Subtitle: Risks, Myths, and Investment Opportunities in a Radically Reshaped Economy.
Almost finished. The case he's making is cogent and crisply, sharply written. A quick read, though very meaty. His thesis is that smart investors, looking forward, must move from growth to value--- specifically into basic materials. Oil, gas. Gold, silver, copper, palladium, platinum.
We are in decline, economically. I have said as much for several years, myself. Some of the reason for it is that the world has emerged and grown and thrived, following WW II. We're not the 800-pound gorilla in the room which can throw its weight around the way the USA was able to do, decades ago. A big part of the decline, says McDonald, is geopolitics and overspending Inevitably, the gummint will NOT be able to literally pay down the debt, ever again. It's too massive. In order to handle it, the gummint will have to continuously roll it all over as it matures, and play interest rate games to help cover it.
McDonald has no use for economic sanctions, like the sanctions imposed on Russia and specific Russians, following the Russian invasion of Ukraine. (Crimea was previously stolen, annexed.) Russia has friends in other directions. Most are not even communist. Russia is still feeding raw materials to China so the Chinese can manufacture stuff. Gotta keep the power on. And they're not operating with any "Green Revolution" imposed upon themselves.
I was not surprised, in his treatment of that stuff in particular, that he simply ignored the ethical implications of not responding to the Putin-monster, and just letting him have his way. There is no investing conversation or essay or book which will go near anything to do with ethics. Obama, so I read, confronted Putin at a meeting of big-wigs, and told him flat-out: "We can do stuff to you." Granted, because of the multi-polar economic and political environment today, sanctions are proving to be as useful as trying to use your finger to push a string across the table.
Breathtaking quotations that gobsmacked me:
"44% of all US dollars ever created, were created in 2020 and 2021." Ya, that was the Covid era. But holy jaypers. DEVALUATION, much?????
"The US dollar has lost 93% of its value since the year 1900."
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McDonald includes summaries of some interviews he's had with some remarkably smart Shining Lights in the Investment Industry. I just finished up reading his account of a conversation with Charlie Munger. Final, distilled thoughts from that meeting actually lifted my spirits. I've made my share of mistakes in investing, but in broad terms, I could take some satisfaction, realizing I'd been doing these things by instinct, for the most part:
Charlie told him: "Trade and invest less. Sit back and wait for those top two or three opportunities that come along each year. Measure your level of conviction and allocate your capital accordingly. Above all, never trade or invest out of boredom or a desire to find something to do. Keep up your high level of passion for markets. Growing wiser is a combination of humility and diligent curiosity. Without the first, the second is useless."

Might Include
- Tactical trades
- Repositioning
- Closing out a fund or other investment
- Acquiring a new fund or other investment
- Portfolio rebalancing
What’s the purpose here? None, except to have some fun. I get the idea folks here trade a lot. My longest stretch without trading something the past 5 years is probably only a month. The core OEFs (7 or 8 funds) haven’t changed in at least a year. But I’ll rebalance a few of them every 6-12 months. It’s “around the edges” (approx. 20% of holdings) that’s held in ETFs, CEFs, individual stocks) that has gotten churned quite a bit.
Anybody out there that hasn’t traded at least once in the last 12 months?

@yogibearbull
Agree fully. Argentina is the 'poster child' of global countries, of how broke everything can become and remain over a very long time frame.
So much corruption, by so many over the years, that it has become a non-biological DNA.
And the new president's radical, suggested reforms.....
BBC article, February, 2024

Congress staggered the terms of Fed Chait and US Presidents by 2 years.
A recent tradition is almost monthly meetings between the Fed Chair and the Treasury Secretary (representative of the Administration) to provide regular and orderly communications.
The Fed Chair also as semiannual testimonies before the House and Senate subcommittees.
IMO, no further formal communications are needed for the Administration and the Congress.
Anyone is still free to make a public comments or send letters to the Fed.

.....expressed desires to have some form of control and/or a large input into the operations of the Federal Reserve.
We all understand the impact of the Federal Reserve and its impact upon the economy, and our investments.
I'm not expressing an opinion; but providing the latest proclamation by a prominent politician.
The statement, August 8: “I feel the president should have at least [a] say in there,” Trump said during a news conference at his Mar-a-Lago residence in Florida. “Yeah, I feel that strongly. I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.”
Story HERE.

