We’re off to a new year. And with it just getting started, this is a time to look forward. Based on the market and economic signs we’re seeing; we’ll lay out the tendencies that likely lie ahead.

Iran and Russia have finalized an agreement to trade in their local currencies instead of the U.S dollar. The agreement was finalized during a meeting between the governors of the two countries' central banks in Russia. Both Iran and Russia are subject to U.S. sanctions.

… — Download the complete letter:
Monthly Letter - January 2024 (PDF).

How high could gold go? In the 1969 to 1980 bull market, gold soared 2,300%. And in the 2001 to 2011 bull market, gold surged 646%. Assuming the current bull market rise is similar, it means that gold could rise to as high as the $6,780 -$24,140 level.

We know that may sound crazy, but it’s really not. Gold has done it before, and it could do it again.

That’s why we always say gold is a great long-term investment. Over the years it has outperformed just about every other market, and it will continue to do so, especially in the years just ahead. So, you clearly want to buy and then hold on to your gold and silver in the upcoming years.

Will gold now start a heated bull market rise similar to the 2008 - 2011 time period? With the new record high, gold is signaling it’s going to soon be making up for lost time.

The big question now is, what could drive gold up so strongly in the years ahead?

… — Download the complete letter:
Monthly Letter - December 2023 (PDF).

Strong macro tailwinds propelled India’s rise to the world’s fifth-largest economy earlier in 2022 and put it on track to become the third-largest economy by 2027, surpassing Germany and Japan. Economic growth has also been evident in the country’s equity market performance.

We are confident that India enjoys a favorable alignment of macro factors, coupled with unique advantages stemming from its vast workforce and the growing perception of being the preferred partner of the West in the region.

This advantageous position is further bolstered by a series of growth-oriented initiatives implemented by the government. As a result, we anticipate that Indian stocks will maintain their outperformance compared to their emerging markets counterparts over the next decade.

… — Download the complete letter:
Monthly Letter - November 2023 (PDF).

Coming soon…

Coming soon

For the optimists, a recession this year is no longer in the cards. “The economy is holding up

better than expected. The consumer is stronger than expected.”

ECONOMY IS FIRM
It’s firm and consumer sentiment is at a two year high. And while there are still some signs that a recession could unfold, others are doubtful.
Fed head Powell, for instance, recently said the Fed is no longer forecasting a recession. And the IMF is now predicting higher economic growth for this year.

So has the Fed been successful in engineering a decline in inflation and a soft landing?

It increasingly looks like it has, even though this is not the way things usually play out, especially after such a steep rise in interest rates. This has many economists scratching their heads.

And as you’d expect, theories are all over the place. One that makes sense, however, is the conclusion that money is not that tight. After adjusting for inflation, the Fed funds rate only turned positive earlier this year and it’s around .5% according to UBS, which is not enough to exert a powerful downward force on activity.

… — Download the complete letter:
Monthly Letter - August 2023 (PDF).

Coming soon…

Coming soon…

Coming soon…

If you thought things were uncertain before, they’re really uncertain now... so much has happened over the past month, it’s hard to prioritize which is most important.

The point is, any one of several factors could take a turn and send most of the markets reeling. In other words, there seem to be wild cards all over the place.

Wild cards. These are events that are often brewing in the background. But then they come out of left field, surprising everyone and sending the markets into a frenzy, primarily because they were unexpected.

To give you a few examples of what are current potential wild cards, we have both domestic and international situations...

On the international front, there is China and the growing tensions surrounding Taiwan. This situation alone would have many repercussions, especially if China decides to invade and take Taiwan back.

… — Download the complete letter:
Monthly Letter - April 2023 (PDF).

With Credit Suisse out of the picture, markets appear to have moved on and reassessed exposures across the sector, with investors asking: which bank now poses the weakest link?

While an increase in credit default swaps is expected as investors start to rerate a bank’s perceived riskiness, we are surprised at the speed and magnitude as well as the movements being seemingly unprovoked.

Central banks in Europe and the U.S. have continued increasing interest rates over the last week and a view that this may amplify the pain felt in the economy is solidifying. That said, it remains to be seen whether such large moves in credit default swap prices are justified.

Deutsche Bank is being strapped in front of the wagon in another blow to confidence in European banks. While this explanation is deeply unsatisfying to us, we fail to see worrying fundamental issues in the European banking sector or for Deutsche Bank in particular. But then again, the risk for European banks now is that investors’ concerns, whether they are justified or not, will force fundamental issues into existence.

… — Download the complete letter:
Monthly Letter - March 2023 (PDF).

“President Vladimir Putin in February delivered a warning to the West over Ukraine by suspending a landmark nuclear arms control treaty, announcing that new strategic systems had been put on combat duty, and threatening to resume nuclear tests.

Already in March 2022, Biden decides to abandon the “No-first use” of nuclear weapons. This means the US is authorized to use nuclear weapons anytime they want. Russia never changed this doctrine.

Nearly a year after ordering an invasion that has triggered the biggest confrontation with the West in six decades, Putin said Russia would achieve its aims and accused the West of trying to destroy it.

Russia and the United States together hold 90% of the world's nuclear warheads.

Putin, who has over the past year repeatedly hinted that Russia could use a nuclear weapon if threatened, was in effect saying that he could dismantle the architecture of nuclear arms control unless the West backs off in Ukraine.

… — Download the complete letter:
Monthly Letter - February 2023 (PDF).

Last year was a rough one... Inflation surged, uncertainty prevailed, stocks and bonds both fell in bear market declines, interest rates surged, housing slowed, China opened and the war in Ukraine raged on.

None of the markets were exciting. In fact, the best market was gold, and it ended the year where it began. Stocks were hard hit with some of the previous tech darlings plunging between 29% to 65%.

So, as we enter 2023, we’re cautious, but looking forward to a much better year ahead.

By all indications, it looks like it’ll finally be gold and silver’s year to take off. The fact they held firm in 2022 says a lot. And with the U.S. dollar becoming less appealing, it should be gold’s turn to shine.

We know we’ve been saying this for a long time, but keep in mind, gold has been in a bull market for the past seven years. Granted, it hasn’t been roaring by any means, but this suggests solid base building and it won’t have much competition.

… — Download the complete letter:
Monthly Letter - January 2023 (PDF).

For 40 years we all got used to certain realities and environments, but these have all changed and they don’t exist anymore.

So, what are we talking about?
Mainly, the economy, markets, politics, cycles, wars and interest rates.

Generally speaking, for example, the economy’s been pretty good over the past 40 years. With the exception of the dot.com bubble and the 2008 financial crisis, the economy’s been sailing along.

The overall situation was basically prosperous. Credit was cheap, and so were Chinese products and energy. Amazing innovations were taking place, like the internet, smart phones and so much more that improved our lives.

… — Download the complete letter:
Monthly Letter - December 2022 (PDF).

During periods of market turbulence, it can be tempting for investors to reduce equity exposure as the market is selling off. However, attempting to time the markets is a flawed strategy, as investors tend to react by selling after stocks have already fallen in value, thereby locking in losses. Conversely, it’s easy to miss the full benefit of a recovery if you don’t get in at just the right time.

Tensions keep rising on the international front, especially in Ukraine and North Korea. Could these move the markets?

Our main concern is Ukraine and the likelihood that it’s going to get worse.

Those who know Putin say he’ll never back down. And he has said he would use nuclear weapons... This in itself is shockingly unbelievable. What was once unthinkable is now thinkable and no one seems too worried about it, or they feel he’s bluffing. Has Putin ever bluffed before?
… — Download the complete letter:
Monthly Letter - October 2022 (PDF).

