The Uncrowned King

Wednesday, December 7th, 2016

Cash compared with a balanced mandate

Nothing illustrates the cumulative distortions QE has imposed on US financial markets, better than the historic returns of a balanced 50/50 portfolio relative to cash. The current upswing has lasted almost eight years in an unbroken trend, as opposed the usual five. Our probability indicators suggest that we are getting close to a break of trend. If the Fed raises rates by more than expected in 2017, cash may yet be king.

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In Praise of Cash

Wednesday, November 30th, 2016

What happens if the Fed surprises on the upside

US cash deposits are a neglected asset class. Our models suggest that US Treasuries, Gold and Investment Grade bonds have a low or no-better-than-evens chance of beating cash on a risk-adjusted basis. If you don’t have to own them, you should be reducing your exposure. Our numbers do not include the risk the Fed decides to surprise on the upside in 2017.

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