Eric Cinnamond writes…In summary, the financial markets, and possibly the economy, appear to be in transition. With uncertainty increasing and equity prices declining, it’s not surprising 2018 is shaping up to be a favorable year for patience and prudence. Of course 2018 isn’t over. It remains possible recent declines in equity prices will cause the Fed to refrain from raising rates tomorrow, sparking a violent year-end rally. Given how much is at stake (how dependent we’ve become on asset inflation), nothing would surprise me. Nevertheless, in my opinion, the days of making money with little effort or consideration for risk appear to be fading (at least for this aging cycle).
For patient absolute return investors rooting for a more favorable opportunity set, the past few months have been refreshing and encouraging. As I’ve stated in recent posts, I’m becoming increasingly optimistic regarding future opportunity. While I don’t have a crystal ball, I suspect 2019 will be another interesting and possibly volatile year. Will 2019 be the year capital can be allocated at prices that adequately compensate investors for risk assumed? I don’t know, but I’m hopeful and can’t wait to find out!
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