Beau Knows

In case you missed the biggest market story of the new year, here’s the short version: a group of rogue retail investors got together on Reddit (a popular online forum) and decided to stick it to the man by aggressively purchasing shares of GameStop and other out-of-favor stock names. “The man,” in this case, was a combination of hedge funds and short sellers who had bet on these stocks declining in value by borrowing shares at the then-current price with the intent to purchase them at a lower price and make a profit when they covered their position. Thus, when the Reddit rocketeers started buying, the result was a “short squeeze,” which forced the short sellers to purchase shares at a higher price to cover their bets, which in turn drove the price even higher and resulted in A) devastating losses for the short sellers, and B) stratospheric gains for the buyers...

Remember January? Life was simpler then. America was a veritable oasis...a land flowing with toilet paper and hand sanitizer. In those days, you could recognize a person by their face –not just the top half, but their whole face. When you greeted someone, you didn’t have to perform split-second calculations to decide between an awkward wave or a fist or elbow bump, you could just reach out and shake their hand. Infrared thermometers were more of a luxury than a necessity; for most, a hand to the forehead was good enough for a temperature check. Back then, people disagreed about the same old things: politics, religion, money. Masks weren’t even part of the conversation...

For decades, the IPO (initial public offering) has stood as the gateway to the public markets for big private companies seeking access to more capital. This year, however, there have been some noteworthy exceptions – companies such as Palantir, Draft Kings, and Nikola – who have elected to bypass the traditional IPO route in favor of alternative methods such as direct listings and SPACs (special purpose acquisition companies). The surge in SPACs, otherwise known as “blank check companies,” has been especially significant, both in terms of money raised and buzz generated...

Among all the issues and uncertainties that are top-of-mind for high income earners and high-net-worth individuals these days (not to mention the accountants, attorneys, and advisors who serve them), a key concern is the possibility of higher taxes if Biden wins the presidential election and the Democrats reclaim a Senate majority...

Fall has officially arrived, and the college football season has officially begun (sort of). If you’ve ever been to a college football game, you’ve probably witnessed the tradition of players and fans holding up four fingers at the end of the third quarter, signaling that the fourth and final quarter is about to begin. It’s a sign that the game is almost over, and it all comes down to this...

Growing up, my grandfather was one of my heroes. His given name was Homer, but we all called him Bones. The son of a Methodist minister, he served as a Navy doctor during World War II and practiced urology in Houston for four decades. He was a man of strong faith and principle; humble, honest, and exceedingly kind...

2020 has been a year of dramatic change. Change in the economy. Change in the markets. Change in our politics. Change in our institutions. Change in our work. Change in our domestic and social lives...

Thinking, Fast and Slow by Daniel Kahneman might be the most oft-cited book in the financial blogosphere, and for good reason. The text synthesizes decades of psychological research by Kahneman and his long-time research partner, Amos Tversky, who together helped establish the field of behavioral economics. Specifically, the book focuses on how our brains use two systems to operate: one that is fast, emotional, and instinctive (System 1), and another that is slow, logical, and deliberate (System 2)...

At a time when trade has, to a great extent, literally been turned off, we are all bearing witness to an extreme example of how trade-offs govern economics, politics, and just about everything else in life...

I’d like to begin today’s note by expressing my heartfelt thanks to our clients, many of whom are regular readers of the blog. The kindness, understanding, and resolve that you’ve exhibited over the last few weeks have been inspirational. Most importantly, we value the continued trust that you’ve placed in us. Maintaining that trust, and building on it, is a responsibility that we take seriously no matter what the market is doing, but during times like these, we are especially grateful...