Beyond The Headlines

Here we will post regular letters covering our current macro and micro views.

An Apple, A Plague, and A Bubble
September 17, 2020 | Bogumil Baranowski

I imagine that almost everyone has heard the story of young Isaac Newton watching an apple fall from a tree, which inspired his theory of gravity. A story he shared himself in his memoirs. I will guess that a few would know that he was home at the time, away from school due to a plague going around. And I can bet that even fewer know that the same Newton made some money, but lost a fortune in a stock bubble of his time!

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Boring Stocks for Exciting Times
August 27, 2020 | Bogumil Baranowski

Recently we had the pleasure of hosting an investment idea Zoom call. Normally, we’d have an intimate “idea lunch” in our Manhattan high-rise overlooking Central Park and the Hudson River. This time, our team and a number of guests (friends of the firm) all tuned in from around the country and as far abroad as Mexico and Bermuda! Only their backgrounds of trees outside the window, beautiful bookshelves, and nautically themed paintings could reveal where they might be. Among the stocks we discussed, we came up with some interesting ideas that we call boring stocks for exciting times.

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Risk-Free Rate, Rattlesnakes, and the Revolutionary War
August 13, 2020 | Bogumil Baranowski

In these Covid-era days, we often have to make unfamiliar choices, many of which involve deciding among levels of risk. Megan and I like to break up our work routine and step away from our laptops now and then. Situated as we are in the woods, hiking has become a pleasant escape. Some trails pass right by our cabin, and we can reach others a short drive away. What we’ve learned is that we have a choice between busier trails and less-frequented ones. The former carry a risk of running into someone sick, so we carry masks. But the latter sometimes present the unpleasant surprise of big fat rattlesnakes basking in the sun. Either way, we have to accept a certain risk, and realize that even an innocent hike is not really risk-free!

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August 5, 2020 | François Sicart

Some years ago, I advised my clients: “Never invest in something where you can’t lose money”. This was the time when investors were beginning to mistake market volatility for risk, (which has now become a habit) and financial marketing departments were obliging the hungry crowd with a multitude of mathematicians-created products that promised to make you money whether the market went up or down. Face you win, tails you don’t lose.

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July 6, 2020 | François Sicart

Back in 1999, at the peak of the bubble, I wrote an article entitled “AOL, RCA and The Shape of History” (December 1999) and was inspired by the chart below, borrowed from that Thanksgiving’s issue of The New Yorker. It compared the 1920s bubble in the shares of RCA to the stock performance of AOL in the late 1990s.

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Liquidity vs. Reality
June 12, 2020 | François Sicart

As I began writing this paper, the following headline flashed on Wall Street rally gains steam, with the Dow up 900 points after record surge in US jobs. It didn’t take long for the media to endorse a new narrative: Trump declares jobs coming back on heels of surprise labor report ( and Trump: This is a ‘rocket ship’ recovery (, for example.

To me, these are just the latest instances of how, in the last few years, financial markets have been interpreting any kind of good news, or even the simple promise of good news, as a signal to jump onto the bandwagon of the decade-old bull market and, in today’s language, to adopt a risk-on investment posture.

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Train wreck or a train you can’t miss?
June 11, 2020 | Bogumil Baranowski

To most of us, the March stock market sell-off might have felt like a train wreck, but today in early June the fast stock market rally may feel like a train you can’t miss. Which one is it then?

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Preparing to be prepared
May 27, 2020 | François Sicart

I began my investing career in 1969, following the value philosophy enunciated by Benjamin Graham in his seminal book Security Analysis (1934) and the later (and lighter) The Intelligent Investor (1949).

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Power out, lights out!
May 8, 2020 | Bogumil Baranowski

Whenever I speak about investing to audiences across the country and around the globe, there is a question that almost always comes up. For years now, I’ve been asked about the 2008/2009 financial crisis. Someone in the audience usually wants to know what I was thinking at the time and how investing felt in those days. In the coming years, if anyone asks me how March 2020 felt, I have my answer ready– power out, lights out!

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A sprint, a marathon or a very long hike
April 28, 2020 | Bogumil Baranowski

As I’m sitting today on the porch of a tiny rustic cabin situated next to a creek in thick woods, just a short walk from the Appalachian Trail (a 2,200-mile (3,500 km) hiking trail, the longest in the world, that stretches along the Eastern United States from Springer Mountain in Georgia to Mount Katahdin in Maine), I start to think about the sprints, the marathons, and the very long hikes in life and in investing.

