How the Economic Machine Works

Looking back on our past blog posts, it is remarkable how patience can play out.  Just several months ago, the world was over.  Now, we have regained those losses.  One could have almost turned off the TV for the entire time, relaxed on a remote island for the summer, and been absolutely fine!

As we come into year end, there are only a few things to be thinking about.  Re-balancing and taxes.  This is the time to review any tax losses you can recognize against any portfolio re-balancing that you might require.

While thinking those thoughts, we wanted to share with you a terrific video that we keep coming back to by Ray Dalio of Bridgewater & Associates (one of the worlds largest hedge funds).  It is 31 minutes of brilliance and does a fantastic job of explaining much of the economy.  Take a moment to watch it and gain an MBA in just 30 short minutes!

Blood In the Streets

Some of you we have known and worked with at SoHo for over 20+ years.  In that time you have learned one thing...we never follow the crowds.  PERIOD.

That mission has allowed us to navigate you through debt crises, sovereign defaults, wars, dot-com busts, mortgage busts, and Great Recessions.

Now as you read the press it is hard not to be depressed.  Markets are selling off, ebola, Gaza, Ukraine, Malaysian airlines, etc.  What is their to be "happy" about?

As the Rothschilds used to say, you invest when there is blood in the streets.  Tragically, that is certainly the case today.  

This is the time of the year (we only do this 4x per year!) when we re-balance.  In other words, we take a look at your portfolio and decide whether or not to re-allocate your portfolio back to your target weightings.  As part of that, we will be recommending that you re-visit your equity allocations.  Our SoHo model portfolios have continued to do exactly what we have constructed them to do in times like this.  For an overview of what they achieved as of last quarter, please click here.

Our team will be reaching out to you to meet and discuss your portfolio.  To contact us, just click here.

The World Cup & Re-balancing

Today was a fascinating example of a patient plan methodically executed.  Germany utterly dismantled Brazil today in a match that should have been "mercied" by the referee.

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At the beginning, Brazil plunged into the match with emotional fury.  They seemed to be everywhere on pitch all at once.  Germany seemed slow and measured.  Initially, it looked like Brazil might take the match!

But then slowly, Germany opened up the game, then it quickly became overwhelming...the rest is sports history.

As you review your portfolio now, ask yourself how much of your current decision making is "Brazil."  The market is at new highs...maybe now you double down on risk?  Maybe you start playing a new game you are not used to playing.  Or, do you patiently re-assess, review your strategy, and then patiently execute your longer game-plan.

As Germany showed today, when you deviate from your plan, the penalties can be devastating.

Talk with one of our advisors today about your portfolio by clicking here. and scheduling an appointment!

Is inflation coming?

For some time now we have advocated a prudent stance with regards to inflation.  Ironically, it is clearly in our best interest as an economy for some price pressure to re-exhibit itself (see here for Bridgewater's Ray Dalio's take by clicking here).

Here was another interesting write-up that we wanted to share with you:

Is inflation coming?

Musings for a long weekend...

As we approach the long weekend, it is important to place today's market close into context.

Yes, the market reached a new high amidst good employment data.  On the face of this, this is quite good news...isn't it?  Yes.

But, while we are not market forecasters, we are however financial pragmatists.  Meaning, we need to ask ourselves, what should the DJIA be right now?  

Several years ago, SoHo did an appearance on CNBC, and explained the math.

Based on market levels from 2007/2008, the DJIA would today need to be well north of 22,000 for investors to "break even."  In other words, for Baby Boomers to be back on track with regards to their retirement the DJIA would need to be a lot, lot higher.  Almost 30% higher.

So take the time this weekend to ponder this and consider the risk.  Investors no doubt will be pouring back into equities as market pundits tout "new highs"...but with 22,000 as the target, we should be hearing that quite often.

At SoHo, we always advocate that investing is not a sprint, but a marathon.  Keep focused on the long game and do not be led into a suckers game and follow the herd.

In the interim enjoy the long weekend!