The Equus Report

- By Barnaby Levin

Since 1998, Barnaby has been affiliated with some of the country's most highly-regarded economists and business leaders at Stanford University's Institute of Economic Policy Research (SIEPR) where, in 2003, he was nominated to their Board of Directors and still actively serves.

He has written numerous articles and papers regarding Portfolio Strategy, the Markets and our rapidly changing Global Economy.

GOOD!

Dec 14, 2024

Listening to one of Joe Rogan’s interviews from last January (with guest, Taylor Sheridan, of “Yellowstone” fame), they were recalling an interview Paul Harvey did (on the radio) in the mid 60s – in which Harvey was explaining how he (if he were the Devil) would destroy America – by destroying the Country’s Social Fabric. He’d begin, he said, with a campaign of whispers – with the “Wisdom of the Serpent’ (as he told Eve: ‘Do as you please’)...

Behind the Curve

Aug 16, 2024

At the last FOMC meeting (on July 31st), the Fed chose not to lower rates (even by a quarter percent!) when inflation is already at or under 3 percent. Because of this – with Fed Funds stuck at 5 ½% – most market participants consider this “restrictive,” especially for interest-rate sensitive industries like housing. And sure enough – just two days after that fateful decision – Unemployment ticked up to 4.3%, triggering the “Sahm rule” and causing a sell-off in Markets as it dawned on people our Fed was Behind the Curve...

The Last Piece of the Puzzle

Feb 14, 2024

We live in trying times, with emotions running high – where a simple, seemingly innocent comment may trigger something inside someone it wasn’t intended to do. So in my case, I hope and trust my Readers know I’m coming from a good place and a desire to offer whatever insight and clarity I can to things going on in the world – while, in the process, the steps we can take to address or prepare for various outcomes...

The Battle between the HAVES and HAVE NOTS

Dec 4, 2023

When we think of things like “What the ‘Next Big Risk’ will be,” you’ll find all kinds of opinions. For example, Ida Liu (Global Head of Citi’s Private Bank) believes conflict between the US and China over Taiwan is (or should be) our country’s top concern (and it’s only a question of when, not if). We agree: it is a Risk – and a big one – and we’ve spoken of this and China on many occasions in past Podcasts and Reports...

Maslow's Hierarchy of Needs

May 19, 2023

I recently read an article by Noelle Acheson at CoinDesk. It was about Bitcoin (of course ;-) but, interestingly – even though I knew where she was heading – she spent most of her time defining what the word “Safety” means (which, of course, has been changing). In fact, I’ve been saying this for awhile, in my Plutonomix Podcast with Laurie and some of my EQUUS Reports, when talking about 'Risk & Reward'...

Asset Allocation, Investment Strategy & the Power of Compounding

Feb 24, 2023

When we discussed 'Risk & Reward' in my last EQUUS Report, I said – what most people consider 'Low Risk' – no longer is. I suggested that – for those who say mathematical formulas (other than as a place to start) can accurately 'optimize' a Portfolio or tell us where best to invest – it may be a bit misleading (especially if they’re using historical returns, over the past 15 years, as the basis for making their forecasts ...

Risk & Reward

Feb 1, 2023

In 2022, the Nasdaq had its worst year since 2008 and the Dot-Com Bust of 2000. Stalwarts (from Amazon and FedEx to Google and Disney) fell 30, 40 and 50% – while smaller companies (from Coinbase and Rivian, to Snap) were down more than 80%.1 Some (like Tesla) held up relatively well, all year long – until November, when (for various reasons) they simply 'gave up the ghost.' ...

What's Going On with the World of 'Crypto'?

Nov 16, 2022

A Client recently asked: What’s happening with the 'Crypto' market? And, has our outlook on Bitcoin investments, over the next 1-3 years, changed as a result? Well, it’s a long story – in what has been a very bad, couple of weeks for 'Crypto' overall. But first, as a reminder: This is not an offer to buy or sell securities. No investment process is free of risk and there is no guarantee ...

What I Think I Know

Sep 28, 2022

It’s funny. I was just sitting down to write this – with some thoughts on the future – when I read “The Illusion of Knowledge” by Howard Marks at Oaktree Capital. Like Warren Buffett and Charlie Munger, Howard has long expressed his (utter) disregard for people thinking they’re capable of making forecasts – that is, of thinking they have a (snowball’s) chance in hell, except out of (pure dumb) luck ...