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Are we there yet?
April 20, 2020 | Bogumil Baranowski

I remember taking long road trips with my parents as a kid. We would pack our small Fiat, and head out. Once we visited the lake country in the northwest corner of Poland, and another time it was the beautiful coast of the Baltic Sea. My favorite destination was the charming, often snow-covered Tatra mountains in the south. And like any other kid, the longer the drive, the more often I’d ask — Are we there yet?”

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Buying companies when they lose money
April 16, 2020 | François Sicart

One of my early and most influential mentors, Walter Mewing, began his career before the Great Depression as a messenger on Wall Street. Reportedly, just before the onset of the Depression, he sold all the stockholdings he had managed to accumulate from his small savings in order to buy a chicken farm. Upon returning to Wall Street in the early 1930s, he embarked on a career as a financial analyst and investor. Somehow, he became a partner with my other two (much wealthier) mentors and the much younger Christian Humann, who eventually became my boss and, ultimately, partner.

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Rethink, Reset, Restart
April 7, 2020 | Bogumil Baranowski

One way or another, we have all paused in the last few weeks. It’s been over a month since Megan and I were sitting on packed suitcases ready to fly first to Paris, and then to Warsaw. Our return flight would have been just a day before the ban on flights from Europe was imposed. Looking back, we are glad we decided to forego our trip. Since then though, with the first day of spring already behind us, we have all had a chance to rethink, and reset as we wait to restart our daily routines.

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Second-Order Thoughts
April 1, 2020 | François Sicart

First-order thinking is the process of considering the direct implications of a business decision or policy change. Second-order thinking is the process of identifying the consequences of actions prompted by first-order thinking.

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Investing in times of pandemic
March 23, 2020 | Bogumil Baranowski

The last few weeks have felt like years to most of us. Out of nowhere, we have been wakened from a low-volatility, 11-year-old bull market to a stormy market crash. We’ve seen record-breaking daily moves, mostly downward. Three years of gains have been erased from the major indices in as many weeks, a process that feels like taking a slow escalator up and a fast elevator down.

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Bring out the towels
March 18, 2020 | François Sicart

Warren Buffett famously quipped that we only find out who had been swimming naked when the tide goes out. During the spectacular bull market since 2009, many “professionals” and people relying on their advice had been insisting that we were holding too much cash in our accounts. Our guess is that many naked swimmers who followed their advice are now beginning to sell shares indiscriminately out of either panic or lack of liquidity. Nothing new there: this is what typically happens after periods of greed, thoughtless complacency or fear of missing out in a rising market.

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Dealing with Uncertainty
March 16, 2020 | Bogumil Baranowski

“Investing is dealing with imprecise assumptions tainted by an imperfect world haunted by uncertainty” – that’s how I described investing in my 2015 book – Outsmarting the Crowd: A Value Investor’s Guide to Starting, Building, and Keeping a Family Fortune. Uncertainty is always a part of investing…

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In Search of Calm
March 9, 2020 | Bogumil Baranowski

The last few weeks have been anything but calm. We keep on learning more about the coronavirus spread around the world, and the decisions made to address it. We certainly hope that all the right steps will be taken to not only slow it down, but also to provide sufficient help, and care to those in need.

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The Point and Challenge of Being Prepared
March 3, 2020 | François Sicart

Beyond the traditional choice of our investment management style between categories such as value or growth, fundamental or technical, trading or buy-and-hold, we have tried to abide by two precepts…

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Always keeping a steady course
February 28, 2020 | Bogumil Baranowski

We talked about it, we wrote about it, but now that it is happening, it’s never fun to watch. We knew that it’s a matter of time when the market catches up with the reality. What is always impossible to say is – when. We took the best approach that worked in the past, and was likely to work in the future. We took money off the table, pruned the most vulnerable positions, held excess cash, avoided the highest-flying stocks that have the most room to fall.

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We don’t time the market; we don’t know how
February 25, 2020 | Bogumil Baranowski

Recently I had a conversation with a prospective client who wanted to know about our experience managing family fortunes over generations. Coming from a money manager who always likes to be fully invested, he was intrigued by our choice of holding some cash on the sidelines, ready to invest. “So, you’re timing the market?” he asked. I answered with a smile that we don’t time the market, we don’t know how.

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Value and momentum: the tortoise and the hare
February 3, 2020 | Bogumil Baranowski

Chances are that you remember Aesop’s ancient fable about the Tortoise and the Hare. In case you need a reminder, in that tale the speedy Hare mocks the slow-moving Tortoise, who then challenges it to a race. The Hare sets a scorching pace and leaves the Tortoise far behind. Then, sure of its victory, it takes a nap, only to find out later that the Tortoise has slowly but steadily won the race! The investment terms “value” and “momentum” often remind me of the heroes of Aesop’s fable. Value investing is a steady tortoise, and momentum investing is a jumpy hare. Value investors buy cheap stocks, momentum investors buy stocks that have been going up.