@hank, @catch22 and other MI residents might be amused to know that FBBAX has approximately 1% of its AUM in KEWL, the Keewenau Land Association. This former forestry products company has considerable subsurface mineral rights. The Upper Peninsula of MI is the ultimate fly-over region (speaking from the point of view of a non-native), but one could imagine a revival if profitable mining returned to the UP. To complement that unusual holding, the fund has Phillip Morris. Go-anywhere does not appear to imply ESG.

I used to tour the UP by road several times a summer. Some beautiful locals on the big water. Other than quick one-day trips to the island for bicycling, I haven’t been back in several years, Given my “druthers” I’d drive 4-5 hours east from the Sault into Canada. But I digress. Yes - the UP once boasted a thriving mining industry.
To FBBAX - ISTM Phillip Morris is a favorite of funds that emphasize a stable income stream and / or low volatility. Hasn’t been a bad hold in recent years. (I get the ESG point. Nice job connecting the dots Ben.) Whenever possible, I like to “hold to the fire” any fund I look at by checking how it performed in 2008 - the worst year for equities in my lifetime. FBBAX lost 30.66% in 2008 (according to Yahoo) which was actually a bit better than its category (and probably better than the S&P). This knowedge, however, does not compel me to want to send $$.

@hank- now it's important to realize that the bank bond we're referring to has no FDIC or other government backing- it's a regular commercial bond, with Deutsche Bank having an "A" rating, which isn't the top rating. So it can't be directly compared to CDs or Treasuries as far as safety. But it should be just fine, I would have considered something like that also, but we're a fair amount older than Mike, and 20 years is a long time if by some miracle they don't call it in a couple of years.

“Tough Month for Tech”
Seems like there was a rather active poster here a couple months back who was really pounding the drums for tech. Derided some regulars who weren’t drinking the “AI” laced Kool-Aid. Can’t remember his name.
To be fair, a lot of money has been made in tech over the past year(s). I’m not qualified to say whether the sector is attractively priced now (or how it might look in the midst of a recession). But my experience says most market sectors run in cycles. These cycles appear to have become exaggerated / intensified in recent years due to the technical capabilities at work at trading desks as well as on everybody’s pocket computer.
Thanks @Charles for sharing these charts. Very helpful.

FWIW, I picked up a 20 year corporate bond from Deutsch Bank at 6%. It won't be called for at least 2 years (aug. '26), so I'll take the higher return with the expectation it will inevitably be called in 2026.
Deutsche Bank Aktien 6% 08/16/2044 Callable
CUSIP: 25161FXT0

Thanks @BenWP
I wonder how the anverage retail investor today would react if his “go-anywhere” fund lost 15% in a year when the Dow, NASDAQ and S&P all gained? Obviously the manager had decided to go somewhere non-mainstream. May have been wrong. May have been a year or two early. Might have built a large position in something while price was depressed.
Real hedge funds operate a lot differently than retail funds. They attract wealthy clients who can ride out multi-year losses. They impose limits on how much, if any, they can withdraw for the first several years. And often the operator receives a predetermined % of the gains - adding incentives to take risk. SEC restrictions may be lesser or non-existent. More risk taking. Much different animal.

The First Foundation Total Return fund (FBBAX) does fit the moniker of a go-anywhere fund. It invests in an eclectic mix of international equities (49%), domestic equities (26%) and fixed income (13%). Cash is currently around 10%. The equities represent the full range of market caps and styles. The fund has had some top quintile years and some bottom ones as well. My personal take is that “go-anywhere” sounds sexy, but it does not translate into an investment strategy that one would recommend to a good friend or a family member. I don’t mind trying out a niche fund for a while with money I don’t need for something important, which is what I did with FBBAX.

If looking for a hedge fund like mutual fund, aka liquid alternative, look into QDSNX. High expenses but AQR has a good bench. If a core fund that does well in down markets, then PRPFX & LCORX are worthy considerations. Invested in PRPFX for my parents over 20 years ago and it's performance in down years is excellent. Still a core holding in the portfolio.

