Thoughts from the Frontline

Last week I compared our jobs data, which is sometimes questionable, to World War II weather forecasts. Those were also questionable but necessary anyway. The generals needed them “for planning purposes.”

I remember when August was a slow month. School didn’t start until after Labor Day. Even in my adult days in the investment world, not much happened. People were either on vacation or coming back and getting ready for September. It’s hard to believe, but nobody really cared about Jackson Hole in the ’80s or ’90s. And it had several venues up until 1981 when it became “Jackson Hole.”

I am widely known as the “Muddle Through” guy. The giant US economy is part of an even larger global economy that doesn’t change direction easily. Major shifts occur slowly, even when presidents, central bankers, and CEOs want otherwise. They don’t have nearly as much power as they may think.

Many people yearn for a simpler life. Ironically, that’s the one thing we’re almost guaranteed not to get. Technology keeps shifting the ground beneath us, mostly for the better, but also creates complications for businesses and individuals. The rules, especially from the government, seem to keep shifting, too. Everything around us just gets more and more complicated, including the economy and markets.

If you listen to the media—both MSM and social media—it seems like everyone in the world wants lower interest rates.

We like to say markets don’t lie. That may be so, but they can certainly send mixed signals.

Happy Fourth of July! I hope you’re enjoying a long holiday weekend. That’s what I am doing, so this letter will be a little different.

Economic news is increasingly hard to follow these days, mainly because it changes so fast and it gives so many mixed signals. Less than three months ago, we were all in shock from President Trump’s “Liberation Day” tariff announcement. While he paused the worst parts of that plan, US import taxes are still at their highest point in decades. Yet now the headlines are more about oil and geopolitics. It turns out that most of the news is just noise. The markets aren’t significantly different from where they were 90 days ago.

Today we’ll talk again about the SIC—not the Strategic Investment Conference, but the Strategic Investment Conclusions it helped us reach. This is not a recap of the conference. It’s my reflection on some things I think we should practice in our lives and our investment portfolio management. The “strategic” part means we don’t seek information for its own sake. We seek information because it should influence our actions.

One cannot overstate the importance of Claude Shannon and his 1940s work on information theory at Bell Labs. It was foundational to modern telecommunications and electronics. We’ve seen constant improvement in our ability to communicate because we can separate the important information from the noise.

“We desperately as a country want to destroy more jobs. That is the only good outcome in the next 10 years…”

I call our annual event the Strategic Investment Conference for a reason. Understanding the macro trends is only the first step. We all have to apply that knowledge in our own portfolios so we can tolerate short-term fluctuations and achieve our bigger goals.