Dear friends,

We live, indeed, in interesting times.

You might think you hear in that statement an echo of “an ancient Chinese curse, ‘may you live in interesting time.’” Yes and no. I was thinking of the phrase but it’s not ancient. Also not Chinese. It appears to have been invented in 1936 by a member of the British foreign service who was trying to sound … uh, profound.

The sentiment remains, though the source is not exalted.

Turmoil, likely deepening, in Washington. Turmoil, likely coming to a head, in London. Turmoil, without a clear path out, with Beijing. Sunny days for the American consumer, dark ones for American industries. Economists place the odds of a recession in 2020 (or 2021) at 31-35%, or 40% or almost 50%, or 75%. Unless it’s all good. They’re economists. It’s always like that.

“John, do you think you could find me a one-armed economist?” plausibly attributed to Harry Truman, ca 1947.

The Financial Times asks whether we’re ready “for the Doomsday Dollar scenario” (9/29/2019) and the Wall Street Journal pipes in with the observation that the breadth of the stock market’s advances is collapsing (9/30/2019).

And no, I’m not forgetting young Greta Thunberg and her infamous glare. When it’s 87 and humid on the first of October, you’re experiencing another bout of river flooding, and the crops that should be ready for harvest aren’t close, it’s hard to set such concerns aside.

As scary as the news of the day might be, we do need to remember that long-term investments require a longer term perspective. In this issue of the Observer we try to balance those concerns. Charles Boccadoro and Lynn Bolin both present metric-centered pieces on dealing with the downside and positioning your portfolio for negative short-term events. (Spoiler alert: Lynn’s analysis points to impending recession and an allocation of just 20% to equities.)

As a sort of counterpoint to that essential concern with the here-and-now, I return to the task of thinking about compelling long-term opportunities with a profile of Crawford Dividend Opportunity (small cap + equity income = outstanding long-term performance) and Invenomic Fund (which now has most of its former Balter hosts onboard), a Launch Alert for Grandeur Peak’s long-planned Global Contrarian fund (read quickly, GP is really serious about their capacity constraints) and an updated report on emerging market value funds (Seafarer Overseas Value has been kicking … uh, up a fuss). We hope the balance helps.

Thanks, as ever …

It might well be irrational to celebrate having nine (9!) subscribers (in the sense of folks who’ve set up to make ongoing monthly contributions in support of the Observer), but we’re celebrating because that’s a new high and they’re cool people. So thanks, as ever, to the folks at S& F Investment Advisors, Greg, William, Doug, William, Brian, Seshadri, David, and our newest subscriber, Matthew. Thanks, too, to Michael from Ontario, New York for his support.

And to you all, for reading and reflecting with us. I’d be especially delighted to meet any of the folks who might be attending the annual AAII convention in Orlando in a few weeks. I’ll be there, speaking … well, at around the time most convention attendees will be boarding their flights home. Such is life. It will give us the opportunity to have a nice discussion with the folks who do attend. The theme of my presentation is how to be a long-term investors in a world filled with … well, sound and fury, signifying nothing.

In November, we’ll look a bit at Castle Focus (which has caught Ed’s attention) and North Star Dividend (which has caught mine); like Crawford Dividend it’s a small cap fund with a strong dividend focus which means it lives in both the conservative Equity Income and aggressive Small Cap camps. Perhaps a fund for our times? The pipeline will be filling for year-end fund and ETF launches.

Stay tuned!