Picto Diary - 10 February 2016 - Skiing with Basketball
Above: Basketball, Montage, Dentist, The Bishop. Silverlode Lift. Park City Ski Area. 10 February 2016.
(42 PC)
The Bishop made history today. No one.. no one in the history of Park City Ski Area has ever skied these runs in one day in sequence:
Turtle
Silver King
Crescent
3/4 Load/Claim Jumper
Blaise's Way
Snowonder
White Pine
Cascade
Mercury
Chrome Alley
Powder Keg
Highway
White Pine
Cascade
Mercury
Connector/Highway
Powder Keg
Home Run
Silver Queen
Drift
Blanch
Home Run
Above: Basketball and Bishop. Quicksilver Gondola. Park City Ski Area. 10 February 2016
Above: Lone skier. King Con ski run. Park City Ski Area. 10 February 2016.
Image captured from Qucksilver Gondola.
Above: Bishop, Mynduveroan, and TIMDT. Windy Ridge restaurant. Park City, UT. 10 February 2016.
Above: Harlan Cadinha, Money Manager, speaks to La Societe Deux Magots (LSDM), Wasatch Bagel, Park City, UT.
Harlan has spoken to LSDM on two previous occasions. Cadinha and Company has an office in Park City, UT.
Hat tip: 'Cake.
Note: Note taker is fallible. Mistakes are his. Harlan Cadinha is welcome to make clarifications/corrections to these notes.
Introduction
Cadinha and Co. has $1 billion under management. Our clients are small business and individuals. Most are conservative in investment philosophy. They seek preservation, protection and enhancement of wealth. So, we are a bit "chicken" about risk. We position ourselves to take 80% of the upside and no more than 30% of the losses.
We could drop 1000 points in the S and P. Not a baby correction. I'm not declaring a bear, but patient (US economy) is in intensive care. Today's market needs a wide berth.
Roger Lipton is a good friend... but, we're not yet ready to make the gold bet.
Demographics pose a challenge to developed economies
Post WWIII was a time of growth. There was an appetite for growth. Baby boom started, Marshall plan was implemented, highways were built. For the most part, post WWII was one sustained bull market through the 1980's.
Growth poses more of a challenge for developed economies today. Japan, with a declining population growth rate, has been sputtering for 20 years. The Chinese have woken up to the reality that their one child policy causes a serious ripple in their ability to sustain growth. In the US, millenials are not buying anything.
So, how to generate growth? Central banks have stepped in and printed money. We now have $230 trillion in global indebtedness. This is a very dicey situation.
Since Bretten Woods, currencies have been floating. US dollar at near value highs relative to basket of world's currencies.
China
Misunderstood. Trump wrong about capital leaving China. If China wants to grow internally, they have to implement their own QE schemes... ie. they have to print their own currency. They have juiced real estate in that way... also their own stock market.
China is under pressure to devalue. If they devalue, what does Russia do?
US
Treasury debt is now $19 trillion. We can handle it if we grow. But, current 2% growth not enough. If Sanders politics are implemented we won't grow and we'll have huge debt implosion. There will be a bad situation all around if holders of US debt lose confidence in US ability to pay its debts.
We must elect leaders who know that growth is necessary to meet our obligations.
We need rules to control central bankers and politicians... to restrict their ability to print money and otherwise tinker with the free economy. Central Bank nees a price rule. I'm not saying our currency needs to be tied to gold, but, more restrictions on money printing than we have today are essential to provide a solid framework to resume growth in the United States.
Considering the fragile economic world situation, no wonder people are sitting on cash. Our median client is one third in equities. He has the balance in cash and short term treasuries. Everybody with money is waiting out the current situation. The next election will tell us a lot about whether or not we get out of the current hole we are in.
Good investments in times of difficulty are natural resource companies which pay a healthy dividend. Exxon is the best of this category.
LSDM: Trump?
HC: I'm trying to figure out what he is saying. Many of the Pub candidates have good tax programs. I like Ben Carson's flat tax. Why is Jeb only fixated on a 4% growth rate? Why not 6%?
LSDM: Gold?
HC: There is less risk in gold than at any time in the last three years. My key is the US$. If the dollar goes down, all bets are off.
LSDM: Under what scenario does the dollar go down?
HC: Sanders election... another QE. Ultimately currencies mirror the prosperity of a people. I don't think our central bank knows what its doing. They have artificially suppressed rates, and, suppressed rates mean bogus asset values.
LSDM: I'm 80% in stocks, 20% in cash. I'm not sure this is a good allocation for the current market conditions.
HC: If you can afford to lose 50% of the value of your holdings and still sustain your life style there is not much point in worrying. Make sure you have some good dividend paying stocks.
Oil was last years problem. Now its banks.
Closing Comments.
The human mind is a difficult thing. These are cleraly down times.... but, somewhere out there is something worth owning that will bring increased value. Think of this as the "glass half full" approach to investing.
Thank-you
LSDM thanks Harlan Cadinha for his insightful remarks today.