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Tesla and the Dark Alleys of Investing
January 29, 2020 | Bogumil Baranowski

In investing, as well as in life, it pays to avoid dark alleys. Common sense and experience teach us what those dark alleys might be in life: dangerous places where trouble lurks and help might come too late. In investing, dark alleys are investments that can get us in serious trouble, and the worst of them can lose money for bears and bulls alike.

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What if this market will go up forever?
January 13, 2020 | Bogumil Baranowski

In a recent conversation, a prospective client asked me a timely question: “What if this stock market will go up forever?” There are no words that have created more investment opportunities on the one hand and investment trouble on the other than “never” and “forever.” Investing requires us to continuously make our best-educated guesses about the future. The stock market aggregates those guesses in the most efficient way, but it’s driven by fear and greed, and oscillates between those two absolutes of “never” and “forever.”

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When fortunes are made, when fortunes are lost
December 31, 2019 | Bogumil Baranowski

The worst investment advice I ever received was the recommendation to get out of stocks and buy U.S. Treasury bills at the bottom of the market. It was a cold winter evening in March 2009, at the deepest point of the most recent financial crisis (though we couldn’t know that then). I was four years into my investment career in New York City. I was invited to an idea dinner at a very pleasant midtown restaurant. It was a group of top-notch investors around the table, most of them a few decades older than me, and the general feeling was that it was time to abandon stocks for T-bills…

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The Ultimate Argument for Holding Cash
December 5, 2019 | Bogumil Baranowski

With the stock market at an all-time high, patient and disciplined investors have gone right out of fashion, but that’s how we at Sicart still proudly identify ourselves. We don’t just attempt to hold the best- quality businesses we can identify, which we seek to buy at the lowest possible prices. We also remain historically underinvested, holding substantial (and seemingly idle) cash.

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The Tale of Two Books
November 25, 2019 | Bogumil Baranowski

As readers of my articles, you probably know well that books are very important to me. This is an account of two that have been a great influence on me, in very different ways. I discovered both of them around 20 years ago. One has defined my career, and the other still defines stock markets and the economies around the world. The first one I bought, and cherish. The other one I browsed through carefully once, but never cared to own … was I wrong?

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The Art of Cashing Out
November 21, 2019 | Bogumil Baranowski

With stocks at all-time highs, some tech IPOs falling short of expectations, and one huge IPO spectacularly imploding before take-off, some investors may be wondering if there is an art to cashing out. This may be a good time to look at two examples from twenty years ago, during the Internet Bubble.

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Asset rich, but income poor
September 4, 2019 | Bogumil Baranowski

With interest rates dropping and yields disappearing while asset prices hover at all-time highs, we find ourselves in a highly unusual predicament. Over the last few years, in many conversations with clients, friends and fellow investors, I have come across a recurring phenomenon. On one hand, over the last ten years they have witnessed an unprecedented rise in the prices of their assets. However, they see that it takes a lot more capital to generate the level of income they’re accustomed to. In other words, they are asset rich, but income poor.

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August 16, 2019 | François Sicart

Part I of this paper (July 30, 2019) concluded that conditions have gathered for a “Minsky Moment” (the time when apparent financial and economic stability turns into instability and eventually financial crisis or recession). The wait may be long for that precise moment to materialize, but since, as the saying goes, “trees don’t grow to the sky,” education and experience can give us a pretty good idea of the ultimate outcome. Thus, the main challenge lies in determining the likely timing of that moment, which is what we are going to investigate in this Part II.

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August 5, 2019 | François Sicart

A few weeks ago, I had lunch with my old friend and colleague Jean-Marie Eveillard, an investment manager whose career has been as long as mine and quite successful, including the stewardship of one of the first global funds from $15 million to $50 billion and a Lifetime Achievement Award from Morningstar. But his feat I envy most is his statement during the Internet bubble of the 1990s, which we both shunned, that: “I would rather lose half my shareholders than lose half my shareholders’ money”. Over lunch, we naturally wound up reminiscing about the speculative bubbles we had lived through and their aftermaths…

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Fighting the currents; a metaphor for the next decade of stock investing
January 28, 2019 | Bogumil Baranowski

Scuba diving in treacherous currents of the South Pacific reminded me of Mark Twain’s words —“What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.” In a warm atoll, all my experience could have gotten me in trouble because I was in an environment with many completely new conditions. And that’s exactly how we at Sicart feel looking at the stock market environment today. In some respects, it looks familiar, yet it’s different enough from the past to get us into real trouble if we don’t pay attention.

