We’ve identified the warning signs. We’ve studied the history. Now comes the hard part: positioning portfolios when we know trash rallies end badly but can’t be timed. Here’s our probabilistic framework for navigating the endgame.
If you are concerned by the red ink, we are not and can help you feel better after you read below. Here’s each strategy (please remember to check Black Diamond for your specific results):
Despite ending the government shutdown, markets fell over concerns about employment, ongoing inflation (the affordability crisis)
A down week as the trash rally found a peak, fell and bounced late Friday. We were slightly down for the week and importantly, we are ahead of every benchmark, demonstrating our renewed superior portfolio design.
Every generation experiences some form of market mania. Technology changes, narratives evolve, and the pattern stays remarkably consistent – excess liquidity meets declining standards, speculation overwhelms analysis, and garbage outperforms quality before collapsing.
We had a relatively flat week where preferred stock prices held us back. These are not a concern, which we will discuss.
When small-caps with weaker fundamentals outpace quality stocks by meaningful margins, smart investors pay attention. History shows these patterns typically appear in the later stages of bull markets – though timing the end remains impossible.
Despite all our care and confidence, the market crashes 35% in three weeks. The financial model on which we relied all this time failed – it happens to even the best investors. Let’s explore how they prepare for everything breaking at once.
Passive indexing now controls more than half of U.S. equity markets. The unintended consequence? Price discovery is breaking down – creating the biggest opportunity for active investors in decades.
What is Alpha? Have you ever wondered whether you earned enough for the risk taken? In the professional investor world, we use Alpha to measure extra return for the risk; and it is very valuable. Not All Returns Are Earned Equally We are all risk…