Atlanta, GA

January 26, 2026

“Climate change” has hit Dixie! The US government may not be conquering Greenland. But Greenland seems to have come to us.

The air is frozen, the pavement slick, and our forest of trees is a latticework of ice. So far, the wrong limb hasn’t found the right power line, so electricity still heats, lights, and charges our home.

But we’re ready if some rogue branch breaks. Our fire logs are stacked, the wine cellar is stocked, and outside air can preserve our food.

Release Valve

For now, we enjoy red wine beside a warm fire, and take a moment to revisit my phone. Saturday I decided I’d do without it the entire day. I stayed away most of yesterday too. Today I decided to become reacquainted.

After a few hours, I realized deprivation can be a gift. On a few occasions, I instinctively reached for my back pocket like an antsy gunslinger grabbing an empty holster. But mostly, I didn’t miss this “essential” device, which tends to be a release valve for boredom.

In the dark ages of two decades ago, if we were standing in line or waiting for a friend, we’d use the time to explore our thoughts. Now we carry a computer that provides (or precludes) them for us.

I’m not suggesting smartphones are inherently detrimental. They aren’t. In most ways, they’re miraculous. But like cars, guns, tax advice, or the Internet, they’re merely tools. Often indispensable, sometimes deadly, occasionally worthless. Like hammers, hacksaws, or a keyboard, their value derives from how its used and the person who wields it.

As a writer and investor, I can research stocks, make trades, and scribble this drivel from anywhere in the world. But it’s not the phone’s fault if I go broke or annoy readers. Seeking friction to stay warm, let’s risk doing both.

Wobbly Table

Among the first scenes I saw when I revisited my screen was a video of another shooting in Minneapolis. Beneath it was an avalanche of opinions, most of which reflected prior political perspectives rather than objective assessments of what actually occurred… assuming anyone really knows.

Our devices feed us what we’re supposed to see. As with all “news” we don’t personally witness, it’s a kaleidoscope of clipped images, half truths, and total lies. Based on what we “like” or who we “follow”, algorithms draft us onto one of two teams. They then call plays for us to boo, cheer, or second-guess… to keep us divided while we ignore the owner’s box.

I have no idea what’s really happening in Minneapolis, Tehran, Kiev, or Caracas. I hardly know what my neighbors are up to. Almost no one does.

But ardent opinions instantly congeal about each new “crisis”, most of which are lesions intentionally inflicted by those who promise to salve the wound with unconstitutional ointments and financial gauze lifted from the victims.

Domestic mayhem and foreign misadventures (and the counterfeit currency that funds the mischief) may explain what’s happening with precious metals.

Ominous Harbinger

With US government debt (excluding unfunded liabilities) approaching $40T and the Japanese losing control of long-term yields, the price of gold breached $5,100. Silver crested $110.

Since Trump was inaugurated, gold has almost doubled, and silver quadrupled. For the last six months… and the first time in thirty years… central banks hold more gold than Treasuries as reserves:

As with any insurance policy, gold has always been something we bought in hopes it would go down. These days, it rarely does. Silver almost seems like it can’t. After rising 12% last week, it spiked another 15% this morning (it later retreated to close up several percent).

With a large position in precious metals, I smile about these prices, but wince at what they portend. I don’t know what that is, but with all the idiocy around us, there are plenty of possibilities.

Parabolic moves may make a portfolio look good, but at these levels… like watching a congressman back off a cliff in my new Mercedes… my emotions are mixed. This price action is an ominous harbinger. But whatever it signals will require reliable energy to carry us thru.

Gaia on the Grill

With much of America in the cooler this week, the price of natural gas popped. Gas is a peak load fuel. It’s too expensive to provide base power, but is a perfect source when temperatures plummet.

With the country coated in ice, natural gas jumped almost 50% in ten days. Airy aversion to “fossil fuels” and “carbon footprints” tends to dissipate when the inevitable effect is freezing to death.

Human survival isn’t the only catalyst. Enabling their replacements is important too.

New and prospective AI data centers also require enormous power. Only hydrocarbons and nuclear energy (sufficient supply of which will take years to bring online) can provide it, which probably explains why “climate change” is no longer a pressing problem among technocratic “elites”.

It’s fine to restrict the rubes’ diet, movement, and livelihoods to “protect the planet”. But to acquire data to enhance control, even someone like Bill Gates is willing to toss Gaia on the grill.

Receding Summit

For the last decade, conventional “wisdom” held that desire for hydrocarbons had peaked and that demand would fall. This notion precipitated industry withdrawal of sustaining capital for essential infrastructure.

