At CSCM, we implement our recommendations and build portfolios exclusively of ultra-low cost and broadly diversified Exchange Traded Funds (ETFs). We aim to capture market returns as faithfully as possible. The objective is to build globally allocated and diversified portfolios that are maximally efficient: that is they optimize the return to risk tradeoff at any given level of risk.
4Q-2021 Review & Outlook
With a smart rally in 4Q-2021, the equity markets posted a surprisingly good year in 2021. The U.S. equity bellwether (S&P 500) posted a 28.7% total return, against a backdrop of supply chain disruptions, price increases and pandemic uncertainty.
Is Inflation Real?
Short answer: it is real enough for now. The latest inflation data revealed an annual inflation rate of 7.0% for 2021. We remember inflation of the 1970s as a persistent upwards price spiral. We are not sure that recent price increases are nothing more than the convergence of a spike in demand driven by delayed consumption caused by pandemic lockdowns coupled with sporadic product shortages driven by both supply chain disruptions and rolling worker shortages.
A Tale of Two Market (Exposures)
At CSCM, we implement our recommendations and build portfolios exclusively of ultra-low cost and broadly diversified Exchange Traded Funds (ETFs). We aim to capture market returns as faithfully as possible. The objective is to build globally allocated and diversified portfolios that are maximally efficient: that is they optimize the return to risk tradeoff at any given level of risk. This is not to say that there are not opportunities to bias portfolios towards or away from various different market factors such as: growth, value, dividend yield, momentum or low-volatility to name a few. They do present from time to time.
Structure IS the Strategy
The financial services universe is home to numerous vendors, service and package providers, corporate structures and various levels of competence. Many of them rely on marketing that purports to have special insights into the markets and future events.
Clothier Springs Capital Partners Update
The partnership ended the year on a strong note as we had two capital events. Deal sponsor Penn Capital sold the Mustang 101 project in suburban Houston and 85% of the Madison Grove project in Huntsville, Alabama. The Mustang 101 project delivered us a 13% annualized total (gains + income) return and the Madison Grove project delivered a 25% annualized total return.
Democratization a Two-Edged Sword
Not too long ago, the commission for buying 100 shares of stock at a local brokerage firm was $400. Last week—investing a new account—we bought 1,000 shares of a $20 stock at our custodian—Interactive Brokers. The commission was $5.
Why We Are An Independent RIA
As we hope you know, Clothier Springs Capital Management, LLC is a Registered Investment Advisor (RIA). We are registered with and regulated by the Pennsylvania Department of Securities with the same regulatory requirements as promulgated by the Securities and Exchange Commission (SEC). Once we reach a size threshold, we will be regulated directly by the SEC.
Data Drives Everything
We have always had a bias towards data and analytics. Even as a stock-picking portfolio manager in a former business I always wanted to know the metrics: earnings, Price/Earnings ratios, price to book value, valuations, projected growth, Return on Equity (ROE), dividend yield and payout ratio, etc to name but a few. Knowing the metrics was a way to compare apples to apples and to provide support for any investment decisions. As we live in a data-rich and data driven world, this approach makes complete sense in literally every arena: business, medicine, engineering, even sports.
Bruce Hornsby - Live
One of our favorites--Bruce Hornsby--Playing the song that put him on the map: That’s Just the Way It Is, Live at the Town Hall in NYC in 2004. Check out the musicianship and the competence of the band and the fun they have.