Way back in 1984, on the day after my 21st birthday, I had what it took to get hired at the firm now known as The Principal Financial Group. That is, I had a pulse…

Here’s money manager Cem Karsan, featured guest in the latest Lead-Lag Live podcast:

“It was easy, you didn’t need education, you didn’t need a strategy, if you told a good story and you held people’s hands, and you sold the idea that hey you always want to be invested, close your eyes, in the long run everything will come back.”

“Over 40 years, because the Fed’s behind you, you can aggregate a heck of a lot of assets, and that’s basically the whole asset management space at this point.” 

“Not having the Federal Reserve’s backing anymore will ultimately lead to a much different kind of market.”

I couldn’t agree more! Cem’s commentary speaks to what we’ve been preaching, frankly, since we added gold (for the first time in 20 years) to portfolios in December 2019, and why we added a slug of other commodities exposure 8 months later. 

And, no, this isn’t us responding to inflation concerns/Fed-tightening along the lines of the 2018 debacle, or 1999/2000, or any other stint over the past 40 years. This is us recognizing the structural shifts; the glaring deglobalization (a multi-dimensional phenomenon) occurring the world over, the surge in populism (a trend that occurs after decades of capital-friendliness culminating in severe wealth and income inequality) and its policy impact, the unrelenting push toward renewable energy, the utter corner(s) central banks have backed themselves into, and so on. 

We appear to be in the early stages of structural, inflationary (relative to the past 40 years) trends that will play out over many years to come — although not linearly, mind you… Trends that simply will not allow for what had become a bottomless pit of central bank pump-priming of financial markets… Trends, therefore, that virtually assure that the path to investment success will veer, perhaps widely, from that of the past several decades…

I.e., while we remain forever open to all possibilities, we believe we’re staring into a macro environment that demands a re-thinking of how money is to be invested, and how risks are to be managed, well beyond the foreseeable future…

And, alas, I fear that far too many in the “asset management space” are asleep at the wheel…