Investments

Modern Monetary Theory – It’s Already Here

Jack Duval

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville

bantam inc jack duval MFO UHNW New York - Monopoly money image

The new Benjamin?

For the past six months, Modern Monetary Theory (“MMT”) has been making heads explode all over the blogosphere and in the financial press.  Most of the commentary is from ride-or-die free market capitalists shouting about socialism and the End of Days.  Few seem to have taken the time to know

where MMT comes from or appreciate that (spoiler alert) the Federal Reserve has been practicing MMT for 10 years. Beginnings MMT has a precursor in what is known as Chartalism. The word "Chartalism" has its roots in the Latin word "charta" meaning a token or a ticket.  The term was…

Investments

The Bantam Investment Process – Equity Selection

Jack Duval

Luck is the residue of design - Branch Rickey.

bantam inc jack duval UHNW MFO Manhattan New York - Branch Rickey

Branch Rickey, one of the all-time great "portfolio" managers.

Our biggest holding, Oaktree Capital Group ("OAK"), announced yesterday that it was being acquired by Brookfield Asset Management ("BAM") for $49 per share in cash or 1.077 BAM shares, at the election of the OAK Class A unitholders.  The position was roughly seven percent of our risk asset portfolio

before the announcement. I'm highlighting this investment in order to discuss our investment process and not to brag about a winner (I've had plenty go the other way). Bantam Investment Process We tend to use diversified ETFs or to recreate them ourselves for increased tax efficiency.  (See this post on Custom…

Uncategorized

The Pause that Depresses – Sell Equities/Buy Bonds

Jack Duval

The trope of the "stock market vigilante" is a tale told by an exhausted stock market, full of hope and yearning, signifying nothing.

bantam inc jack duval manhattan new york MFO UHNW OCIO family office - guardian angels image

These guys are back to protect your stock portfolio.

Rarely does the market ring a bell to signal a selling opportunity, but it did yesterday.  Fed Chair Jerome Powell announced the Fed would stop its interest rate hikes and consider slowing its balance sheet reductions. Equity investors, trained over the past 10 years to buy on Fed easing, gorged

on any and all equities, sending the S&P 500 Index up 1.58 percent.  They won’t taste as good coming back up. Bond investors, a less flamboyant type with a sensitive ear for risk, quietly gathered their things and left the party, which they know is over.  They bought bonds across…

Environmental Risks

A Pace Layer Approach to Investing and Risk

Jack Duval

Small changes at the axis can cause enormous changes in layers further out.

bantam inc jack duval UNHW MFO OCIO Manhattan - wind turbine graphic

Is this the future of investment philosophy?

I have written extensively about the rising threat of environmental risks for investors.  Now The Wall Street Journal has caught up, calling the PG&E bankruptcy "the first climate-change bankruptcy", and positing that it won't be the last.  I wrote about PG&E back in November in a post about environmentally resilient portfolios. I believe

the PG&E bankruptcy is small potatoes compared to the systemic environmental costs that are coming. In this post, I want to introduce a new way of thinking about investments that utilizes a framework for time and change called “Pace Layering”.  This framework enables the easy visualization of…

Investments

The Coming Credit Event – Charts Before the Storm

Jack Duval

There’s no way the biggest and longest credit expansion in the history of the world ends in a credit whimper.

bantam inc jack duval multi-family office manhattan new york - sharknado

Artist's rendering of debtnado.

As I have written about here, the corporate bond market has become toxic due to increased leverage levels, the record issuance of low-quality bonds, and leveraged loans (this cycle’s poster boy for excess).  All of this has been made possible by the synchronized global central bank policy of lowering interest

rates to zero (or below zero) after the Global Financial Crisis. Chart 1: Ratio of U.S. Corporate Debt to GDP[1] Chart 2: BBB Share of Corporate Debt Outstanding[2] The Coming Credit Event It seems highy likely that such excess will culminate in a credit event that will mark the end…