Articles of Value

We do a lot of reading in our business. Much of what we read is regurgitated market commentary of little value, but occasionally we come across some well-thought-out pieces that we think are relevant to our clients. Three such articles follow. Before each article, is a brief introduction.

The Greatest Bubble of All Time

The following article highlights one of the worst financial bubbles in the history of the world, the Japanese real estate bubble of the early 1990s. People often like to cite extreme examples in order to prove or disprove a point. These outliers are important to consider, but oftentimes can lead to faulty conclusions that in most cases would be inappropriate. The author, Ben Carlson of Ritholtz Wealth Management, takes a look back at some of the extremes occurring in Japan at this time, and examines some of the lessons (good and bad) that can be taken from what was possibly “the greatest bubble of all-time.”

You Don’t Have to Play

Meb Faber uses a gambling analogy to discuss how long-term market forecasts can be used to avoid overpriced asset classes or increase exposure to cheap asset classes. This is exactly what we do in managing your portfolios. Since market valuation is not a very good short-term market timing device, we never decide “not to play” rather, we reduce our weighting to markets we feel offer limited returns. Faber’s analysis also reflects our current thinking, underweight US and overweight outside the US.

The Financial Basket of Deplorables

The final article is a whimsical play on Hillary Clinton’s now infamous comment on Donald Trump’s supporters. We agree wholeheartedly with Mr. Isola’s list. We avoid these investments and if you know someone who owns them, please have them give us a call.

Hopefully, these articles give some insight into our investment process. We continue to be positioned conservatively in the face of projected low stock and bond returns. We appreciate your confidence in WJ Interests and we look forward to the opportunity to help you reach all your financial goals and objectives.

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