fuel prices based on naive “green new deal policies” have created persistently higher inflationary pressures […]
COVID-19 Vaccines Jettison Stocks to New High Prices and Valuations
Political Uncertainty Continues Caution! Historically high valuations and exuberant sentiment Rising interest rates drive growth to value rotation Rising Covid-19 lockdowns could trigger a Q1 correction Antero Resources (AR) and Antero Midstream (AM) are compelling natural gas stocks The great vaccine results, led by Pfizer, AstraZeneca Oxford, and Moderna, have transformed global economic prospects and […]
The Election is Not Over as We Predicted
• Election results will be challenged in court and uncertainty could persist through January 5th. • The Senate appears to stay Republican, leaving a divided government, but that is not assured. • Both a $4 trillion tax hike and a massive spending program now appear unlikely. • Equity markets remain historically expensive, but Pfizer’s vaccine […]
Extreme Election Scenarios
Technology stocks peaked on September 2nd. Our recent cautionary advice sets up election investment opportunities. We examine a blue wave and a potential Amy Coney Barret decided Trump Victory. Invest in value and sell growth. Commodities could boom. Cyclical turnarounds in natural gas and cannabis. 9/2/2020 Technology Peak: Our September letter argued that a generational peak […]