Hey @OJ, here are the very simple terms in which I understand the whole thing. The FRED high yield spread measure is the yield difference between junk corp bonds and Treasuries. (There's lots of detail on what's counted in the text below the graph.) Junk of course is more credit risky, so you expect a premium in yield to put your $ into junk.
The premium (spread) has been historically small for quite a while, falling from ~6% 2 years ago to ~ 3% recently, which has meant really juicy returns for hi yield over that time. For a while, just about every week, the talking heads on Bloomberg Real Yield have chatted about when and if those spreads will "widen" (increase) and slow down those juicy returns.
Now the spread has shot up to nearly 4% in a matter of days. It took roughly 8 months to go down from 4% to the low 3's.
Just for reference, back ~ 20 years ago when I was learning about and investing in some HY, the common wisdom was that the spread hitting 4% (on the way down) was a pretty definite sell signal for HY. Recent years have blown that assumption out of the water. But what's next?
Sure feels like a phase shift could be happening. Or maybe it's just another big market freakout. In any case, it's unusual to see that much change in only about a week.

Is Dell really going to let over 10,000 associates go? Super micro margins going down down down....this is not good news for the markets, nor the Ai bubble... Could get interesting over the next few weeks....

I won’t wade into AI / Tech / Consumer staples or other specific sectors. But sometimes I get tired of people talking about “the markets” as if they are all unified and all move in sync. At any given time there are stocks or other assets that are overpriced and other stocks or assets that are reasonably priced or even underpriced. “Verification” is always in hindsight months or years afterward. If we knew for sure what was going to be up 6 months or a year from now and what would be lower 6 months from now investing would be a dream. We’d all be incredibly rich.
Thank you to the vast majority here who have kept politics largely out of the investing forum. Much appreciated. Let’s focus on making money, long term financial health and having some fun together. There are always lively political discussions in the OT section and we who hang out there were recently privileged to have longtime mfo member @Graust, an R, drop by for some civil chatter which takes a lot of balls to do because it’s a bit on the liberal side over there. Perspective from those who disagree is always appreciated.
Just 1 political comment here. I spoke to a neighbor yesterday who “unloaded” on the USA. The country’s “shot” / ”going to hell in a hand-basket”. The government, politicians and public servants are “all crooks”. Everything’s “rigged.” There isn’t a candidate on the ticket of either party that’s worth voting for. To top it all off, he’s so upset with things he will not vote in November!
I thanked him saying, “For every person who chooses not to vote … that makes my vote count a bit more.”

Interesting
PRCFX is less than a year old (automatic eliminate for me despite being run by a star manager. I do hold his TRAIX fund and that has struggled recently).
QLENX has performed a lot better than VNMIX last 3-4 years albeit with a higher level of volatility than VNMIX.
Boils down to timeframes one is looking at (I don't care about daily returns including pivot days like yesterday). Minimal evaluation period for me is 12 months plus.
To each their own, good luck with your journey.

I put money into a fund if it has a good risk/reward record over the past 3-4 years and that meets my personal conservative risk criteria. As a retired investor, I certainly don't want to lose a lot of money at this point of my life.
The only thing that matters to me is performance, and how much of a loss I will tolerate during a market downturn. Bottom line, if a fund doesn't work for me anymore, like QDSNX, for example, I sell it and move on.
As I said, I am currently checking out funds that have done well over the past 3-4 years and also during the recent market downturn. "Market Neutral" funds like QQMNX and VMNFX, and conservative balanced funds like Giroux's PRCFX fit this profile.
Good luck.

So it's really an allocation fund that includes commodities exposure, and as a result can display high volatility (SD).
David went back for an explanation on the -5% single day loss on BLNDX from a few years ago, and of course it was related to commodities.
This is not a fund for the squeamish.

BLNDX has a good track record. I might dip my toes in again (I held it several years ago).
BIVIX (a fallen angel) is also recently showing signs of life.

In the June Standpoint commentary for BLNDX, it stated it's biggest winners as:

Biggest Winners
Long U.S. and Japanese equities. Short soybeans, corn, and Japanese yen.

I guess holding Japanese equity will be their biggest loser in the next report. Still, YTD the fund is up 7.6% compared to a couple other notables from another thread, QDSNX at 5.7% and QQMNX at 9.8%. After several years holding BLNDX, I have to admit, QQMNX is a tempting alternative in this alternative field for a less bumpy ride and, so far, excellent returns (+12.1 3Y).

I am now checking out two "Market Neutral" funds, QQMNX and VMNFX, which held up very well and provided some protection during the recent market downturn. New managers have been at the helm of both funds since 2021.

Today, when the US stock market sees the biggest daily loss in nearly two years (S&P = -3%), "Market Neutral" funds QQMNX only lost 0.05% and VMNFX 0.07%.
Both funds also have excellent 3-year total returns (QQMNX = 12.07% and VMNFX = 15.54%), with standard deviations of less than 8.6%, since new management took over.
So far so good.