As with mining metals, extracting and refining oil and gas is extremely capital intensive, and for more than a decade… thanks to political pressure, ESG mandates, and environmental charlatans… investment lagged. Meanwhile, demand keeps going up.

Like Lewis and Clark reaching the Continental Divide and being stunned by endless ridges touching the horizon, events have forced analysts to acknowledge a receding summit for fossil fuels. A couple months ago, the International Energy Agency (IEA) pushed the projected peak demand out another twenty years, with prices lounging above $100 per barrel.

Many oil companies are trading at discounts to net present value at current oil prices (~$60). If IEA projections are correct (or, more likely, understated), those share prices can multiply… particularly for small or mid-cap listings in risky jurisdictions (which regrettably now includes formerly stable places like Canada and Australia).

Tho’ their ascent has been startling, I’m not planning to sell my gold or silver. But I wouldn’t be shocked if some money rotated from precious metals into oil, gas, or even (gasp!)… coal. Many of these stocks have begun to perk up. Is this a temporary blip or the start of a trend?

I don’t know.

But those wanting to ride the train need to be on board, even if it means waiting a while. Natural resource investors are used to spending years as their carriage sits idle, gathering cobwebs on rusting rails in abandoned stations.

Speculators in gold stocks spent more than a decade waiting to be right… which meant they were wrong. Until they weren’t. Such companies catch fire when they come in from the cold.

Reason Enough

Will the energy sector see similar returns after years languishing? Some pockets probably will. Others console us with enticing dividends while we wait. I could be wrong (like most of us, I usually am), but I don’t think it’ll take long to find out.

By demonizing essential hydrocarbons that keep us alive, climate cultists have done considerable damage in religious deference to their deadly fad. For people who enjoy heated homes, lighted rooms, functioning hospitals, and indulging the habit of eating every day, oil, coal, and natural gas are indispensable.

These resources allow the world to sustain eight billion people. They efficiently pick, preserve, and deliver their food; they enable them to move quickly across town or around the globe; and they permit pompous blowhards to type tedious essays on a small screen.

Which may be reason enough for most readers to put their phones away.

JD

Atlanta, GA

January 12, 2026

As the year recedes, financial clouds darken and economic waves are rising. Riding a leaky economy on rough seas, we take inventory of what’s needed to survive the approaching storm.

Among the essentials are a compass and a calendar. Shadows lengthen across the market. We know not the hour. Yet we need a sense of the season, an…

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Atlanta, GA

April 4, 2025

The first thing most people do in situations like this is panic. So at least they’re doing it in the right order.

On Thursday, markets around the world greeted “Liberation Day” the way a man’s betrothed greets her hungover fiancé the morning after his bachelor party when he’s unable to move a few hours before they’re supposed to r…

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Atlanta, GA

March 13, 2025

I rarely do this. But this scenario leaves me no choice.

By almost any metric (the “Buffet Indicator”, Schiller CAPE, DOW/Gold ratio), U.S. equities have rarely been more expensive:

“Buffet Indicator”:

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Phoenix, AZ

December 22, 2024

“Nature is not in a hurry, yet everything is accomplished.”

- Lao Tzu

“Don’t judge each day by the harvest you reap, but by the seeds you plant.”

- Robert Louis Stevenson

“My wealth has come from a combination of living in America, some lucky genes, and compound interest.”

- Warren Buffett

About a decade ago, Fidelity evaluated whi…

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Atlanta, GA

August 5, 2024

“Scared enough to save for the short-term, brave enough to invest for the long-run.”

- Morgan Housel

The first thing most people do in situations like this is panic. So at least they’re doing it in the right order.

But we’ve had a plan and are sticking to it. This morning, markets tanking again. The yen carry-trade is rapidly unwinding.

Overnight, the Nikkei fell more than 12%…the biggest decline since the ‘87 crash. In the US, indices opened down 4-6% (tho’ as often happens, they’ve alleviated some losses after the “amateur hour” following the morning bell).

Who knows how long the drops will continue or how far they’ll go? That’s the only answer that’s easy:

No one. Especially us.

We’ve simply taken precautions to balance our vessel and stay afloat. Today, we take extended time to divulge what they are.

Taking Inventory

Clouds are darkening and waves are rising. Riding a leaky economy on rough seas, we take inventory of what’s needed to survive the approaching storm.

Among the essentials are a compass, and a calendar. Shadows lengthen across the market. We know not the hour. Yet we need a sense of the season, and the direction we’re headed.

Markets, like lives, have reliable cycles…and distinct times. These will guide us as we decide what to retain as we sail to safety.