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Where did my trillion dollars go?!!
November 26, 2018 | Bogumil Baranowski

In the last couple of months, the unstoppable, must-own FAANG stocks are down 30% from their highs, and a total of over $1 trillion in market value vanished. What happened? Not long ago, Amazon, Apple and Alphabet (formerly known as Google) each flirted with or surpassed historic trillion-dollar market value thresholds. Where did all that money go?

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November 12, 2018 | François Sicart

In recent months, we have revisited the performances of some of our accounts as well as those of a few other portfolios managed by highly successful long-term investors. Our aim was to try and distillate some wisdom about how long-term performance is achieved and, especially, to dispel some widespread assumptions or preconceived ideas that may lead us to use less-than-optimal tools and techniques for achieving it.

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Zeromania. From a trillion to zero in 10 days?
August 21, 2018 | Bogumil Baranowski

Two great contemporary companies hit milestones recently. Apple reached an astronomical trillion-dollar market capitalization. Meanwhile, Facebook lost 120 billion in a day (comparable to the annual gross domestic product of Warren Buffett’s home state of Nebraska). That made me realize that at Facebook’s record free-fall speed, Apple would need less than 10 days to get to zero… we discuss how the difference between making and keeping money has never been more striking that it is today.

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What to do when nothing works?
May 16, 2018 | Bogumil Baranowski

After my recent TEDx Talk, a student asked me: “How do you invest when nothing works?” It’s such a good question that it deserves a longer answer than I could give that student on that day.

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Buy the dip, don’t buy the dip?
April 6, 2018 | Bogumil Baranowski

Over the last few decades, we’ve been conditioned to buy each market dip, but is this a good strategy today?

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The bull market crashed. Now what?
February 13, 2018 | Bogumil Baranowski

Over the last few days, we have seen about a 10% correction in major equity indices around the world. It definitely got everyone’s attention. Globally, estimated $5 trillion of paper wealth vanished in a matter of days. What happened though? No war, no impeachment, no lasting U.S. government shutdown either.

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February 7, 2018 | François Sicart

In a comment on my recent paper (Picking daisies under a fuming volcano, 11/30/2017) a European colleague with some affinity for our investment style nevertheless reminded me that “for us, asset managers, timing is of the essence” and that “clients will resent our missing another year of rising markets.” This warning was sent before the recent rout in the global stock markets, but it does not affect my strong views on the difference between short-term and long-term investing.

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When Bottom-Up Research Helps Top-Down Understanding
December 29, 2017 | Bogumil Baranowski

In our search for new ideas, we often come across companies we would never invest in. Steinhoff International is one of them. It’s a company we’ve encountered on a few occasions over the last year or two, and in each case, it triggered an immediate negative assessment. Nevertheless, there’s a story worth sharing here.

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Picking daisies under a fuming volcano
November 30, 2017 | François Sicart

In July 2007, near the top of big real estate bubble and only weeks before the Lehman Bros. bankruptcy and the onset of the Great Recession, Charles O. Prince III, then CEO of Citigroup, notoriously declared: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” Today’s markets echo this past episode and remind us that contexts may change, but human nature does not.

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Sicart Associates Macro Views Presentation September 2017
October 2, 2017 | Bogumil Baranowski

Watching the high risk stock market, fragile growth, with limited pro-growth tools left available, we share some secrets to keeping a fortune in those perilous times.

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The most unusual bull market
September 26, 2017 | Bogumil Baranowski

Our current, highly durable bull market is characterized by three qualities: it might be the least exciting bull market in history, it’s been possibly one of the hardest to beat, and when it ends, the resultant crash will have been anticipated for months if not years.

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It’s easier to find someone to blame after the losses than to prepare for adversity
September 13, 2017 | François Sicart

“Shirtsleeves to shirtsleeves in three generations.” – The universality of the proverb above is the reason why, as investment advisers and family office to several generations, we view it as one of our primary missions to help our client families avoid the “curse of inherited wealth”. A good place to start is to try and avoid speculative bubbles and their fortune-destroying aftermaths.

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Life in a shrinking economy, a forgotten concept
August 21, 2017 | Bogumil Baranowski

With everything build for growth, with all assumptions hoping for a never-ending expansion, we take a contrarian view and consider a world with a shrinking economy. We see tailwinds of the last 40 years turning into headwinds ahead, and changing how we think about investing, and wealth preservation.

