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What We Think

Philosophy

Having an investment philosphy is important if you are going to risk money in the markets.  A good investment philosphy not only helps clarify market behavior, but it also tells you how you should react to changing economic and financial conditions.  

Our investment philosophy yields a three-pronged approach to managing investments:

1.  The tendency of the economy to cycle between periods of boom and bust - the business cycle - implies a similar cyclicality in every investment option that is tied to it.  Each type of investment will, as a result, have a favorable period and a not-so-favorable period within that cycle.  Therefore, investment risk comes from the cyclicality of the economy and it behooves the investor to know where we are in that cycle at all times.

2.  If "timing the market" means trying to stack the odds of success in your favor by aligning investments with the business cycle, then we can time every market whether that market is for bonds, stocks, commodities, currencies, or any other.  Real diversification requires us to time as many disparately correlated markets as is possible and practical.

3.  The willingness to short an asset class is necessary to minimize portfolio drawdown.  Drawdown is the term used to describe the drop in value of a portfolio from the most recent high value to the subsequent lowest value. 

Recommended Reading

Our Favorite Blogs

  • Abnormal Returns
  • Businomics Blog
  • Cafe Hayek
  • CXO's Investing/Trading Insights
  • Ludwig von Mises Institute
  • Marginal Revolution
  • Mish's Global Economic Trend Analysis
  • Peter Dag & Friends
  • Peter J. Boettke
  • Seeking Alpha
  • The Capital Spectator
  • World Beta

 

Great Books Related to Investing

  • Against the Gods: The Remarkable Story of Risk - Peter L. Bernstein
  • The Black Swan: The Impact of the Highly Improbable - Nicholas Nassim Taleb
  • Fooled By Randomness - Nassim Nicholas Taleb
  • Complexity, Risk & Financial Markets - Edgar E. Peters
  • Fractal Market Analysis - Edgar E. Peters
  • Chaos & Order in the Capital Markets - Edgar E. Peters

Article

Much more often than posting blog entries, we will isolate an interesting article from the worlds of economics, finance or politics. We'll post a brief take and you get your chance to respond. All we ask is that your comments be civil. Disagree all you want, just remember that this dialogue is about ideas - not people.

  • Blog
  • Article Commentary

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Posted on 03.23.12 by Patrick Berch

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Posted on 03.23.12 by Patrick Berch

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German Unions (and Politicians) Warm Up to EFSF
Posted on 09.28.11 by Chris Butler

As AP reports, two German union heads are in favor of expanding the European Financial Stability Facility  (EFSF).  Although it seems now that expanding the EFSF has "broad" government support in Germany, I have heard nothing about a change of heart in the German people who are "

No Profit Motive in Government
Posted on 09.21.11 by Chris Butler

Apparently, the Justice Department has an affinity for $8 cups of coffee and $16 muffins.  This is an example of what happens when the there is no profit motive.  The Justice Department is not bound by the same revenue/cost constraints as the private sector precisely because there is no profit motive.  Be that good or bad, it can lead to outcomes detailed in this article.&nb

Greece is the Word. Again.
Posted on 09.19.11 by Chris Butler

Funny how markets kind of forgot about that one thing last week.  What was it?  Oh, right - Greece is going to default!  Markets look poised to start the week on renewed fearsof a Greek default.  Some political setbacks have markets on edge again this week.  Unfortunately, the right thing to do for Greece (default now) will also be the most painful for the entire global e

China Gets It, But Do We?
Posted on 09.14.11 by Chris Butler

In this article, it appears that China understands the benefits of free trade with the US.  In fact, maybe Harry Reid could use a Econ 101 refresher.  Cheap Chinese goods benefit American consumers.  And that's the key issue.  To protect American industry would hurt the American consumer.  The more Chinese goods American consumers buy, the more US dollars China has to

"Just raise taxes...Duh?"
Posted on 06.14.11 by Chris Butler

A recent Wall Street Journal article has the head line, "Private Sector Should Help With Greek Bailout..."  So, let me get this straight.  The government spending programs needed to be funded, so they extracted taxes to pay for most of it.  After many years of profligate government spending in excess of tax revenue, now the private sector must foot the bill for the shortfall?  Only a govern

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Overland Park, KS 66210

info@blwinvestments.com  913.696.1919

 

Securities offered through Brookstone Securities Inc., Member FINRA/SPIC. Advisory services are offered through Butler, Lanz & Wagler, L.C., a Registered Investment Advisor. Butler, Lanz & Wagler, L.C. and Brookstone Securities, Inc. are separate entities.

 

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