In this phase of the market and stage of our lives, our objective isn’t to “get rich”. It’s to not become poor.

With that in mind, we’re fine forgoing short-term gains to elude large-scale losses. To stay afloat, we’ve compiled a portfolio of assets. Among them is a dwindling allocation to stocks, for which stop losses are a lifeboat when the winds kick up.

As with anything, trailing stops have their risks. Sometimes they’ll throw us overboard just as the sea subsides.

But as darkness descends and barometric pressure drops, I’m fine forgoing a rising tide if it means avoiding an iceberg. I want to board our vessel with eyes wide open, and with one on the exits.

Before we stock the galley, let’s clear the deck. The first item overboard is…

Bonds

With the exception of short-term T-bills (which I categorize as “cash”), we’ve been reluctant to hold bonds. Not that they can’t be a good tactical trade, particularly after yields spiked the last couple years…or if investors rush to cash their chips after other bets go sour. But with the casino in shambles and the croupier in decline, I’ve preferred to stay away from the table.

For forty years, the tide came in. Stocks and bonds rose together on an ocean of credit. But as the current shifts, the undertow strengthens. When rates rise, stocks and bonds struggle to stay afloat.

In 2022, the “60/40” portfolio by which they’ve been tied together sank further than it ever has. Since then, it’s come up for air, albeit buoyed by a small cohort of the strongest swimmers.

Bond yields move in generational cycles. They fell precipitously after the First World War, and rose relentlessly after the second. They didn’t peak until many of the surviving soldiers had full-grown grandsons.

After the early ‘80s they doggedly dropped. A few years ago, they scraped 5,000 year lows. But now they’ve escaped the channel down which they slid. As the wave again begins to rise, bonds could become less a life vest than an anvil.

Bond risk comes in three forms: default, currency, and interest rates. An explicit default on US government debt is extremely unlikely. Instead, lenders will suffer a stealth heist, with inflation wielded as a surreptitious weapon.

As rates rise in response to that risk, bonds lose value over time…as we’ve seen the last couple years. And principal is returned in deeply depreciated currency.

This won’t happen in a straight line. At the moment, sentiment is stretched and rates are liable to drop. The Fed signaled as much last week, indicating rate cuts could be on the near horizon, perhaps hitting the radar as soon as September.

That isn’t a harbinger of health. Reductions in the fed funds rate don’t usually interrupt recessions. They announce them. But last week came a more reliable sign.

According to the Sahm Rule, when the average three-month unemployment rate rises half a percentage point over the lowest three-month average of the previous year, the economy is in recession.

As the chart above reveals, the Sahm Rule (red line) hasn’t given a false alert since 1960. A July unemployment reading (orange line) of 4.2% would’ve sent the signal. Friday, it registered 4.3%. And the labor market is usually a lagging indicator.

The yield curve is a leading one. For two years its been inverted, a near flawless gauge of upcoming contraction.

But the economy usually doesn’t slump while the curve is flipped. The carnage comes after yields resume their accustomed configuration. That hasn’t happened yet, but it’s inching closer.

If the economy tanks, stocks could drown. They’d probably pull yields down with them as money seeks support from “safe haven” bonds.

But will it be swimming toward the eye of the storm? Treasuries can be a temporary dinghy when the tide goes out. But if a tsunami comes in, that rickety raft can quickly go down. I’d rather not be on it at all.

Gold

Now that we’ve plugged a hole, let’s assess our anchor.

Gold performed exceedingly well during the 1970s, the historical period we seem destined to revisit. It also outperformed stocks during the first two decades of this century.

While the S&P 500 has nearly quadrupled since 2000, gold is up almost nine-fold. Gold fetches seventy times as many dollars as it did when the two were tethered. Stocks are up “only” fifty times (including re-invested dividends) since the gold window was closed.

One of the crucial cycles we’ve previously referenced is the “Dow-to-Gold ratio”. Bill Bonner and Tom Dyson employ this measure…merely the Dow Jones Index divided by the price of an ounce of gold…as their compass. It uses real money to smooth out inflationary “noise” and better assess the value of stocks. When the ratio is high, stocks are expensive; when it’s low, they’re cheap.

This tool isn’t to “time the market” or be too precise. As Bonner put it, we’re not trying to hit the apple; we just want to ensure William Tell is pointed in the right direction.

The Dow peaked in 1929 at about 18 ounces of gold. That was the time to sell stocks, and accumulate more of the Midas metal. A few years later, the ratio tanked to below two…a signal to exchange holdings of gold for inexpensive stocks.

For almost forty years the Dow climbed, exceeding twenty ounces in the late 1960s. The bell was ringing, and the top was in. Those who swapped stocks for gold avoided an 80% inflation-adjusted decline during the 1970s.