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How can we be wrong?
July 31, 2017 | Bogumil Baranowski

When we analyze an individual stock or the market as whole, we wonder how our conclusions can be wrong. Lately, we think the current market offers extremely low reward at an extremely high risk. How can it keep going up forever? Only if it finds buyers. Since the last financial crisis, debt-funded corporate share repurchases have amounted to almost 20% of market capitalization, and they offset net selling across most other investor types. Will anyone replace those buyers? And do they have the capital to do so?

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June 29, 2017 | François Sicart

The asset bull market of the last eight years has been quite comfortable for the 20% of the population who own investment portfolios. This is no time for complacency, however.

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The Emperor’s New Clothes – Understanding Today’s Financial World
June 23, 2017 | Bogumil Baranowski

Sometimes it seems that we learn all we need to know in life as children, and then somehow forget it all as adults. Recently, I had the pleasure of reading again Hans Christian Andersen’s tale – “The Emperor’s New Clothes”. Tricked by two enterprising weavers a vain emperor agrees to wear a suit made of invisible fabric. As you may remember, when the emperor chooses to parade his new attire, only a child in the crowd dares to say he is not wearing anything at all. Let us, for a moment, look at the financial world through the eyes of that child.

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How to save a fortune, and make money in these perilous times?
May 24, 2017 | Bogumil Baranowski

Our clients are families, and our job is to take good care of their fortunes for generations to come. We are playing the very long term game. We can wait. Today investing may feel like shopping in a crowded department store at the peak of pre-holiday frenzy, but we all know what happens after New Year’s Day — fewer shoppers, better selection, better prices. It only takes some patience.

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April 12, 2017 | Bogumil Baranowski

As much we avoid forecasting the market’s direction, we have reasons to believe the US stock market is too high. It’s not a question of “if” but “when,” “how much,” and “for how long” stock prices will drop. We believe that most asset prices could be subject to some of the biggest declines we have seen in decades, if not a century.

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February 2017 Monthly Letter
March 1, 2017 | Bogumil Baranowski

Please enjoy our monthly letter. We discuss the higher highs for the market, the earnings seasons, Fed rates decision, car loan delinquencies, and we share thoughts on the government policies.

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February 21, 2017 | François Sicart

In a previous paper, I argued that policy makers are being increasingly misled by statistics that were created to measure the 20th-century industrial economy. Our more virtual, 21st-century economy is hard to capture with such obsolete methods. I concluded with a question, which I promised to answer in a forthcoming paper:
“Faced with contradictory indicators that seem to be confusing policy makers, what should investors do?”

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January 2017 Monthly Letter
January 30, 2017 | Bogumil Baranowski

Please enjoy our monthly letter. We discuss the impact of Trump’s policies, strong labor market, flat markets but still at record highs.

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January 27, 2017 | François Sicart

“Consumer sentiment in U.S. hovers near highest in 12 years.” This cheerful headline from Bloomberg on January 13 reflects the general tone of the media during the recent “Trump Rally.” At the same time, the Gallup organization reports that “In the US, personal satisfaction [is] back to pre-recession levels.” But, as John Authers had pointed out in the Financial Times a few days earlier: Those strong consumer confidence numbers came as the new year dawned with some horrific announcements from the biggest department stores, traditionally the beneficiaries of consumer confidence and also big employers.

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December 2016 Monthly Letter
December 20, 2016 | François Sicart

Please enjoy our monthly letter. We discuss the impact of US presidential elections, interest rates heading up, stronger dollar, and record highs for US equity markets among other.

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With Nothing New To Buy Baby Boomers Are Ready To Cash Out
December 13, 2016 | Bogumil Baranowski

Insatiable appetite for stocks (over-sized demand) driven by baby boomers funding their retirement accounts has boosted the stock market for decades. Now a dry spell in new IPOs (shrinking supply) has helped propel stocks even higher to historic levels. Both of those trends are about to reverse. Baby boomers have already started upping their retirement account withdrawals (falling demand), and pent-up supply of innovation may inundate the market with a fresh wave of IPOs in the years to come.

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Between Inflation and Deflation
November 15, 2016 | François Sicart

The 1970s and early 1980s were years of turmoil. From 1963 to 1969, US President Lyndon Johnson had pursued “Guns and Butter” policies that simultaneously financed an escalating war in Vietnam and his “Great Society” welfare programs at home.

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Baby Boom Investors: Geniuses or Just Lucky?
September 2, 2016 | François Sicart

I founded Tocqueville Asset Management in 1985, with what turned out to be incredibly good timing. Since then, the S&P 500 index of the US stock market has risen from 210 to almost 2,200 — a more than ten-fold appreciation in just over 30 years.

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