Odds and ends An interesting chart from the analysts at Stifel caught my eye this week. It shows the relative returns and volatility of biotech investment trusts over the past five years. It makes the point that the conventional assumptions about the correlation between risk and return do not apply for these trusts (assuming for the moment that you are happy to use volatility as a proxy for risk, which it is not of course). It also highlights the attractions of BioPharma Credit, which has consistently delivered reliable returns without excessive volatility. You would expect more price consiste...
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Into the waiting game Q1 2023 market review in pdf Although I originally planned a video presentation about first quarter 2023 market performance, I have instead provided a simple slide presentation which will be quicker to read through. You can find the slides here with a few notes attached and should be read in conjunction with the slides that I presented at the Master Investor Show at the weekend (available here). Regular readers will know that my general stance remains cautious, while conceding that the economic data and equity markets have been more resilient than I expected in the last f...
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Not a perma-bear I think it is beginning to sink in that there are no easy ways out of the dilemma that the authorities are now in - belatedly trying to balance the fight against inflation with the need to protect financial stability and doing so at a time when the accumulation of government debt is limiting the room for fiscal interventions and banks are running into liquidity problems. The uncertainty about where this all goes to which investors are waking up is matched by the lack of coherence and clarity in the responses of central banks and governments. I fear that there are bound to be p...
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Technical update The first big test of the bear market rally looks to have arrived. Despite the recent "golden cross" signal that I mentioned a little while ago, the chart of the S and P 500 index has retraced its steps all the way back down through the 200-day moving average and although it now looks a little oversold, we can only wait to see if it can find fresh support around that level. Don't bank on it, given this week's dramatic events.
The problems of Silicon Valley Bank, the Californian bank which has been taken over by regulators after failing to raise new equity to shore up its bala...
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Jonathan Davis reviews the four Money Makers model portfolios:
Growth portfolio Income portfolio Handbook portfolio Defensives portfolio
The slides accompanying this video presentation are available for download (PDF). The current holdings in each portfolio are summarised in the attached spreadsheet, together with an indication of which of them are - or have been - holdings of Jonathan Davis and his family in the past. Please note that the numbers are unaudited and subject to a more detailed review when I move the data to a new provider, after which I hope it will be quicker and easier t...
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Commodities for the long run? The latest Global Investment Returns Yearbook from the London Business School academics Dimson, Marsh and Staunton, out this week, has some important insights into the behaviour of commodities as an asset class, which, they point out, have some potentially invaluable diversification and inflation-hedging properties. Here are some of their conclusions on this topic, based on their extensive historical data set which stretches back to the nineteenth century:
Individual physical/spot commodities have provided low long-run returns since 1900 with an average annuali...
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I continue to try and process what is going on in the markets, which are behaving very strangely but now, I suspect, approaching another potential turning point. The disparity between normally reliable leading indicators and what the markets are doing remains very wide. The former clearly points to a recession, while implicit in current market prices is the assumption that inflation will return to its 2% target more quickly than was thought, leading to central bank interest rate cuts later this year. Meanwhile corporate earnings are starting to weaken. There is no doubt that the economic dat...
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The markets' positive start to the year resumed last week, with the S&P 500 index finally succeeding this week in breaching its 200-day moving average, which other important indices have also done, although the technical signal in the case of the US market still needs to be confirmed. This next interest rate decision from the Federal Reserve will provide just such an imminent test. Discipline therefore forces me to consider the possibility that my thesis could be wrong and the outlook for equities has improved markedly. Stuart's latest profile meanwhile is of the newcomer Foresight Sustai...
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It is good to report that the markets have made a positive start to the year, with both equity and bond markets making gains in the first week of the year, boosted by a positive jobs market data release in the United States. This week I have recorded a video looking at the leaders and laggards of the past year (link below). I will be following that up with a series of videos about the Money Makers portfolios. Stuart's latest profile is of the Monks investment trust (ticker:MNKS).
2022 in hindsight The table of leaders and laggards I talk to in the video this week does not make for happy read...
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My end of year thoughts are quite short. One reason is that by the nature of my involvement in the markets my thinking does not change suddenly at the end of a calendar year, but evolves slowly as time goes by (so you have already heard most of what I think already). A second reason is that I have long eschewed making predictions for the year ahead, since most such exercises often turn out to be worse than unhelpful, as a 12 month time frame is essentially both unpredictable and arbitrary. Most investors sensibly have a longer time horizon and while it makes sense to review your portfolio at r...
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