It’s been a difficult year. It’s been volatile, confusing, complicated, bearish and/or lackluster for nearly every market.

The big winner has been cash in U.S. dollars. No other market has really been able to compare, and this alone is a dilemma. Usually there are at least a few markets that’ll shine, but that hasn’t been the case this time around.

We know this is frustrating and disappointing. And we would’ve all been better off if we’d just stayed on the sidelines. But we didn’t. So what to do?

So far, all of the markets have been hit, and most have been hit hard, dropping between 25% - 55%. Interestingly, the market that has held up best is gold. It’s only declined 5%.

Plus, the dollar strength and rising interest rates have lowered gold demand. So anything is possible. But again, there are pros and cons, within the uncertainty, as you’ll see.

… — Download the complete letter:
Monthly Letter - September 2022 (PDF).

Interest rates are telling us the Fed will raise rates similar to the last one in June. With the hot inflation rate at 40-year highs, the gold market expects the Fed to continue aggressively raising interest rates to slow the economy, and hurt demand in commodities to cool inflation. This of course is recessionary. We have a lot of frustration in the gold market today, and with reason, especially since commodities have already fallen

hard. Copper had one of its worst weekly declines in over a year.

A lot of uncertainty.

That’s because the biggest financial bubble ever is now popping and it’s taking everything down with it. That’s why this is being called the Everything Bubble.

Basically, it was fueled by the biggest explosion of money and debt the world has ever seen. And now, we’ve been seeing the effects via this year’s huge inflation rise.

Even though it’s reported at being near 9%, experts agree it’s really near 17%. And this is happening all over the world.

… — Download the complete letter:
Monthly Letter - July 2022 (PDF).

A hurricane is coming, brace yourself” - Jamie Dimon, JP Morgan
Many of the things that’re currently happening have never happened before. We’re clearly in uncharted waters, which is fueling uncertainty. It also means we have to be prepared for whatever comes our way.

This is the Fed’s balance sheet and this alone is telling us a powerful story. 2007-2022
The first thing you’ll notice is that it’s near a new record high. This tells us that the Fed is not tightening its monetary policy at all.

Despite the Fed’s latest interest rate hike, money is still easy. In fact, it’s so easy, it’s still fueling inflation.

The rate hike is way too little, too late, especially compared to inflation. And due to the massive amount of money that’s been created in recent years, inflation is going to continue soaring.

To give you an example, consider the following...

… — Download the complete letter:
Monthly Letter - June 2022 (PDF).

War ending?

The Fund and the markets in general will most probably move up soonest the war is going to an end.

The ideal situation for all is a deal where Ukraine becomes a neutral independent state (like Finland) with free trade to both Europe and Russia.

Secondly Ukraine can constitute a federal system with two levels of governance authority shared between central state and the federal state (like Switzerland). Each has legislative and executive powers. In addition the central state and the federal state have judicial powers.

In Switzerland, this federal constitution has provided the basis for a peaceful cohabitation of different cultural, linguistic and religious groups.

This deal would resume energy and other commodities provided to Europe at reasonable prices, and maybe reduce the heated inflation. This would end the suffering of the Ukrainian people.

… — Download the complete letter:
Monthly Letter - May 2022 (PDF).

“Greedy when everybody is afraid.”
“Now is the time to buy” (W Buffett)

1Q 2022

1. A looming US government shutdown
2. Rising interest rates,
3. Massive deficit spending,
4. 40-year highs in inflationary pressures,
5. A tight labor market,
6. And continuation of COVID difficulties (China).
7. Russian invasion of Ukraine

Looking ahead, we think it is important to remember the path the market was on before this conflict started. The global economy was on track to re-open and accelerate sharply, with factory output surging, inventories lean, and the service sector rebounding. Despite today’s turbulent and unsettling conditions, we believe a lot of risk is already priced into the marketplace. Sentiment seems downright depressed, and investor positioning is more weighted towards cash, than equities.

… — Download the complete letter:
Monthly Letter - April 2022 (PDF).

What do Putin want?

Following are some comments in 2014 by Professor John Mearsheimer, University of Chicago.
Is Ukraine of vital interest to the US/NATO? Not at all Is Ukraine of vital interest to Russia? Definitely Yes.

Does the US and Europe wish to peel Ukraine away from the Russian orbit and incorporate it into the West? YES. They have been trying since over 20 years and ignoring the consequences.

Remember Ukraine is on the Russian border and Russia has repeatedly said that it is absolutely unacceptable to have Ukraine attached to the West.

Will Russia do everything it can to make sure that this will not happen? YES of course they will.

… — Download the complete letter:
Monthly Letter - March 2022 (PDF).

The equity markets as usual will move up soonest we have some prediction of where the war is heading. As we have seen during last week, the market can very suddenly move up strongly soonest investors believe in any positive indication.

It seems that nobody can with certainty explain what the final objective is in Putin’s head. What is it that he really want.

1. Does he have the “madness of grandeur” and make Russia like it was in the Soviet period or create an empire together with China? Not likely.

2. Does he want to invade Ukraine and keep it for its natural resources to be able to strengthen Russia’s GNP, which is rather weak for the moment? Not likely.

3. Does he have enough of the fighting and killings in the Donbass where there is +14000 death since 8 years of war.? He claims the Kiev leaders do not respect the MINSK treaty which should guaranty the autonomy of the Donbass and Lougansk regions. Does he have enough of NATO closing their eyes to 8 years of Russians being killed or as he says massacred. Most likely.

4. Is he trying to give a military lesson to the Kiev leaders and blame Zelensky for the whole mess while he is hiding behind NATO and Europe ? Not likely

5. Does he have enough of the extreme nationalist AZOV battalion of 4000 fighters killing Russians. Most likely.

6. Does he have enough of EU, Nato and US politics to increase Nato’s presence closer and closer to the East. Most likely.

Whatever the agenda in his head is and whatever reason he has, he will most probably fail with his initial plan. A quick attack into Ukraine, dismantle the actual Ukraine leaders and then getting out in a few days is now out of the question. The Ukraine resistance has made sure of that. Putin has shown his muscles and what Russia can do, but what now?

… — Download the complete letter:
Monthly Letter - February 2022 (PDF).

The yield on the 10-year Treasury note jumped nine basis points to 1.86%, the highest it’s been since December 2019, on suggestions the Federal Reserve may increase interest rates more than anticipated this year.

As we finish off 2021 and look forward to 2022, there is a constant fight between the optimists (rising demand, strong corporate profits, low interest rates, etc) and the pessimists (COVID, valuations, inflation, government bickering etc).

Today, most financial commentary involves the negatives, like inflation worries, Fed tightening and significantly higher government stimulus and spending. Naturally, many are wondering where do we go from here. Will the Fed end its latest QE (quantitative easing) and taper quicker than expected? Will interest rates spike in response or will they rise in a steady and measured way? Will inflation continue to tick higher, or will it simply be “transitory”, as the Fed says? Will small businesses lift wages and go on a hiring spree? Will the Omicron COVID strain cause another lockdown or are we better equipped to handle this variant?

… — Download the complete letter:
Monthly Letter - January 2022 (PDF).

The big news this week was the Fed’s announcement yesterday. They said they’re going to taper their bond buying, and they’re planning to raise interest rates three times in 2022. First, it’s important to recognize what the Fed would like to do, and what it actually does, often don’t coincide. In other words, interest rates are set to stay low and if they do rise, it’s unlikely to be by much.