By the end of the decade, stocks were shunned, the Dow-Gold ratio approached one…and it was time to buy. For twenty years, the Dow went on a record run, and gold fell asleep (or into a coma). At the turn of the century, the ratio crested forty.

Everyone was in love with stocks, and disparaged gold. It was time get out of the market, and run for shelter. But few wanted to turn off the music or close the bar. Finally, in March 2000, the cops showed up. And over the following two years, nausea intensified as the hangover hit.

Except for those who sold stocks for gold before the sun set. While stocks trudged higher into the ’08 financial collapse, gold multiplied four-fold. After the meltdown, the Dow-Gold ratio had fallen to six.

Then, for the next twelve years, the pendulum swung the other way. The ratio again touched twenty, and stocks began to fall. In terms of gold, we think they have much further to go.

Regardless the ratio (it’s just over 16 now), I think it’s always prudent to own some gold. Certain periods require only a little. Others demand a lot. For my money, this is one of those “others”.

While gold lagged badly during the stock and bond bull of the late twentieth century, that’s not the environment we’re in today. Compared to current astronomic levels, debt twenty-five years ago was relatively low, and real interest rates comparably high. Even after record increases, today’s real rates (based on falsely flattering government data) barely eclipse negative territory!

The point with gold isn’t to increase our wealth. It’s to preserve it. Gold is money. That’s it.

If we endure a crisis, we merely want to retain purchasing power till we come out the other side. We’ve owned gold for years, and (like an insurance premium) never minded its price going down, since that implies most things are going well.

But I don’t think they are. They seem to be getting worse. Within the next few years, it may be time to bar the door and batten the hatches. And gold has always been the best latch.

As storm clouds gather, I’ve increased gold to a third of our portfolio. We’ll keep it there till the Dow-Gold ratio sends a signal to reduce. And then we’ll plan to buy blue chip stocks on the cheap, and ride the dividends the rest of our lives.

Stocks

Jeremy Grantham reminds us that stock markets act “normal” 85% of the time. But it’s the other 15%…when fear, greed, euphoria, or panic are in the saddle to guide the herd… that matter most.

And that’s very likely where we’re about to be. Despite a less rocky path this year, we’re still traversing the greatest bubble of our lives.

For forty years, stocks and bonds charted a lucrative course. A demographic breeze filled their sails, and Fed winds pushed their backs. But after a few years of calm, our forecast is for pressure to shift, clouds to form, and gales to increase.

We’ve seen profitless goofball “growth” stocks that rose on hot air of easy money plummet during the deep freeze of contracting credit. Some have recently bounced. But a large portion will return to earth, and into the grave. And given prevailing financial conditions, even “sturdy” stocks may be part of the wake.

With this in mind, why own stocks at all? Because we must guard against arrogance, and protect against being wrong. And other evidence implies the bull market remains intact.

A particularly compelling piece is the 18.6 year real estate cycle, which suggests stocks and land could have a couple banner years before the real decline the middle of this decade. Supported by two hundred years of history, the process is characterized by credit and land values swinging in sync.

Inflating credit pumps up land prices, which act as collateral for the additional credit higher real estate values require. As more credit is granted, land prices keep rising, perpetuating the feedback loop, which carries construction and other real estate related activity with it.

By this pattern, land prices become a leading indicator of broad economic performance. Data reveals peaks every eighteen to twenty years, after which sharp contractions (lasting about four years) inevitably occur. That puts the next collapse (which could cut indexes at least in half) about a year and a half from now.

Will this two-century cycle continue? No one can be certain, especially me. So despite a general aversion (and because the cycle implies stocks should do well the next couple years), owning some stocks is prudent…and an act of humility.

Because something is inevitable doesn’t mean its imminent. No matter when we think stocks may fall, or how far we believe they’ll go (in real terms), we can’t know for sure.

And as we saw in the 1930s and 1970s, some businesses do well when the world is in tatters. Others are strong enough to weather the storm, and prosper when it clears.

These are the type businesses we want to own now. They are solid companies with pricing power, reliable profits, rising dividends, and that produce real things: energy, agriculture, precious metals, maybe some utilities, healthcare, or consumer staples, and the best businesses that ship or store these essentials.

To provide more cushion and extra income, we often sell put options to acquire desired stocks (or enjoy extra income if we don’t). And when selecting them, we embrace concentration by focusing on the best ideas to not dilute performance with over-diversification.

But for the time being our exposure to stocks is greatly reduced, with strict stop-losses for most holdings. As with gold, we should always own some stocks. There are times for more, and times for less.

