For those fortunate souls who have not succumbed to the Siren’s call that is the game of golf, a Mulligan is basically a free “do-over.” The term “mulligan” represents an opportunity to have a second chance to do what you wish you had done from the start. In the world of federal income taxes, there are not many chances at a mulligan.

The first half of 2024 was strong for global risk assets as many investors believed in the “goldilocks” narrative for the markets. US economic growth was strong, inflation continued to make progress lower, and there was an unquenchable thirst for “AI” related stocks, which seemed to go up every single day, regardless of the macro or micro news flow. 

In theory, the turn in a calendar year should have no impact on market trends or leadership, yet it always amazes us how each year develops its own unique characteristics and storylines. Since COVID, the investment landscape has been unique. Various aspects of the economy seem as desynchronized as they have been at any point in modern times.

Since the last time we formally wrote in mid-December, there have been some significant changes to the investment landscape. Most notably of course is that we recently experienced the largest bank failures since the Great Financial Crisis.

Good afternoon, the failure of Silicon Valley Bank shook markets last week as investors try to comprehend the uncertainty of this situation for the entire banking industry. It’s a tragic situation for those involved. We have listed several thoughts below.

Every December Wall Street strategists partake in their annual ritual of forecasting where the S&P 500 will be a year from now. To be fair, this is somewhat of a thankless exercise as capital markets simply do not allow investors to be this precise.

There is no shortage of ways one could describe the current investment environment, but we will allow the great Stanley Druckenmiller to opine on it for us:

Good afternoon, we wanted to share some current thoughts on the markets and
portfolio construction given this challenging investment environment.

We wanted to provide an update with our latest thoughts given the continued volatility across capital markets and the escalating situation in Russia / Ukraine.

We feel fortunate to be a couple of weeks delayed in translating our thoughts in writing for the year ahead since the investment landscape has changed considerably since the beginning of this year.