The other big news was the sharp rise in producer prices. It surged nearly 10% annualized, thereby reinforcing the strength in inflation has longer to run.

Stocks are slumping amid concerns over the Omicron coronavirus variant and fresh restrictions being imposed by a number of countries, including the Netherlands, which is re-entering lockdown.

… — Download the complete letter:
Monthly Letter - December 2021 (PDF).

We are living in one of the most confusing times in history...With rising prices... higher government spending and debt... concerns of a market crash... and a pandemic that doesn't seem to be ending anytime soon.

Now, I know there's a lot of confusion and fear surrounding the markets and economic outlook...

And it doesn't help that everywhere you turn the so-called "experts" on the TV are stoking fear and uncertainty 24 hours a day...Leaving millions of folks on edge and wondering what is going to happen next...

While reflection is great, the market, as ever, is forward-looking. What will we be thankful for in one year from now? There is a lot that could vex investors this coming year. Covid is posing new threats, and inflation is making people nervous, The Federal Reserve is—]slowly—withdrawing monetary stimulus.

… — Download the complete letter:
Monthly Letter - November 2021 (PDF).

There’s something very unique going on, and it’s important. It’s also intensifying.

We’re sure you’ve heard about the supply shortages. But when you take the whole big picture of what’s happening and what it means, it’s unprecedented and it’s going to affect us all, as well as the markets.

As you probably know, there are over 100 ships backed up at the Port of Los Angeles/Long Beach. This port receives most of the exports out of Asia and this log jam is getting worse. Why?

It’s basically one of the covid repercussions and the bottom line is, it’s going to slow the economy and help fuel inflation. Here’s what’s happening...

When the pandemic arrived on the scene last year, many countries went into lockdown. As a result, many Asian factories shut down and production ground to a halt. This resulted in many shortages, like chips, car parts, imported food products, clothes, toys and more. But since demand was relatively low during the covid months last year, it wasn’t such a big thing.

… — Download the complete letter:
Monthly Letter - October 2021 (PDF).

“All of the previous bubbles occurred when economic conditions looked nearly perfect. This has been quite different because the market started its incredible surge in a rather wounded economy.” (Grantham).

Uncertainty makes the market nervous about holding risk-on investment positions right now. This includes the China growth slowdown, Evergrande contagion fears, supply chain concerns, energy price surges, food price spikes, an appreciating dollar, rising Treasury yields, US debt ceiling anxiety, lingering Covid issues, and North Korea firing missiles. There are certainly elements of this that you could slot into a stagflation hypothesis.

When signs of economic optimism emerged, like upbeat earnings report, the market moved higher. It declined, however, on fears the growing delta coronavirus variant could threaten the global economy.

… — Download the complete letter:
Monthly Letter - September 2021 (PDF).

Stocks had their worst day in months on Monday, as the latest Covid-19 concerns hit a wall of existing investor angst about inflation, the Federal Reserve’s next move, and an earnings season with a high bar to meet. As for Covid, after a springtime reprieve from the pandemic in the U.S., cases are rising again and grim data points from around the world are shaking investors’ faith in a global recovery.

Over the weekend, news of positive tests of Olympic athletes, who have now gathered in Tokyo for the games set to begin there at the end of the week, raised concerns about the advisability of the entire event.

Meanwhile, new cases of the virus are up 34% globally over the past two weeks, according to the New York Times. In the U.S., the number of new daily cases remains low, relative to other points in the pandemic, but is up 140% over the past two weeks.

Fears over the Delta variant of Covid-1 were the trigger for Monday’s selloff, but they were also a chance for markets to blow off some steam after a long rally without a correction. The declines could open up buying opportunities for investors willing to fade those concerns and scoop up some suddenly discounted names.

… — Download the complete letter: Monthly Letter - August 2021 (PDF).

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Many countries are suffering a strong third or fourth wave of Covid-19 and lockdowns persist. That’s particularly true in India and Brazil, but many countries in Asia are again getting hit hard.

Europe is still struggling and so are many Latin American countries. In Costa Rica, for instance, everything was going in the right direction. In recent weeks, however, cases have surged, and it’s been a real setback.

That certainly hasn’t been the case in China where the economy is strongly rebounding. Plus, growth is expected to soon reach the 10% level, which has been the average growth rate for decades.

The U.S. is doing very well too. The economy is starting to boom as cases continue to decline. Growth has been on the rise for the past three quarters, erasing the awful plunge in last year’s second quarter.

Yes, damage was done, but the positive news is clearly outweighing the negatives by a big margin.

… — Download the complete letter: Monthly Letter - June 2021 (PDF).

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The stock market is surging. It’s again hitting new record highs and enthusiasm is bubbling over.

This has resulted in tons of money flooding into the market, which is driving stocks even higher. In fact, the amounts involved are astounding.

Just in the past five months, for example, more money has flooded into the stock market than in the previous 12 years combined.

Plus, investors are borrowing like mad against their portfolios at the fastest rate since 2007. This alone is amazing and these are the most solid signs yet that the market has indeed entered the frenzied stage.

That’s when the general population jumps in driving stocks to their ultimate peak as the Melt Up gains momentum. So, who are all these people?

According to poll by Yahoo Finance – Harris, 28% of all Americans bought GameStop or other pop stocks in recent months and the average investment was $150. For the most part, these were new, young investors and this is practically the definition of the “little guy.”

Historically, the little guy is inexperienced and buys in the late stages of a bull market. These are speculators who are generally following the crowd and that’s exactly what’s happening now. You could say Bitcoin is caught up in this same surge.

But we also have to remember that tons of money have been created over the past year and there’s more coming, and this could keep propelling stocks higher.

Plus, interest rates are way overextended and they’ll, therefore, likely head lower in the months ahead. And that too could keep a nice foundation under the bull market in stocks,

In other words, this bull market could last for several more months, but we do have to maintain caution. We suspect the bull market could end before year end, perhaps in the Fall, but we’ll see.

… — Download the complete letter
Monthly Letter - April 2021 (PDF). :

The markets are again a bit stronger as investors bet on a recovery that is expected to deliver the fastest economic growth since 1984. Technology, Healthcare and Financial stocks provided the biggest lift. Yields rose. The dollar is stronger on optimism about the US economy and gold slightly higher. Oil jumped up on worries global supplies could be disrupted for weeks due to the Suez Canal blockage.

For now, however, the economy is still plodding along all over the world. In the U.K. for example, they’ve been suffering their biggest slump in 300 years, thanks to covid lockdowns. And all of the major countries are following the U.S.’s lead as far as ballooning their balance sheets

It’s an international phenomenon, and the IMF is warning it’s not going to end well.

We’ve seen a strong rise since the Summer of last year, and especially since last November in the stock market, the resource sector, commodities in general, currencies, and interest rates. It’s been an “Everything rise” with covid stimulus, uncertainty, debt, a weaker dollar and more.

Meanwhile, we’ve seen the opposite in gold and the gold universe, bonds and the dollar. They’ve been on the down slope since the Summer, and the latest hit to new lows for the move is causing some doubts about the bull market.

But the bottom line is, the gold universe is the lone ranger and the most undervalued for now. If you look at the wave, the ebb and flow of a market, you’d have to say gold, silver, and platinum are good buys now, over the short and the long term.

It’s the same story with the resource sector. We believe the resource sector rise is just beginning a longer bull market run. And stocks have further to run too in this Melt Up move. So we’re riding these big waves until they’re over. They’ve been a little bumpy but they’re good and they have further to run.