At our age and risk tolerance…and in this phase of the market cycle…this is a time for less. For regular income and targeted appreciation under anticipated conditions, about a 30% allocation should do the trick. The current holdings in the equity component of our portfolio are included below.

Cash

In inflationary times, cash is a melting ice cube. But, at least for a while, it’ll keep our drink cold while the heat is on. Like a sealed freezer when the power goes out, cash can temporarily preserve the essentials while storm rolls by.

Inflation eats away the value of cash. But when everything else is falling off a cliff, I’d rather float slowly to the ground with the safety of a parachute. That’s what cash provides. It offers diversification, optionality, an ability to sleep, and time to think.

And now, with short-term T-Bills (which is where we’re keeping our “cash”) offering over 5%, we’re being paid to do so. This may change in coming months, at which point we’ll reassess the best place to store our powder.

After markets crash and the smoke begins to clear, cash is the shovel that lets us sift thru the rubble for abandoned gems and overlooked heirlooms. We can use it to scoop up marquee names that few others are able to access. Then, we’ll hold them forever and collect the dividends.

Cash comprises about a third of our portfolio.

Speculations

As we prefaced above, these aren’t times to try to get rich. They’re periods when you diligently try not to become poor. But smart speculation retains a small spot in our anxious portfolio.

I consider Bitcoin less a pure “speculation” than a source of security, or an asymmetric bet that’s likely to pay off. I think it’s the real deal and everyone should own some. But till further notice we’ll stack our small portion in the “speculative” pile.

With it we include an allocation to true speculations like options, warrants, and private investments. In total, and particularly in this environment, we pour into this bucket no more than 5% of investable assets, with strictly limited position sizes based on the risk profile of each holding.

Conclusion

Markets take long trips along winding roads. Accidents are to be expected, with detours along the way. As we’ve seen, major undulations are infrequent, yet come with cyclical regularity.

We don’t know exactly when steep descents will appear or ascents reverse. We have a general idea, and think we’re headed downhill soon. But we don’t know for sure.

Actually…notwithstanding our cycles, charts, hunches, and whims…we don’t know at all. So we adopt the mantra of investment editor Dan Ferris: prepare, don’t predict.

Asset allocation historically affects portfolio performance more than stock selection does, so that’s what I’ve focused on here. It’s more important to be on the right bus than to pick the best seat.

But wherever you sit, be sure to buckle up. To misquote Bette Davis, it’s going to be a bumpy ride.

PORTFOLIO REVIEW

The asset allocation described above and detailed below is what we’re doing with our own money, excluding real estate investments, private placements, warrants, and short-term options trades.

Real estate is very personal and specific to each individual or family (and in many cases is more consumer good than “investment”), so I’ve not included it as an asset class. And options, warrants, and private placements are too risky, illiquid, inaccessible or fluid for me to post anything that anyone reading this might be inclined to act on.

The Ballast

Gold and “cash” are fairly self-explanatory. We’ll hold cash in short-term (less than a year to maturity) T-Bills, at least till yields start to fall (which, as noted above, could be soon). Gold is held in physical form by secure custodians, in allocated storage in other countries, and in redeemable shares in reputable funds. We also hold Bitcoin in cold storage wallets, with keys secured in several locations.

But individual stocks are obviously more specific. Below are the ones we’ve decided to grab, yet are prepared to ditch when risk-adjusted stops are hit:

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Atlanta, GA

July 30, 2024

To a dispassionate observer, the way people act often makes little superficial sense. This is particularly true in matters of money. 

Our rational mind convinces us to maintain our low interest …

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February 8, 2024

About five months ago, as I do each year, I updated our asset allocation strategy. More recently, we added a speculative stock to the equity portfolio. Today I’ll reveal what it is, and how we decided to make the purchase.

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September 7, 2023

“Scared enough to save for the short-term, brave enough to invest for the long-run.”

- Morgan Housel

Riding a leaky economy on rough seas, we take inventory of what’s needed to survive the app…

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September 7, 2022

September, as Mark Twain noted, is the most dangerous month to speculate in stocks… “along with July, January, April, November, May, March, October, June, December, August – and February.”

Since the Second World War, September is the only month with negative average market returns. But as we wade into dangerous seasonal waters…

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February 4, 2021

A couple days ago, in western Pennsylvania, the groundhog was coaxed from his hole. Last week, in lower Manhattan, bigger game was smoked from its lair.

Wall Street puppeteers routinely pull strings of their Washington marionettes…to enhance their power, fatten their wallets, and fleece the little people. But suddenly…unexpecte…

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