There IS an Alternative
There IS an Alternative
Post the Great Financial Crisis, interest rates were on what appeared to be an unstoppable march to zero. As a result, an oft repeated phrase by both market pundits and investors alike was “There Is No Alternative (TINA).” The general thought of TINA proponents was that since the returns offered in fixed income were extremely low, investors had little choice but to invest in just about anything that might offer the potential for long-term growth. As many investors lowered their bars for investments, money flooded into the shares of profitless growth companies, seedy SPACs, and cryptocurrencies. Today, with 12 month Treasurys yielding 4%, there finally is an alternative for investors. Not surprisingly, the air has come out of many of the aforementioned speculative assets with many experiencing 60-90% drawdowns. After such a severe dislocation, it’s fair to ask if we are now presented with a good opportunity to own those former high fliers. In our view, the answer is no. Despite falling significantly, the valuations for many of the profitless, hypergrowth companies are still much too rich, and they are no closer to a path to profitability. In many cases, today’s high-inflation environment has made their business models even more challenged. Does that mean it’s finally time to increase fixed income exposure? Again, our answer is no. Yields are much higher but still fall short of the 8% annual inflation we currently face. As a result, fixed income investors are seeing their money shrink in real terms. In contrast, we believe the right approach continues to be the ownership of a diversified portfolio of attractively-valued industry leaders with the financial strength and flexibility to invest in long-term growth while simultaneously returning cash to shareholders. We plan to stick with the strategy that has helped our clients grow their wealth for many years.
Articles We Liked:
Tech Bubble and Ping Pong
Falling sales of ping pong tables, a common perk at new tech startups, could be a precursor to rough times ahead for the tech industry.
Self Driving
Is our economy ready for a future where most semis are powered by self-driving technology? It could be here sooner than we think.
Quantum Computing
China is passing the United States in quantum computing, which could result in big, negative ramifications for the United States as the rivalry between the two countries intensifies.
Plastic and Obesity
Once a fringe hypothesis, an emerging number of scientists believe that the chemicals used in many everyday products like plastic packaging, clothes, cosmetics, and food additives are making us fat.
The Big Bang
New images from the James Webb Space Telescope call into question if the Big Bang, the name given to the origin of the universe, even happened. As the astronomer Alison Kirkpatrick says in the article: “Right now I find myself lying awake at three in the morning and wondering if everything I’ve done is wrong.”
Patagonia Given Away
50 years after starting the popular outdoor apparel maker, Patagonia’s founder, Yvon Chouinard, has given his company away. In doing so, the company’s future profits, over $100 million per year, will be used to combat climate change and protect undeveloped land around the globe.
Notable Reads:
The Storyteller: Tales of Life and Music
by Dave Grohl
Dave Grohl, of Nirvana and Foo Fighters fame, recounts his life from the days of his childhood near Washington DC up through selling out stadiums around the world. Likely due to his infectious and upbeat attitude, Grohl mostly focuses on the good things that have happened in his life, save for an intense look at his response to the death of his bandmate, Kurt Cobain. Grohl manages to carefully walk a tightrope between too much celebrity namedropping and his utter joy and disbelief at the experiences he’s had in his music career. – AG
We Are Legion (We Are Bob)
by Dennis Taylor
Shortly after selling his software company for millions of dollars, Bob Johansson is killed while crossing the street. He awakens decades later to find that his mind has been implanted in a machine. The first in a series of books in the “Bobiverse,” this was a (mostly) lighthearted exploration of artificial intelligence, cloning, and the future of the human race. – AG
Restaurant Review:
Lovechild Restaurant
300 Third Street South, Lacrosse, WI
http://lovechildrestaurant.com/
Situated within walking distance of the Mississippi River in downtown Lacrosse, Lovechild offers simple food with big flavors with an ever-changing rotation of locally-sourced and seasonally-appropriate dishes. In addition, Lovechild’s bar has something for everyone with its long list of unique specialty cocktails (and “mocktails”). The dining room is inviting and perfect for large groups. Our party especially enjoyed the braised lamb shank, roasted chicken thighs, and the triple-cooked French fries. For dessert, do not pass up the Portuguese cinnamon-sugar doughnuts. – AG
More Than a Trusted Investment Advisor
We recently assisted a new investor, who received a sizable inheritance, on strategies to protect his wealth with an appropriate asset allocation and to structure a real estate purchase. We worked with the client’s attorney to develop the best approach to meet the client’s needs. If you have a unique problem, we are here to help!
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