The Sunday Drive - 03/31/2024 Edition [#104]
Musings and Meanderings of a Financial Provocateur
👋🏼 Hello friends,
This week’s edition of the Sunday Drive is special to me for a number of reasons.
First off, this is the 104th edition, marking the two year anniversary of this weekly newsletter which I started shortly after my retirement from Eaton Vance at the end of 2021 as a way to stay in touch with friends, family, and former colleagues.
Today also marks the one year anniversary of the inception of the private investment fund I launched under the banner of New Lantern Capital, the firm I started in 2022. I’m quite pleased with how the fund performed in its inaugural year, and am particularly happy with its performance on a risk-adjusted basis. I’m very grateful for the support of our early investors in the fund and am excited to tell the New Lantern story to more folks in 2024 now that we have a full year of performance under our belt.
It’s also Easter Sunday and I hope that all of you who celebrate can do so surrounded by family and friends who love you.
We will get to our regularly scheduled programming shortly, but first…
🚨 A Professional Update
Many of you have known me for quite a while and understand me as a person who functions best as a member of a team. While I have enjoyed my independence these last two years after leaving the confines of the corporate world at a publicly traded asset manager, I have very much missed having partners, colleagues, and teammates.
During my tenure as a portfolio manager at Eaton Vance, I managed alongside my partners, two distinct types of funds:
Exchange Funds, which offer a tax-efficient way to diversify concentrated stock positions. Eaton Vance was, and still is, the market leader.
Equity Income Funds, primarily option income funds which incorporate options as a means to generate income and manage risk. The New Lantern branded fund mentioned above is of this variety.
In a sense, I am a bit like a two sport athlete because these types of funds require very different investment skills and processes.
After about a year and a half of being a lone wolf, serendipity stepped in last Fall and brought not just one, but two amazing teams into my life. Each allows me to leverage my experience and skills in the two types of portfolios I managed for so many years at Eaton Vance.
In October of last year, I was asked to join Cache Financials, a venture capital funded fintech startup based in San Francisco as their Investment Strategist. Cache is seeking to broaden the appeal and accessibility of Exchange Funds to investors previously not able to invest in them. Working alongside Cache’s visionary Founder - Srikanth Narayan, the Head of Investments - Christopher Lange, and a talented team of software engineers and operations people, we launched our first fund in early March and will have our second closing in early April. I am super excited about the growth prospects of Cache and am happy to be a part of such a talented and growing team.
Around the same time, I was also introduced by a former Eaton Vance colleague to Investment Research Partners, a talented group of investment professionals based in State College, PA and asked to become a consultant, helping them look after some of the funds they manage, one in particular that follows a strategy similar to that of the New Lantern fund.
As the months have passed, I’ve grown closer and closer to this great team. I am excited to share that next week, I will be joining the firm as Strategist and Portfolio Manager, where I will manage not only the New Lantern fund, but also some of their existing strategies as well as new funds we will be launching in the future.
I’m excited to be a part of two wonderful teams, which together allow me to bring the fullest expression of my investment skills and experience to benefit our investors and my teammates.
Now let’s get on with the rest of this week’s Sunday Drive.
🎶 Vibin'
A lighthearted example of teamwork would be the Hanson Brothers of the Charleston Chiefs, as depicted in the 1977 classic hockey film, Slap Shot (perhaps Paul Newman’s greatest role! 😂)
So this week, I’m vibin’ to Maxine Nightingale’s Right Back to Where We Started from the Slap Shot soundtrack. I found the song title to be somewhat relevant and in keeping with this week’s theme. The scenes from the film in the video are also quite fun to watch as well. My apologies for the NSFW language at the 0:25 mark, but Substack doesn’t seem to let me start the video anywhere but from the beginning. Enjoy.
💭 Quote of the Week
“There is no limit to what you can accomplish if you don't care who gets the credit.”
– Ronald Reagan
📈 Chart of the Week
It’s often taken as an article of faith that stocks and bonds are negatively correlated and thus when held in tandem, provide attractive returns with lower risk than investing in stocks alone.
However, the Chart of the Week tells a different story. Over the long sweep of history, stocks and bonds were actually positively correlated - some periods more so than others but still positive. This makes intuitive sense if you think about it - both stocks and bonds are financial instruments. They just live in different places on the spectrum of risk and return.
It was during the secular decline in interest rates which began in the early 1980’s and continued until 2022, where stock and bond correlations turned meaningfully negative.
The Federal Reserve Bank’s response to the post-pandemic increase in inflation led interest rates to much higher levels in 2023, and they still are high today. The Chart shows an increase in the correlation of stocks and bonds again.
Whether this continues and we see a sustained return to positive correlation is open to debate. My own belief is that investors would do well to seek other means of diversification beyond just stocks and bonds.
🚙 Interesting Drive-By's
This week we have articles on technology venture capital, entrepreneurship, phased retirement, and the effective acceleration movement:
📈 Will Tech VC Funds Be the New Frontier for Private Wealth? - from Wealth Management Magazine
Investing in venture capital funds targeting tech start-ups carries high risks and requires a tolerance for decades of illiquidity. But all it takes is one outperforming company to make it worth it. [Read More…]
💯 Driving Your Own Train - from Kyle Harrison
There are two kinds of people in the world. There are people who are building trains, and there are people who are riding the trains that other people have built. Right now, you're riding the train. The question is, when are you going to get off? [Read More…]
💡 More Baby Boomers and GenXers Are Betting On a Phased Retirement - from Fortune Magazine
Amid the rise of more hybrid and remote roles, talk of a four-day workweek, and the potential of AI to shake up entire industries, work in America is undergoing profound changes in the 2020s. Some employees—and their employers—think it's also time to change how and when people retire.
Of course, retirement in the U.S. isn't a monolith—some work until age 65 before leaving for golf courses and world cruises, while many others never fully retire at all. Others are set on leaving the traditional work world as soon as possible, entering high-paying but stressful fields so they can sock away money and then quit in their 50s—or even earlier.
But there's another option that benefits both employees and businesses, says Alicia Garcia, the chief culture officer of life sciences software company MasterControl. A so-called phased retirement can help near-retirees reduce their workload and stress while still earning income and maintaining workplace connections, and businesses can continue to benefit from their years—or even decades—of experience.
[Read More…]
🤔 The Effective Acceleration (e/acc) Movement - from Faster, Please!
Opposite the “doomer” worldview and its apocalyptic concerns about recent advances in artificial intelligence is a trending school of thought called “effective accelerationism,” better known as “e/acc.” Its followers, emerging from social media, are advocates for unrestricted tech progress, AI, and breakneck-speed innovation. Critics of e/acc have accused them of being reckless, delusional, and even cult-like. (Cult accusations go both ways, of course.)
In the latest issue of New Atlantis, Nadia Asparouhova wrote a wonderful piece, “Tech Strikes Back” about “accelerationism” as overdue corrective to years of doom and gloom in Silicon Valley. Asparouhova is a researcher and writer whose work currently focuses on the growing social and political influence of the tech industry.
[Read More…]
👋🏼 Parting Thought
If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.
Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed.
I hope you have a relaxing weekend and a great week ahead. See you next Sunday...
Your faithful financial provocateur,
-Mike
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