Creative Destruction; It’s Kind Of A Big Deal

My latest post for Alpha Baskets looks at creative destruction as relates to the widespread closing of retail outlets and what the long term implications might be. From the post; As a bigger concept this is about creative destruction, a concept widely attributed to Joseph Schumpeter from the 1950’s. Creative destruction is what makes laptops and 60 inch televisions be dirt cheap (Moore’s Law is a derivative of creative destruction) and the list of industries that have been impacted is endless. People as consumers have mostly benefitted although it might be a different story for people as workers. Think about auto manufacturing which along with other forms of manufacturing are moving more to robotics and automation. We’ve all seen the posts on Facebook about fast food workers being replaced by kiosks as the minimum wage starts to move a lot higher. Please click through to read the entire post. The
Continue reading "Creative Destruction; It’s Kind Of A Big Deal"

Don’t Fall For The Fallacy Of Explanation

This week’s Market Update is posted at Alpha Baskets and includes the following; We are fascinated by various spread relationships that serve as risk proxies. Long time market participants may recall the TED spread, also in years past AUDCHF, Australian dollar versus the Swiss franc, was just such a measure where, put in today’s terms AUDCHF moving up was viewed as the equivalent of risk on and if the cross moved down it was risk off. YTD AUDCHF is up almost 2.5% but it is down about 3.5% since late February. Dennis Gartman has talked lately about EURCHF playing a similar role but lately the market broadly has been following the yield spread between the French OAT and the German bund. As the spread gets wider it is thought that political uncertainty in the European Union is increasing while a narrowing spread is a sign of decreased
Continue reading "Don’t Fall For The Fallacy Of Explanation"

Being John Malkovich-Moment

A quick note; Do you remember the movie Being John Malkovich, the one where John Cusack and his girlfriend go into Malkovich’s brain? Then along the way John Malkovich goes into his own brain? Yeah, it was a weird movie but it was funny too. The ETF business may be having its own Being John Malkovich-moment with the launch on April 20th of the ETF Industry Exposure & Financial Services ETF which is being sponsored by Toroso Investments and trades with symbol TETF. It owns a good mix of companies including the parent companies of iShares and SPDRs but not Vanguard of course which is not publicly traded. It also owns a few publicly traded exchanges where ETFs trade, companies that make markets in ETFs, discount brokerages that offer their own ETFs, companies long known for traditional mutual funds but who are also getting into the ETF business as
Continue reading "Being John Malkovich-Moment"

Being Disciplined 90% Of The Time Won’t Work

My latest post for Alpha Baskets is up and includes the following; A common criticism of indexing is the extent to which the index tilts more and more toward growth as the bull market matures because the growthier, high fliers go on a run of outperformance later in the cycle (this is historically how it has worked). Those are the same types of names that stand to go down a lot, really a lot, during bear markets. It is a good bet that most of these types of stocks will bounce back to new highs in the subsequent bull market but it is at points of maximum pain the poor decisions are made. Please click through to read the entire post. A type 6 (brush truck) from a neighboring department 17991645_1920015898279854_1795208505848633705_o A 1936 Ford I drove by the other day. 17973676_1920636784884432_201871326341343746_o Dropping off one of Walker Fire’s trucks and saw this. 17917204_1917579165190194_4803526193342475804_o

“Head-Snapping” Reversals?

This week’s Market Update is posted at Alpha Baskets and includes the following; The 200 day moving average (DMA) is viewed as being a significant technical indicator. Our take on this is that the 200 day moving average is a signal for the health of demand for an asset. When the price is above the 200 DMA, demand can thought of as being healthy regardless of whatever else is going on in the world. Likewise, when price is below the 200 DMA demand is unhealthy. While the consequence for gold’s unhealthy demand over the last few months was negligible, the recent trading represents an improvement. Please click through to read the entire update. The 2017 Prescott Basin Ops Drill was held over the long weekend. This is the big, annual, inter-agency wildland fire exercise that I have been involved in planning going back to 2010. This year there was more
17917526_1918139178467526_8548028991326333638_o (1)
Continue reading "“Head-Snapping” Reversals?"

Don’t Let Performance Haunt You Forever

My latest post for Alpha Baskets is posted and includes the following; A well thought out strategy focuses on longer time periods like an entire stock market cycle with goal of having enough money when it is needed. Someone who retires at 63 with enough money doesn’t say to themselves “while I am glad I have enough, those two quarters in a row that I lagged the market when I was 56 are going to haunt me forever.” As silly as that sounds, if the S&P 500 goes up 9% this year and someone is angry about only being up 6%, it is the same thing. Please click through to read the entire post. Military themed, 6100 Class Trophy Truck 17855081_1914509128830531_6622141452367389232_o Corvette from Kihei 17879928_1914512138830230_7700617335436153520_o The front end of a Trophy Truck taken with a fisheye app 17796841_1914549612159816_1900590816141748222_n

Blame It On The Rain

The weekly Market Update is posted at Alpha Baskets and includes the following; In news that harkens back a little over two years ago when the Swiss National Bank depegged the franc versus the euro, the Czech National Bank depegged the koruna from the euro, removing the floor. The cross is quoted as EURCZK so this move allows the euro to drop against CZK if that is where the market takes it which seems likely as it fell 1.6% on Thursday when the news hit. Bespoke Investment Group had a funny quote noting that “this floor removal looks nothing like the chaos of the SNB’s in 2015” because the CNB effectively telegraphed the move. We don’t mention the Czech Republic very often but it is an interesting investment destination that we will try to explore in a later commentary but for a little context its 10 Year Note yields
Continue reading "Blame It On The Rain"