… — Download the complete letter: Monthly Letter - March 2021 (PDF).

Every few years something happens in the markets that seems to stun everyone. We’ve seen this happen many times and here are a couple of examples...

The soaring gold price in 1980... It more than doubled in less than two months in a frenzy that was head spinning. About the same time, interest rates skyrocketed to 20%, which was unbelievable at the time.

The dotcom bubble in the late 1990s was another unforgettable moment. It seemed everyone went crazy over tech stocks, driving them up to levels that were unreal. And then the bubble burst in 2000 and Nasdaq plunged about 80%.

The 2008 financial crisis and housing bust was also a super noteworthy event. The market plunged as the economy and several banks were very close of collapse.

More recently, the covid scare initially freaked everyone out. Emotions ran high, driving stocks and the economy down sharply -30% last year.

And the Bitcoin frenzy since December has been another one, up almost 500% in about two months.

Okay, so fast forward to today and last month we saw another big emotional wild card hit the markets. This one was different than those previous examples just mentioned, but the excitement and sentiment were certainly similar.

We’re sure you’ve heard all about it, but to recap...

The big news all over the mainstream media was the GameStop story. David and Goliath, they called it, and here’s what happened...

… — Download the complete letter: Monthly Letter - February 2021 (PDF).

The Biden inauguration went smoothly and the markets liked the outcome. That was especially true of stocks and precious metals...

Most of the stock market indexes, for instance, hit new record highs and they’re poised to rise further. Sentiment is very bullish, and the market particularly liked the fact that more easy money is coming soon. Also bullish is the fact that the dollar is in a sharp decline and it’s set to fall further.

2020 was one for the history books. And several experts are saying things will get worse in the upcoming months. This is something none of us are looking forward to, but we’re not surprised.

So far, 2021 has not gotten off to a good start. The violent attack on Congress was shocking and sad. We can only hope this type of political upset does not continue and the US is indeed able to heal.

Then there’s the virus. It’s gaining momentum worldwide, yet many people aren’t taking it seriously, but we sure are.

The vaccine is here, and this will make a huge difference as the year moves on. It’ll mark the beginning of the end, so have patience and take care. Once this starts to kick in, 2021 will indeed end up being a better year. It’ll provide hope, change and opportunity and that’s something we’ll all welcome.

… — Download the complete letter: Monthly Letter - January 2021 (PDF).

It’s been difficult in many ways, involving health scares, lifestyle changes and sadness for too many people. We look forward to a new year knowing it will be better.

In one important way, however, this year has been a good year, especially for the markets...

Gold and the metals sector, for instance, have been the big winners, Gold surged 74% in the past two years from its 2018 low to this year’s high. And it’s only declined 14% in recent months from its price peak in August. That’s been a great run, and it continues.

This year gold has risen 35% and silver has been #1, gaining 62%. Gold shares surged 52%.

The stock market has also done well following its steep fall in March. Nasdaq was the winner in the stock sector, rising 38%. The S&P 500 and Dow Industrials, however, lagged, gaining 14% and 4 1⁄2%, respectively.

… — Download the complete letter: Monthly Letter - December 2020 (PDF).

After a long drawn out process, the election was held. A record breaking number of people voted, despite the coronavirus.

As the votes were tallied, Biden won the majority of electoral votes, but the results are being challenged. This is creating nervousness and it could fuel more uncertainty.

Unfortunately, a smooth transition does not appear to be on the agenda. And until it is, there will be ongoing discomfort.

Meanwhile, whatever the outcome, there are quite a few things we know will stay the same...

Currently, for instance, the President elect has already said that his top two priorities will be the economy and the coronavirus. These are the issues on most people’s minds, so it just makes sense they’ll try to tackle these.

The economy is still on thin ice. This will mean more stimulus, and probably the sooner the better.

The stock market is focused on current earnings, forward guidance and whether or not a second stimulus package will get passed. The average American is concerned about their job, dealing with COVID-19 and a host of other social issues. Unfortunately, too many Americans are struggling to pay the bills. Fed Chairman Powell recently said that "more fiscal support is likely to be needed,” and the Fed cannot be alone in rescuing this uncertain economy.

Another round of stimulus will be a boost for equity markets, but it is a bit of a “band- aid on a gunshot wound. While many in Washington seem to agree that more stimulus is needed and that many Americans need help, some political issues are holding up a deal. Unfortunately, political fighting never seems to end.

The world is drowning in debt and, therefore, it’s drowning in bonds. But a new twist in the past decade has been super low interest rates. And in many cases, interest rates below zero.

… — Download the complete letter: Monthly Letter - November 2020 (PDF).

Covid is not getting better. It’s getting worse. Worldwide, the number of cases is more than 36 million and over 1,000,000 have died.

Many of us had hoped it would have diminished by now, but it’s increasingly obvious that it’s going to be around for a good while and instead, we’ve had to learn to live with it.

The Spanish flu lasted two years. That was 100 years ago and experts believe today will be similar. If so, then we could see a another wave as we move into 2021, perhaps lasting until 2022.
Should this happen, it will continue to hurt the global economy, and those effects will be widespread. It would add more uncertainty to the pot and it would strongly affect the markets.

The upcoming election is another wild card in a year of wild cards. It’s fueling uncertainty even more so now that Trump has covid. Plus, it seems likely that the election results will be challenged.

Then what happens? At this point, no one knows but the instability that follows will almost certainly affect the stock market.

We wouldn’t be surprised to see a longer lasting period of economic weakness. We hope not, but as each month passes, it just doesn’t look like the economy will bounce back soon. That’s especially true considering the massive hit the economy is taking due to the growing coronavirus.

Many of the jobs that were lost, for example, are not coming back. Businesses have closed, unemployment is sky high and millions of people are suffering from severe financial distress.

… — Download the complete letter: Monthly Letter - October 2020 (PDF).

The main reason why was because the Fed was printing excessive amounts of money to pay for the governments ever growing expenses and deficits. They simply didn’t have enough money to pay for all these expenses on their own, so the Fed had to step in to pick up the slack.

As you know, too much money creation is the direct cause of inflation. And the end result of all this money creation was going to end up in an inflationary bubble.

There was really no way out of this dilemma. Thus... inflate or die.

And that’s exactly the situation currently taking place, and it’s the most important factor that’s happening, even though everyone has been preoccupied and distracted by other things that’re also very important, like Covid, the election, the economy, protests and more.

But this fundamental financial situation is clearly eroding the overall foundation.

As we’ve mentioned before, but want to emphasize again, the situation today is a mind blowing, never-happened-before event. It’s totally unprecedented.

… — Download the complete letter: Monthly Letter - September 2020 (PDF).

It’s actually strange and sad that the virus has become political. It simply doesn’t make sense.

The virus is like many viruses throughout history. It doesn’t care what your politics are, if you’re young or old, rich or poor, or where you live... It just is, and it’ll continue to attack whatever the circumstances.

The best thing we can all do is protect ourselves and our investments the best we can.

With the new way of working, sometimes at home sometimes in the office, some tasks take longer and we miss the fun and interesting lunch talks where we discussed everything from world politics, good times, not so good times, the markets and much more. But we’re grateful for what we have and we wish you all the best too.

The Trump-Biden outlook.

President Donald Trump is tapping his presidential authority to make tax changes that Congress is refusing to do.

