David Fleer
Bristlecone Value Partners, LLC
12301 Wilshire Blvd., Suite 320
Los Angeles, CA 90025 USA
Work 1-877-806-4141

Productivity Conundrum, Market Power & Equifax Hack

September 19th, 2017

In recent years, one issue that has vexed economists is the rather sluggish pace of U.S. Real GDP growth (less than 1.5% per year over the past decade).  What makes this data point especially confounding is that it overlaps a period where several other macroeconomic indicators are trending strongly in a positive direction.  The unemployment rate, after peaking at nearly 10% in the aftermath of the Great Recession, has declined to only 4.4%.  Stocks have also done well, with the S&P 500 index nearly quadrupling from its recession-era low.  Read the rest of this entry »


The Next Crash is Upon Us!

August 18th, 2017

Hardly a day goes by without an article predicting an impending stock market crash. As we reiterated in a recent commentary, now is not the time to chase hot investments. However, we do not profess to have any insights on the timing of the next crash, and we certainly do not advocate selling your stocks or stock funds. Since we are now 10 years removed from the onset of the last financial crisis, we’d rather draw a few lessons from history: Read the rest of this entry »


The “Nifty Fifty” Becomes the “Nifty Five”

July 24th, 2017

Global capital markets were broadly higher in the second quarter, continuing the trend from Q1. Within our typical client portfolios, 10 of 12 asset classes notched positive returns for the quarter (your own portfolio results may differ – please refer to your Quarterly Portfolio Review Report). The following table shows the recent benchmark returns for every asset class in a 60/40 model portfolio, for the periods ending June 30, 2017:

Year-to-date, the only category still in negative territory is natural resources, where weakness in energy markets (primarily oil and natural gas) has outweighed recent positive trends in precious metals and agricultural commodities. Moreover, returns for this category are negative in trailing 3, 5, and 10-year periods. Even though our allocation to natural resources is quite small, this persistent lag is possibly a source of frustration to many clients, so it’s worth revisiting the role these assets play in the portfolio. Read the rest of this entry »


Oil Future; Increasing Allocation to Foreign Stocks

June 23rd, 2017

Oil Future
Total S.A., one of the world’s largest oil companies, was reported in a recent article as seeing its future in electricity generation, rather than oil production. This is a startling admission in our opinion and worth mulling over. Total is the 2nd company in the last 6 months announcing a surprisingly early peak in worldwide oil demand (Royal Dutch Shell has said oil could peak somewhere between five and 15 years, while Total thinks demand for oil will peak in the 2030s.)

The recent example from the coal industry should serve as a warning to investors in oil companies. After demand for coal peaked, a little over a decade ago, it took about 2 years for coal companies’ finances to start deteriorating. The downtrend has been relentless since then and investors who tried to bottom fish got burned. The main culprit was competition from cheap and cleaner US natural gas for power generation. Read the rest of this entry »


Berkshire Meeting, Baumol’s Cost Disease, and Amazon

May 17th, 2017

Berkshire Hathaway’s 2017 shareholder meeting was held on the first weekend in May.  The Wall Street Journal carried a helpful live-blog with notes from the lengthy Q&A session with Warren Buffett and Charlie Munger (the event’s main attraction).  One of Mr. Buffett’s more interesting points—particularly in light of current partisan debate on the subjects—concerned the relative impact of taxation versus health care costs for U.S. businesses. Read the rest of this entry »

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