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5000 Years Is a Long Time

September 11, 2019

Good Afternoon:


I hope this note finds you doing well.


The key takeaways on a brief note:


1.  Q3 Earnings* growth has slowed materially;

2.  Interest rates have continued to fall;

3.  Real estate, utilities, and Gold continue to perform;

4.  The stock market is absolutely dependent on the Federal Reserve; and

5.  5000 Years is a long time.


There is an absolute incessant focus on the actions of the Fed to cut short term interest rates. 

With stocks near-all time highs, solid employment, and benign inflation this "Trump demand" is merely to prop up asset prices. 

Drug metaphor warning - we are hooked on cheap money, not unlike heroin, cocaine, or methamphetamine.  


The focus on the short-term results and political outcome is frightening, but our new reality. 


Since my original draft on Monday PM we now have this tweet from President Trump:



Interest rates serve an incredibly important function - setting a cost of capital.  All capital decisions are dependent on natural hurdle rates to justify and fund their pursuit, project future asset/liability matching, pension funding etc. etc.

The long-term implications of lower rates are defined; it destroys banking, insurance, and financing that is dependent on spread and duration based lending/investing/funding etc.  See Japan since the late 1980's.   


Trending back towards the 0% bound on rates merely encourages debt fueled speculation and diminishes our currency's purchasing power. 


Governments have NEVER been good long-term stewards of fiat (paper) currency. The U.S. Dollar has lost 95% of its purchasing power value since the creation of the Fed.  But we feel richer they say!   


We are in new waters and will protect, then grow, your capital accordingly.  

Have a great day.




*earnings used to matter to stock investors






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Julien B. Booth

Principal & Portfolio Manager


Dana Christner

Operations Manager



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