Trump has deferred hundreds of billions of dollars worth of payroll tax levies and is contemplating another executive action that would amount to a roughly $100 billion capital gains tax cut for investors by changing Treasury Department guidelines.

The president is running for re-election in November trailing Democrat Joe Biden in every recent poll. Meanwhile, Congress is deadlocked on another broad stimulus as the country continues to struggle under a still-raging coronavirus pandemic. There are no immediate prospects for more negotiations and the stalemate could drag into September, leaving the economy limping as voters are getting ready to make their choices.

… — Download the complete letter: Monthly Letter - August 2020 (PDF).

In a nutshell, gold is the best investment in the world today. This month it hit nine year highs and it’s poised to go much higher in the years ahead.

So even though you’ve heard it all before, it’s always good to review and then put it in today’s perspective. So here it goes...

Gold is, and always has been, the world’s favorite safe haven. That is, during times of uncertainty, insecurity, economic or political upset, war, devaluations and more, gold has always come out as #1. And this impressive track record goes back more than 5,000 years.

In other words, there’s not one single item or investment that can come anywhere close to beating gold’s mega, long-term track record.

Throughout history, gold has always maintained its purchasing power, and again no other investment comes close.

Gold is also global money. It’s known and accepted throughout the world. This too has been true for thousands of years.

… — Download the complete letter: Monthly Letter - July 2020 (PDF).

This is one of the big uncertainties hanging overhead. No one knows what’s going to happen next. With many countries beginning to open up, the big questions are, will everything eventually get back to normal? Or are we opening too fast at a time when the numbers are still rising? And if so, will this lead to a second wave?

Only time will tell and whatever the outcome, it’ll affect the markets. The main point is, Covid-19 is the biggest wild card we’ve ever seen and it’ll continue to be a major influence for probably a long time to come. So we are staying alert.

The S/P 500 Index has increased 2,400% since 1980. During that period we have seen several crashes, corrections of 20% or more and lots of volatility and scary investors. And still you would have made +2,400%. So there is no point in try to do market timing.

Also individual stocks are even better, as an example, JNJ, AMZN, MSFT have a total return of 6,000%, 40,000% and 79,000% respectively during the same period. So again there is no point in selling strong companies and trying to find something else....you cannot get these kind of returns if you trade.

… — Download the complete letter: Monthly Letter - June 2020 (PDF).

Never in the history of all our lives have we seen the world economy come to a stand- still. This goes far beyond the markets. It’s affecting us in a much more personal, practical and profound way.

The goal is to stay healthy. This is especially so if you’re over 65 years old. That would include many of us, and even though this is new for all of us, we can make the best of our new reality.

Everyone in our office is now working from home. I am working from home too and sometimes in the office, which is rather close. We’re all in touch via WhatsApp, Skype and Zoom. So far, it’s working well.

For now, none of us know how this will end up. But we do know it’s best not to focus on fear and the unknown. It’s best to take one day at a time, which will help to ease stress and anxiety.

Remember, we’re all in this together and we’ll ride it out together. And we’ll come out at the other end with our finances in good shape, we believe. In fact, it’s already starting to happen.

… — Download the complete letter: Monthly Letter - April 2020 (PDF).

Some facts:

There are 316,652 confirmed cases of infections, probably much more (estimated 4x ) due to the fact that many have not been tested or did not even know they were infected.

Total deaths is 13,598 reported (John Hopkins University)

Total recovered is 94,176, again probably more due to the fact that many do not even know they had it.

China’s stock market is down 10% YTD. MSCI World Index is down YTD 30% ? S/P 500 Index is down 29% YTD EuroStoxx50 is down 32% YTD

Why is China holding up so much better than the other markets this year?

First China is actually down 47% since the top in June 2015 while the top on S/P 500 was in Feb 2020. Secondly, the US and Europe are about a month or so behind China, epidemiologically, but also economically.

… — Download the complete letter: Monthly Letter - March 2020 (PDF).

These two issues have been the largest overhang on the markets and are creating the most uncertainty.

For decades, US presidents, regardless of party, failed to hold the Chinese accountable for trading abuses. China was essentially robbing the US and the US government with these abuses on behalf of the strong Chinese growth. Many US companies were willing to sacrifice, just to potentially earn a bit of China’s giant market opportunity.

Republicans and Democrats can agree on few issues, but both publicly stated that the trading relationship with China was problematic and unsustainable.

This ongoing trade war has definitely negatively impacted both countries. A Fed study stated that trade uncertainty cut the US GDP by roughly 1% last year. While many doubt the accuracy and transparency of some of China's official reported figures, the 3rd quarter of 2019 was their lowest GDP result in nearly 30 years.

… — Download the complete letter: Monthly Letter - February 2020 (PDF).

On October 8, 1998, the House voted to begin impeachment proceedings against President Clinton. The S&P 500 initially fell by (4.9%) before finishing the day down (1.2%).

On September 24, 2019, House Speaker Nancy Pelosi announced the launch of a formal impeachment inquiry against President Trump. The market response was eerily similar, down (1.2%).

By the time Clinton was acquitted by the Senate in February 1999, the S&P 500 was up +28%. This doesn’t mean that the stock market is poised for a massive move higher, simply because of impeachment proceedings. The point is to show how certain political events in DC are not necessarily viewed the same on Wall Street. The stock market will likely view these impeachment inquiries as inconsequential and “much to do about nothing”.

… — Download the complete letter: Monthly Letter - January 2020 (PDF).

Stocks soared and so did the metals related markets. All things considered, we're ending the year on a very positive note and we look forward to 2020. Gold surged on Christmas eve, breaking above the important $1500 level. Today gold is up another $10.

The stock market keeps hitting new record highs.....where do we go in 2020 ?

The market's been focusing on the good news and ignoring the bad news. The brighter trade outlook has been a key factor. And as the melt-up continues, stocks are set to rise further. This is being reinforced by the Tracking Index, which also keeps hitting new record highs, signaling the upward momentum remains on track.

Keep the stocks you have.

The outlook for the US economy and the stock market is fairly optimistic. There are two key risks. There is the risk of an ongoing US-China trade war will be prolonged and will have a significant negative impact on the US economy. And there is a political risk, ahead of the US 2020 presidential election.

We anticipate a trade deal with China will materialize, if both parties can claim some positives and media “wins”. In the US, it will be likely be marketed as “the best trade deal with China ever” or at least since it entered the WTO in 2001. As this trade deal is formalized, and uncertainty is lifted, the stock market will rally and the economy will head higher.

Interestingly, the U.S. dollar index is holding firm, despite gold's rise. The dollar will continue to be the best currency and that's where you should keep your cash. If you have the Japanese yen, keep it but don't buy new positions.

… — Download the complete letter: Monthly Letter - Decembre 2019 (PDF).

It really seems that many Democrats wants to see the President of the United States out of the White House. Is there proof strong enough for an empeachment ?

“The President is interested in the wider issue of corruption in Ukraine”. “There are facts about the inefficient use of American taxpayer’s money by representatives of Ukrainian state bodies”.

This is a very thrilling episode: an abuse of power or a “partisan witch hunt”. ???

… — Download the complete letter: Monthly Letter - November 2019 (PDF).

The biggest hero of this decade long bull market remains the US consumer. Consumer spending is estimated to equate to 70% of US GDP. The main driver of the US economy is consumer spending.

To state the obvious, consumers are likely to continue to spend, as long as they have a job. With unemployment at 50-year record lows, this bodes well for continued strong spending.