Capitulation

May 19, 2022

Given the upheaval going on, right now, in markets all over the world, I want to address something we’re right in the middle of, which is a State of Capitulation. The term, “capitulation,” means “the act of surrendering or ceasing to resist.” It’s when people are so afraid, they start to sell – ultimately without discrimination – because they’ve reached a point (the precondition of which is great suffering ...

Fintech 2.0

Feb 2, 2022

Last year in Season 1 of my new, Plutonomix Podcast with Laurie Kamhi, we spoke about “Fin Tech” and De-centralized Finance, considering some of the innovation going on in everything from “Digital Wallets” and “Mobile Payments,” to Buy Now Pay Later Lending. We highlighted how the companies involved – by reducing cost and removing friction – are increasing ...

Leadership

Nov 10, 2021

In his Quarterly Report to shareholders, Ron Baron spoke a lot about Elon Musk. “Think how expensive it would be,” Elon once asked, “to fly from New York to London if you used a 747 once and then scrapped the plane?” But that was (essentially) what we’d been doing in our Space Program and, as a result, the last time we went to the moon was in 1972 ...

The Pareto Principle

Mar 1, 2021

According to The Pareto Principle, 80% of all outcomes (or outputs) result from 20% of all causes (or inputs) and the amazing thing is that this Principle can be applied to just about every aspect of our lives. Whether it’s money, work or how we allocate our time, if we focus on those inputs that are most productive, the more effective we’ll be in everything we do ...

COVID-19

Jun 20, 2020

In light of the growing threat from the COVID-19 Coronavirus – and the damage to our Energy complex that, I’m afraid, is occurring because of the ill-timed price war between Saudi Arabia and Russia and the price of Crude falling below most companies’ and countries’ cost of production -- we want you to know what we have done to prepare for and, ultimately, take advantage of it ...

T.G.I.F.

Oct 12, 2018

The purpose of these Articles is not only to share my Outlook and let clients know where things stand, but also to provide them the framework within which we are managing their money as that outlook will clearly influence our decisions. It gives us an opportunity to make sure (in this fast-changing world) that we remain philosophically aligned and, if not, open a dialogue so we can come up with ways to make sure that we are going forward.

Seven Surprises

Feb 21, 2017

Every year since 1986, Byron Wien has published a list of “Ten Surprises,” offering his views on a number of economic, financial and political events for the coming year, defining a “surprise” as something that the average investor would only assign a one-in-three chance of taking place but which he believes “probable” – that is, having a better than 50% likelihood of happening. So, I thought it might be fun to try my own hand ...

Essential Context

May 30, 2016

The purpose of my writing these Articles is not only to share my thoughts and Outlook, but also to provide clients the framework within which we are managing their money as that outlook will clearly influence our decisions. I find that it gives us an opportunity to make sure, in this fast-changing world, that we remain philosophically aligned and, if not, open a dialogue so we can come up with ways to make ...

Ipso Facto

Jan 22, 2016

From 2012 to 2014, the S&P 500 was up 72% -- mostly, according to William Priest, because Price/Earnings ratios expanded to historical highs in a Zero-Interest-Rate world: There are only three drivers of stock market returns – Earnings, Price/Earnings multiples and Dividends. Quantitative Easing, which has been the driver of valuation metrics, is ending in the US and UK – nor is it going to have ...

The China Syndrome

Sept 03, 2015

In 1979, “The China Syndrome” (starring Jane Fonda, Jack Lemmon and Michael Douglas) was released on March 16 – twelve days, it turned out, before the infamous Three Mile Island nuclear accident in Pennsylvania. The movie described a fictional, worst-case result of a nuclear meltdown in which the “core” could theoretically melt through its containment structure, into the underlying ...

Wile E.

Dec 31, 2013

So much – and yet so little – has changed over the past two years that I haven’t been sure what to say for a while. Nevertheless, this hasn’t stopped us from making bold and sometimes difficult decisions with regard to Asset Allocation. Actions, we knew, would speak louder than words and it’s clear today that these choices were the only and best thing for us to do on behalf of our clients.

