Auour Insights

“The economic problem is that the material fruits of the United States’ engagement with China (and the post-1980 globalization more generally) have been very unevenly distributed…”

—Arthur Kroeber, Gavekal

The Quarter in Review

It was not a bad quarter! U.S. equity markets were very strong across all styles and sizes. We moved past the impact of February’s dive in this quarter, and although you can point to different reasons to justify calling it strong, clearly the economy was the primary factor, with the U.S. continuing to buck the trend of slowing growth in international markets.

On that note, the international economy has been missing

The Oracle of Omaha, Warren Buffett, is a consistent optimist about the power of investing in the U.S. equity market. Though known as a selective investor, he advocates that the average investor buy and hold a slice of the entire equity market. As a fundamental principle, we agree. But for those of us who aren’t in his unique position as one of the richest people on the planet, sometimes we need access to that slice.

As the graphs below show, Buffett is right over the long-term. There are few periods when equities did not produce superior returns on an annualized basis

Danny Deutsch’s motto and the title of his book, Often Wrong, Never in Doubt, are about the power of confidence and moving forward even when it results in as many misses as hits. It worked for him. It doesn’t work in investing, which relies on empirical evidence, not hope. However, we find the motto does apply to the alternative investing space—given its poor performance coupled with confident messaging.

The size of this space is more than $6 trillion and encompasses real estate (for investment purposes), private equity, and hedge funds, as well as other, more esoteric forms

“It takes a long time to become young.”

                                                – Pablo Picasso

The team at Auour has been enjoying reading Value as a Service, by Rob Bernshteyn, the CEO of Coupa, a rapidly growing software company. Its premise is that companies need to move from selling products to selling value, and although the book focuses on the technology industry, Bernshteyn’s insight applies to any business. It certainly reinforces the objective we have had for Auour since our founding.

As we celebrate our 5-year anniversary this year, we have been reflecting on our own firm’s mission and the direction the investment industry as a whole

Emerging Problems

“I think we can’t learn clear lessons from history. What we can learn is to watch out for dangerous possibilities.” – Margaret MacMillan

At Auour, we analyze many independent factors to assess greed and fear and the inherent risk in the global markets. We believe the tools we have honed give us a more balanced approach to global investing and provides us the opportunity to gradually move allocations – potentially to all cash – as our confidence builds that a material and enduring downturn lies in front of us. Based on our analysis, we expect to hold some cash about