Consumer confidence is “booming” and the US consumer is driving corporate profits higher. US balance sheets have never been stronger and 2nd quarter earnings results were just the latest example of this positive environment. Over the next month, we will likely see 3rd quarter growth reflect this same positive development.

For 2019, the US economy is expected to experience GDP growth of +2.6%. While this may not be in the 3% to 4% “perfect scenario” range, this growth is the envy of the developed world. This level of growth is actually stronger than the average annual GDP over this entire 101⁄2 year bull-market expansion.

… — Download the complete letter: Monthly Letter - October 2019 (PDF).

There have been 10 recession since WW2 and during 6 of these recessions the S/P 500 Index rose. Most market declines are small and quickly recovered. Even a 15% decline is recovered on average 5 months. I guess there is some wisdom to “Buy on dips” after all.

In many cases most of the pain is felt 6 months before the recession actually begins. Apart from the last six months before a recession being hurtful, markets tend to be very strong.

On average, the S&P 500 generates total returns of more than 15% in the year after a recession ends, and 40% in the three-year period following the economy's return to growth. Because it's impossible to predict with accuracy when a recession will occur or how long it will last, trying to time a recession is generally a bad idea.

Unfortunately, one of the biggest mistakes people make during a recession is to sell their stocks after the market has already fallen sharply, because they expect it to fall even more. The stock market then starts to recover before people are ready to reinvest, resulting in them missing out on the market's recovery.

But those negative effects will probably be short lived. Which is why you should invest in businesses that can make it through the tough times, and then hang on to those investments for the long haul.

…
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Download the complete letter:
Monthly Letter - September 2019 (PDF).

The bull market in stocks has been a long one, and President Trump will do what it takes to keep the market strong leading up to the election. But as you are seeing, the market can become vulnerable and more volatile at any moment. It’s moving on the whims of the day.

China resolutely opposes an escalation of the trade war. The US and China is seeking to ease the trade war tensions, with Beijing calling for calm and Trump is predicting a deal. China has contacted US trade officials and offered to return to the negotiating table. Or have they?

The trade wars are taking a toll on the outlook for the world economy and following the latest escalation of tensions we are expecting global growth to slow down. The key reason why is the re-escalation of the trade wars following President Trump's decision to impose 10% tariffs on the remaining $300 billion of imports from China from 1 September.

The problem with this is when the economy really does slow down, or goes into recession, there won’t be room for the central banks (Fed in the U.S.) to cut interest rates much further, which is an important tool to help boost the economy out of a recession.

…
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Download the complete letter:
Monthly Letter - August 2019 (PDF).

Things are slowly improving on the trade war front and this is something both the USA and China wants. They know an ongoing trade war wouldn’t benefit anyone and it hurts both countries. For this reason, we don’t expect the trade war to drag on.

…
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Download the complete letter:
Monthly Letter - July 2019 (PDF).

Last month Apple, Alphabet, Amazon and Facebook lost more than $130 billion in aggregate market value after the federal government launched what seemed to be a coordinated campaign to examine the companies’ competitive practices. The tech-heavy Nasdaq Composite fell 8.4% in May, mostly on the antitrust news.

According to multiple media comments, the Federal Trade Commission (FTC) was given oversight over Amazon and Facebook, while the Department of Justice (DOJ) received Apple and Google’s parent, Alphabet.

Amazon, Apple, and the Nasdaq managed to finish the week in positive territory, but Facebook and Alphabet shares declined more than 2%. Regardless, May’s selloff shouldn’t be ignored. Investors are worried about regulation, and the headlines won’t go away anytime soon.

But, as usual, there’s no reason to be nervous with every new story on regulation. For investors, the stock price volatility is a chance to step back and analyze each company on its own merits. Would government regulatory action materially affect the economic business models of these core four tech giants?

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Download the complete letter:
Monthly Letter - June 2019 (PDF).

The Sparrowhawk Fund’s successful start in 2019 is partially due to our long-term approach, as business buyers, and not because we are short-term traders or momentum chasers.

The Sparrowhawk Fund, who doesn’t do market timing, but rather is staying invested in quality companies for the long-term, succeeded in staying on the positive side in 2018, +2,47% and is up this year +22,32%. Also, the Fund is still holding the top spot based on the 3-year average total return.

The Sparrowhawk Fund is primarily an Opportunity Fund or a Conviction Fund, based on a concentrated portfolio exposed to strong cash flow companies, and, now more than ever, focusing on quality companies, safe dividends, strong long-term growth potential and cheap valuations.

The Royal Albatross Portfolio also remained on the positive side in 2018 with 80% in cash. This portfolio strategy has never had a negative year since 1973, except 2015 with a loss of -2%. The Portfolio is + 2,67% YTD and is divided in 5 asset classes and holding 40% in cash.

We are convinced that in order to gain decent returns (risk adjusted) from an equity portfolio is to seriously invest for the long-term.

…
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Download the complete letter:
Monthly Letter - May 2019 (PDF).

The Sparrowhawk Fund, who doesn’t do market timing, but rather is staying invested in quality companies for the long-term, succeeded in staying on the positive side in 2018, +2,47% and is up this year +17,49%. Also, the Fund is still holding the top spot based on the 3-year average total return.

The Sparrowhawk Fund is primarily an Opportunity Fund or a Conviction Fund, based on a concentrated portfolio exposed to strong cash flow companies, and, now more than ever, focusing on quality companies, safe dividends, strong long-term growth potential and cheap valuations.

The Royal Albatross Portfolio also remained on the positive side in 2018 with 80% in cash. This portfolio strategy has never had a negative year since 1973, except 2015 with a loss of -2%. The Portfolio is + 2,67% YTD and is divided in 5 asset classes and holding 40% in cash.

…
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Download the complete letter:
Monthly Letter - April 2019 (PDF).

The Sparrowhawk Fund, who doesn’t do market timing, but rather is staying invested in quality companies for the long-term, succeeded in staying on the positive side in 2018, +2,47% and is up this year +15,59%. Also, No1 on a 3-year annual basis.

The Sparrowhawk Fund is a concentrated portfolio exposed to strong cash flow companies and, now more than ever, focusing on quality companies, safe dividends, strong long-term growth potential and cheap valuations.

The Royal Albatross Portfolio also remained on the positive side in 2018 with 80% in cash. This portfolio strategy has never had a negative year since 1973, except 2015 with a loss of -2%. The Portfolio is + 1,61% and holding 40% in cash. We are convinced that in order to gain decent returns (risk adjusted) from an equity portfolio is to seriously invest for the long-term.

…
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Download the complete letter:
Monthly Letter - March 2019 (PDF).

The IMF lowered their world economic growth forecasts, warning of a serious slowdown and emphasized that risks are rising. Does this mean a recession is on the horizon? Not necessarily, but it’s fairly clear that things are slowing down and we have to keep an eye on global developments.

The stock market just had its best first two months of the year since 1991, during which most of the economic news has been more lousy than not. And this is just after the stock market’s worst December since 1931, when corporate earnings and economic indications for late 2018 were, for the most part, pretty good.

This shows once again that markets look ahead. The recent stock market moves imply that the markets are looking past the current slowdown and view it as a temporary phenomenon. At the same time, early indications of 1Q activity are as poor as the stock market’s performance has been good.

The S/P 500 was up 11,08% and the Dow Jones up 11,1% in the first two months of 2019, that made it up for the 9,18% drop in December 2018.

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Download the complete letter:
Monthly Letter - February 2019 (PDF).

