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Federal + Reserve

September 23, 2016

I hope this notes finds you doing well. Charlotte is great this time of year, albeit a bit rowdy at the present.


Mark Grant (Hilltop Securities) had a powerful introduction in his note this week that I believe captures the state of the financial markets:


"Many statements made by public officials, in America, in Europe and in Japan are unbelievable. They are not true. They are not factual. They are just out and out lies to protect or to further the institutions they represent. This is critically important to understand. You will be horribly mislead if you do not get this right. You will make terrible decisions if you do accept the untruths as facts just because some public official claims that they are telling you the truth, all the truth, but you must understand that they are not".


Forest Capital and Sixty Guilders Research were founded on the underlying belief in the integrity of individual securities/data and the underlying financial system regime...the game has changed. The overwhelming macro-force today is the Federal Reserve, being either:


"dovish" = more cheap$ = lower US dollar = higher commodity and stock prices

"hawkish" = less cheap$ = higher US dollar = lower commodity prices + lower stock prices


May the market "data" be damned. The WSJ free site has a great piece on this: https://goo.gl/282hwa


Incessant speculation of the action of the Fed (economics be damned) is now the primary job of most market "prognosticators" talking endlessly on CNBC/Bloomberg et al. With the exception of Mark Grant and a few other independent thinkers (conflict/compensation) contrarians the big banks/brokers provide a pittance of value.


Wall Street banks/brokers remain wrong (see WSJ data) on what has happened with bonds/income securities = HUGE price appreciation+safety+income.


We have adapted to this Federal Reserve reality; we cannot project our wants onto the market, but must accept the ocean that is under us. Capital preservation, however, is a constant.


Thank you for your trust and interest in Forest Capital and Sixty Guilders Research.



As usual, thank you for investing with Forest Capital! For additional information on portfolio positioning, please contact Forest Capital directly at jbooth@forestcapital.net.


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Julien B. Booth

Principal & Portfolio Manager


Dana Christner

Operations Manager



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