Why Shouldn't Gold

Aug 22, 2012

In “All That Glitters,” Howard Marks says that gold is impossible to value and that it is like religion: you’re either a believer or you’re not, and one can’t ever convince the other. In truth, there really isn’t any analytical way to value an asset that doesn’t produce a Cash Flow. But wouldn’t this be true of almost any tangible asset, including raw land and art? Must we then exclude these from consideration when it comes to long-term asset allocation when everyone knows how much they have appreciated ...

A Mean Reverting Mechanism

Sept 15, 2011

Nobody likes hearing bad news, which is why – despite the size, number and magnitude of issues facing us on a global basis today – I think so many people still believe that we’ll somehow muddle through like we always do. I think this because, when I ask questions, there are a lot of things they just can’t answer. They have notions of what should be done – but can’t offer decent odds that enough other people will agree with them to reach a consensus and take decisive action.

Where You Sit Depends on Where You Stand

Jan 26, 2011

For some time, I have been concerned about the growing dangers posed by stealth inflation, rising, long-term interest rates, the intermediate, principal risk to longer-term Treasury and Municipal debt. The Federal Reserve has not. They believe that inflation is not a threat because the Consumer Price Index – which excludes “volatile” components like food and energy and is heavily weighted toward housing – showed a mere 1.5% increase ...

Short Against the Box

March 12, 2009

The primary purpose of Asset Allocation – by establishing a reasonable degree of diversification – is to provide investors with a means to benefit during favorable conditions while remaining financially secure and comfortable during riskier times. For any given portfolio, adding up to 30 securities – the point where statistical risk becomes constant – should result in a reduction of what is ...

Let's Be Clear

Mar 12, 2009

Two years ago in late 2006, we celebrated positive growth in every country in the world for the first time in history and I quickly broadened the scope of our Large Cap portfolio from 15 to 25 industries in order to gain more exposure to more opportunities. In similar fashion, our Emerging Market portfolio encompassed 13 distinct economies, each of which was growing faster than the US or Europe.

Foreign Exposure

Apr 01, 2005

For several years, I have been steadily increasing our foreign exposure in the “Core” strategy. One reason for this is valuation. Foreign companies like Sony or Cemex have tended to trade at lower multiples than their American counterparts on a price-to-earnings or price-to-sales basis. Another reason is dominance. Given my bias toward choosing the number one- or two ...

The Law of Unintended Consequences

Aug 31, 2004

Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor, and show them that it is for their own advantage to do for him what he requires of them. Give me what I want, and you shall have this which you want. We address ourselves, not to their humanity ...

Is the U.S. Losing its Competitive Edge?

Feb 01, 2004

Besides obvious issues – like Iraq, terrorism and, for the moment, Mad Cow – the big concern on many people’s minds still seems to be the relatively high rate of unemployment. Economically, high unemployment casts doubt on our country’s prospects for continued growth because, pundits claim, everyone else is already tapped out. Politically, it offers Democrats a campaign stump to challenge ...

Demographics

Apr 16, 2003

Author Peter Bernstein says in the prologue to his book “Against the Gods”: “The story I have to tell is marked by a persistent tension between those who assert that the best decisions are based on quantification and numbers, determined by the patterns of the past, and those who base their decisions on more subjective degrees of belief about the uncertain future. It boils down to one’s view about the extent to which the past ...

Boston Tea Party

Jan 08, 2003

Life is not black and white like it is in the “Lord of the Rings.” There, everyone knows who the bad guy is and that his goal is nothing less than to crush spirits and enslave the world. And, despite the risks, they also know that the only choice they truly have is to join hands, “take arms against a sea of troubles and, by opposing, end them.” Failing that, they only prolong the inevitable.

Wrong Way Corrigan

Oct 18, 2002

Not much has changed since my last report. We’re still being bombarded by wave after wave of threats, scandal, fraud and the country’s crisis in confidence is as widespread now as it was then. Well, maybe there’s been a little progress. Some of the people under investigation have actually pleaded guilty or been indicted and New York’s attorney general is on the case. Congress has ...

Creative Destruction

Feb 01, 2002

Capitalism exists in a state of ferment marked by spurts of innovation destroying established enterprises and yielding new ones. Just thinking about last year with The World Trade, The Recession Center, Enron, California’s Energy Crisis and The Telecom Meltdown makes one’s heads spin. It was awful. In fact, you could almost feel this great sigh of relief – rather than celebration ...

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