Last year was a tough year for equities, actually for all asset classes. The U.S. and world markets were the biggest losers. But our picks in the portfolio saved the Sparrowhawk Fund from red figures

The U.S. and China will begin 48 hours of trade talks today in what will be the highest- level discussions since President Trump and Xi Jinping agreed to a 90-day truce for their trade war in December. Treasury Secretary Steven Mnuchin expects to make "significant progress" toward a comprehensive trade agreement, although many remain skeptical about whether the economic giants can bridge their differences.

The Fund’s return in 2018 of +2,49% outperformed 97% of its Morningstar large-growth funds. The S&P 500 lost -6,24% over the same period, and the MSCI World lost -10,44%

Companies like Visa and Microsoft, and other top performers were among the positions that made the Sparrowhawk Fund number one in the EUR FUND list for 2018 and also number one for the 3-year total return.

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Download the complete letter:
Monthly Letter - January 2019 (PDF).

The stock market just suffered its worst week in 10 years and as a result its raining undervalued blue chip growth stocks. There are now plenty of quality undervalued stocks worth buying. “Be greedy when others are fearful” and take advantage of the market becoming insanely stupid and provide quality companies at obscene discounts to fair value.

What should investors do when confronted with market volatility? The conventional wisdom couldn’t be clearer: Ignore it.

Often the wisest thing to do during periods of extreme market volatility is to stick with the investment plan that you have already put in place. “Resist the urge to sell based solely on recent market movements...it’s best to ignore the noise and focus on the long-term goal”. Sudden market correction or crashes, such as the 2008 crisis and what we have seen in the past few weeks, could present buying rather than selling opportunities, at least for investors with stable finances and long investment horizons.

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Download the complete letter:
Monthly Letter - December 2018 (PDF).

Now, this weekend the Trump and China agreed to halt additional tariffs in a deal that keeps their trade war from escalating. This should be good for the stock market. Trump is asking China to reduce and remove “tariffs”. But Chinese authorities has yet to confirm any move. This has given European car makers, like BMW and Daimler a strong boost in share prices.

“Returning from the G20 summit on Air Force One, Mr Trump told reporters "it's an incredible deal" that would have an "incredibly positive impact on farming".

"What I'd be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs," Mr Trump said.”

Before the G20 meeting Trump insisted on new tariff threats during these meetings. The Chinese may not be under pressure to make concessions. After all, China has the ability to play a long game and the US doesn’t. China has many more weapons in its arsenal in a trade war, including depreciating the currency, launching fiscal stimuli, lowering taxes and interest rates and ending the purchasing of US Treasuries, to name a few.

…
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Download the complete letter:
Monthly Letter - November 2018 (PDF).

The big news this month was the surge in interest rates and the plunge in stock prices. It took many investors by surprise and it affected most markets. Even though interest rates have been rising for a while, the rise has been gradual, which was fine for most investors. But the sudden steep interest rate hike this month really rocked the markets.
What happens next?

Should we sell or keep holding for the long-term? Being a long-term investor, which in my opinion is the only serious approach, doesn’t mean you never sell your stocks. But it does mean adjusting your stock positions based on what is happening in the economy and on the global scene.

Since stocks generally rise over the long-term, you should ride through periods of weakness, knowing stocks will eventually hit bottom and resume their rise.

…
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Download the complete letter:
Monthly Letter - October 2018 (PDF).

Once again equities, held for the long run with patience and conviction, has proven to generate positive returns. Sparrowhawk Fund, with its strategy of limited number of quality holdings has so far generated +15,55% upto August 31st.

The Dow Jones Index is + 5% and the MSCI World Index is + 3,40% YTD.

We are convinced that in order to gain decent returns (risk adjusted) from an equity portfolio is to seriously invest for the long-term.

The Albatross Portfolio is up 3,24% end August 2018 with 40% still in cash. The commodity part is + 4,63% and the US equity part is +10,16%.

Our FAANG stocks (we do not own FB) did well, but also our holdings in less popular companies did really well so far this yerar, such as, Microsoft +32%, Pfizer +20%, Activision +26%, Nike +35 Salesforce +49%

and Visa +30%.

The trade war with China continues to move up and down. On the one hand, Trump is saying he may put tariffs on all Chinese imports into US, but then they say they may start over with fresh talks between the two countries. This would be good because everybody knows a trade war is the biggest risk to the global economy.

…
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Download the complete letter:
Monthly Letter - September 2018 (PDF).

China is taking the next step in the ever-escalating trade war with the US. The country announced it will put 25% tariffs on $16 billion worth of US goods, including oil, steel products, autos and medical equipment. This move was widely expected after the US announced back in August that it would add a 25% tariff to $16 billion of Chinese goods.

Thus far, tariffs haven’t slowed the flow of goods from China. Exports to the US rose 13,3% in July compared too a year ago. Eventually tariffs will hurt both countries. We expect a “mutual” agreement to be announced soon that will remove all tariffs, and free trade will win out.

The Fed discussed raising rates soon to counter excessive economic strength, but also examined how global trade disputes could batter businesses and households. Trump is not really thrilled with rate increases by the

Fed.

The difference in yield between 2-year and 10-year notes narrowed, making it the flattest yield curve since 2007. NOT GOOD.

You may think it is hard for the stock market to ignore these kind of moves, but it does. The Sparrowhawk Fund has again benefitted from being patient. The Fund is up 13,07% as of end July 2018.

The Albatross Portfolio is up 1,84% end July 2018 with 40% still in cash. The commodity part is + 3,85% and the US equity part is +6,54%.

…
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Download the complete letter:
Monthly Letter - August 2018 (PDF).

It’s all about Trump. He is attacking the Fed, which could cause the central bank to hold back on rate hikes. There are many bets on a flattening yield curve and Trump has told that he expects GDP to hit 4,8% in 2018.

You may think it is hard for the stock market to ignore these kind of moves, but it does. The Sparrowhawk Fund has again benefitted from being patient. The Fund is up 10,80% as of end June 2018 and +13,8% mid July.

AT&T will report its results today, a position in the Fund due to their takeover of Time Warner. Verizon shares are up on strong results, so maybe same thing will happen to AT&T. Another position of the Fund, Alphabet, was up 5% due to strong results.

The Albatross Portfolio is up 1,56% end June 2018 with 60% still in cash. The commodity part is + 6,44%

and the US equity part is +3,14%.
The Dow Jones Ind is still in negative territory -1,81% and the S/P 500 Index is + 1,67% end June 2018.

…
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Download the complete letter:
Monthly Letter - July 2018 (PDF).

The Sparrowhawk Fund has benefitted from being patient in the media sector, where Disney and Comcast is fighting for Fox’s assets. Disney just raised their bid to $71,3 billion. The fight goes on and the whole sector is booming. The Fund is +8,13% end May 2018.

The Albatross Portfolio is up 1,84%, with the commodity sector + 8,59% and the US equity part +2,42% and the remaining in cash (60%).

Things had been relatively calm on the trade front, which made the US dollar stronger. China and the US imposed tariffs on each other’s products in March. There have been some sharp words and diplomatic moves going back and forth since then. Tensions eased, until the end of May. The White House announced it will publish a list of $50 billion worth of Chinese goods that will be hit with a 25% tariff. The US also said it will continue pursuing action on trade with China.

Obviously, china was not happy, trying to protect their interest from “reckless” US trade threats. This is

straining relations between the two countries, but then the US hit its closest allies as well. Tensions intensifies when the US said it will put tariffs on aluminum and steel imports from Canada, Mexico and EU. The US is also putting the heat on German cars.

