Season Investments

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WEEKLY INSIGHTS

The Growth Recession

Posted on Feb 19, 2013

Although the stock market and the economy bottomed around the same time, the speed of the recovery in these two markets has been quite different. How has the stock market rebounded so well while the economy is still nowhere near the level it was at before the crisis?

Achieving Real Diversification

Posted on Feb 12, 2013

The foundational principal of Diversification 2.0 is finding and investing in assets with low correlation to each other. A portfolio consisting of highly correlated investments is nothing more than a one directional bet on the future. The portfolio will do well in one particular environment but is exposed to a great number of risks if the world doesn't unfold as expected.

Taking the Tide at the Flood

Posted on Feb 5, 2013

There is a bull market in uncertainty that is unsettling for many but also creates opportunity for those willing to take the tide at the flood. This uncertainty is not unfounded, but it might be overpriced. Part of our job is to find the best way to take advantage of the “flood” in uncertainty.

Buying A Four-Letter Word

Posted on Jan 29, 2013

We added AAPL to our watch list when it broke below $550 in November, and we purchased the stock yesterday in our client portfolios at roughly $451/share. We’ll spare you the technical details as there is no shortage of hyper-granular analysis available on the web, but here are a handful of high-level reasons for our decision.

Exporting Unemployment

Posted on Jan 22, 2013

The global financial crisis in 2008 was a game changer on many levels. One of which was, and continues to be, the gross reality that developed economies can no longer borrow their way to prosperity. According to many central banks, the answer to this problem is to export unemployment to other countries through competitive currency devaluation.

The 95th Raising of the Debt Ceiling

Posted on Jan 15, 2013

The whole concept of the debt ceiling is a bit strange in that Congress has the power to set revenues and spending, but not the issuance of debt to fill the gap between these two. How did the debt ceiling come about and will this most recent debate over raising it for the 95th time be a game changer?

An 18-Month Devolution

Posted on Jan 8, 2013

The deal Congress reached on New Year's day dealt with several, but not all, of the important components of the Fiscal Cliff. The real fireworks may be yet to come...

Wimpy Economics

Posted on Dec 18, 2012

Our modern society believes that pain and sacrifice are unnecessary evils that can be alleviated by borrowing from our future prosperity. We can think of this as Wimpy economics since we would “gladly pay you Tuesday” for a hamburger today.

The Best of a Terrible Set of Choices

Posted on Dec 11, 2012

The US Treasury has just announced that it will sell its remaining 234 million AIG shares in its sixth offering since the rescue, thereby securing a $4.1 billion profit on its investment in AIG stock. But while the economic tethers of the bailout will soon be cut free, has the success of the AIG bailout created a slippery slope for future bailouts?

The Patience of Taleb

Posted on Dec 4, 2012

Nassim Taleb made his fortune with an uncanny willingness to lose small amounts of money the majority of the time in order to collect a huge windfall over short, punctuated “Black Swan” events. We see XVZ as having similar characteristics to Taleb’s strategy, and therefore believe it demands patience and a long time horizon in order to prove its investment merit.

Can the Stock Market Repeat?

Posted on Nov 27, 2012

This will be the first quarter of negative growth in the past eleven, and while the majority of companies beat bottom line earnings estimates, the 41% that beat top line sales estimates is the lowest since the first quarter of 2009.

Valuation Matters

Posted on Nov 20, 2012

Stock market performance over any time period can be broken down in terms of the change in the underlying earnings-per-share and the change in the P/E multiple. The best scenario is when earnings are growing and P/E multiples are expanding.If earnings are declining and P/E multiples are contracting then the market is facing dual headwinds.