…
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Download the complete letter:
Monthly Letter - June 2018 (PDF).

The market is not always rational, especially in the short-term, and many investors are looking for the slightest reasons to sell in the face of political issues, global geopolitical concerns, and probably most important, rising interest rates. It’s been difficult for investors this year, thanks to volatile markets, mixed signals and ongoing global and geopolitical tensions.

But we have to go with the facts: growing trade tensions have been driving the world markets, sentiment and the global economy. This is one of those wild cards that seems to come out of nowhere. This trade war has become a big one and the reason everyone’s so nervous is because it has the potential to disrupt economic growth, dragging many markets with it.

Then there is the fear of escalation, eventually causing global chaos and maybe even war. It wouldn’t be the first time and it looks like these concerns are growing in synch with the speed at which global tensions have escalated.

...
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Download the complete letter:
Monthly Letter - April 2018 (PDF).

No sooner had the Federal Reserve announced an expected rise in the Fed Funds rate of 0,25%, when the stock market took a dive on Trump’s announcement on new trade tariffs targeted at China. Gold and Bonds rose, while the 10 year yield declined.

The stock market was hard hit. The proposed tariffs on China spooked the market on fears of a trade war. And Facebook’s troubles didn’t help matters either. This pushed the Dow Industrials down more than 700 points and the other stock indexes fell sharply too. But despite this drop, the stock market still remains bullish, and the declines are technically downward corrections.With the US economy now at or near the Fed target of full employment and 2% inflation, the US central bank should continue raising interest rates until they are no longer stimulating growth.

...
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Download the complete letter:
Monthly Letter - March 2018 (PDF).

It’s been a long time since we have seen a drop like we saw this month. The Dow Jones Industrial Average tumbled 1330 points, or 5,2%, to 24190 this month, its worst since Jan. 2016. The S/P 500 index slumped 5,2% to 2619. The Nasdaq dropped 5,1% to 6874. Both the S/P 500 and Dow dropped more than 10% from their Jan. 26 high, the definition of a correction, though they made back some of those losses in a rally.

...
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Download the complete letter:
Monthly Letter - February 2018 (PDF)

This stock market rise doesn’t stop. And as the new year got underway, the stock market continued its incredible record breaking surge with most of the indexes hitting new all-time record highs.
The Dow Industrials also made history by chalking up 71 record closes, ending the year with a gain of 25%. And the other stock indexes were similar

Nasdaq charged through the 7000 level, gaining nearly 30% for the year and marking its longest string of gains in 37 years. Like the Dow, it too hit a record number of new all-time highs. Meanwhile, the S&P500 was making records too. It climbed nearly 20%, its biggest annual gain in four years, which was double its gain in 2016. And the S&P started o 2018, hitting one record high after another, which is somethig it hasn't done in 53 years.

...
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Download the complete letter:
Monthly Letter - January 2018 (PDF).

The new Fed Chairman is named: Jay Powell. If he survives the con rmation process, it’s a done deal. He is in favor of low interest rates. But people are afraid he can change his mind. He is not an economist, which might be a good thing. Low interest rates and the in ation currently below the Fed target of 2%, as we all know, is good for the stock market. is is why Trump choose him....low interest rates is good for business. If he chooses to raise rates, he will be in con ict with the President and may be dismissed. You are not supposed to do those kind of things, but Trump doesn’t care. It wouldn’t be the rst time the Fed wanted to raise rates and the President didn’t. 

...
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Download the complete letter:
Monthly Letter -November 2017 (PDF)

Two big hurricanes, has disrupted big cities, causing loss of life and amounting to hundreds of billions of dollars. Just Hurricane Harvey alone was one of the ten worst natural disasters in the world over the past 50 years. And since Houston was the fourth largest economy in the US, the repercussions will be felt for a long time.

The damage caused by Irma and Harvey could reduce growth this year. But next year, rebuilding will be good for the economy. 
...
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Download the complete letter:
Monthly Letter -October 2017 (PDF)

US companies reported more upbeat earnings. Crude oil is back close to $50 and this could help lift stocks on global markets. Earning and economic data is taking away worries that the world economy may be headed for a slowdown.
The US market tumbled 2% in the last two weeks and investors could pick up some beaten down stocks now.

The Big Picture

Fed recently raised interest rates for the 4th time in 18 months. they feel the economy is strong enough to withstand these rate hikes.
In their favor, they point out the employment picture is the best in decades. Housing is improving
...
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Download the complete letter:
Monthly Letter - August 2017 (PDF)

US companies report more upbeat earnings. Crude oil is back above $50 and helping lift stocks on global markets. Earning and economic data is taking away worries that the world economy may be headed for a slowdown.

The Big Picture

The Fed recently raised interest rates for the 4th time in 18 months. they feel the economy is strong enough to withstand these rate hikes. 
...
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Download the complete letter:
Monthly Letter - July 2017 (PDF)

All eyes have been on France. After Britain voted to leave the EU last year, many feared France would follow. is uncertainty made the markets nervous. But now that Macron won by a landslide and he is pro EU, the markets are breathing again. At least that uncertainty is behind us.

We have other uncertainties hanging overhead. We are watching them closely. Geopolitical tensions in North Korea, is having the world on edge. We also have the US debt load, which currently amounts to about $828,000 per family, and it keep accelerating. e 46 years since 1971 have seen the debt soar by 5,291%. We are now also doubling what was in 2008, just nine years ago. Some experts estimate Trump’s tax cuts alone could cost the government $2 trillion over 10 years. 

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Download the complete letter:
Monthly Letter - June 2017 (PDF)

We are in a quite period for data. e Obamacare drama is nished for now. e Fed meeting is over. Earnings season is past the peak with strong earnings. Don’t worry the market will nd something new soon.

Corporate earnings have been strong on all fronts; improvement over last year, beating expectations on earnings, and beating expectations on revenues.

there have been several important developments, some obvious, some not so obvious, that provide clues as to how this may play out.

The obvious event that everyone paid attention to was the +50 barrage of missiles red at a Syrian air force base in what was said to be a response to the horri c chemical weapons attack that someone perpetrated on civilian men, women and children. Although the attack was not said to be part of a permanent campaign in Syria there has clearly been a change in policy that Russia has been quick to denounce. 

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Monthly Letter - May 2017 (PDF)

The Fedraising the interest rates was widely expected and it’s a vote of con dence for the economy. But .25% is not a big deal. But the Fed said they forsee two more hikes this year?

First, in ation is picking up faster than originally expected. is is happening not only in the US, but in other countries too. is is fueling optimism and investors are not worried about de ation anymore. 

Second, China sold the most Treasuries ever last year. And in December, Japan sold the most in
three years. is is a big deal because China and Japan are the US’s biggest creditors. Trump has been criticizing these two countries, accusing them of manipulating their currencies. China and Japan could respond by selling even more of their Treasury bonds. And this could cause long-term interest rates to soar, which is the last thing the government can a ord because it would make paying the interest on the debt more expensive. 
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Monthly Letter - April 2017 (PDF)

Growth is still slow. But consumer spending is up, home prices are rising and unemployment is low. Manufacturing is picking up, earnings are looking a lot better and there is nothing like improving earnings to support stock prices. De ation pressures have also eased, thanks to rising commodity prices.

e reason interest rates are so important is because they move all major markets. ey in uence business and retirement plans, the economy and the real estate market. ey are powerful and we want to keep an eye on them. 
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Download the complete letter:
Monthly Letter - March 2017 (PDF)