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“If not for you, my sky would fall. Rain would gather, too. Without your love…”

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75% of the Perry Capital Portfolio remains in AAA-rated, very short maturity, and very liquid securities.
I remain extremely underweight the equity market because the valuation metrics of risk assets are not
discounting for persistent inflation and a slowing economy to the degree necessary to be attractive.

“If not for you, my sky would fall. Rain would gather, too. Without your love…” Read More »

“What’s the deal with bank runs? I mean, why are they called bank runs?”

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I still have small positions in Silver and Bitcoin.
Given recent events, things may get even crazier before they calm down. Monday’s opening and the rest of
next week will be telling. As I cautioned last week, be patient and remain defensive; I suspect that most assets
you might be interested in buying will be available at lower prices.

“What’s the deal with bank runs? I mean, why are they called bank runs?” Read More »

“The whole art of war consists of guessing at what is on the other side…”

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I am not fighting the Fed and expect funding rates to rise higher than the markets expect and for them to stay
higher for a longer period than the market expects. I also recognize that liquidity and momentum models may still
encourage large and sophisticated derivative trading which can propel risk assets higher.

“The whole art of war consists of guessing at what is on the other side…” Read More »

“Judging by the price action in markets over the past couple of months…”

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50% of the Perry Capital portfolio is in the money market. current yield 4.29%. The T-Bill position
remains at 25% of portfolio assets. 3-month T-Bills now pay 4.63%, 6-month T-Bills pay 4.81%. Long Treasuries
(10% of portfolio) are up 6.7% in 2023 and have returned 12.73% over the last three months.

“Judging by the price action in markets over the past couple of months…” Read More »

“Equity fund managers always tell you what’s going to go right, but what risk managers want to know…

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The Perry Capital Portfolio remains unchanged (75% cash.) 50% of the portfolio is in the money market. The
T-Bill position remains at 25% of portfolio assets. Long Treasuries represent 10% of the portfolio. The
S&P 500 is also a 10% position. So far, everything is up. My small Silver and Bitcoin positions have been good
performers for the start of the year. Lower long-term funding rates are the key to the whole puzzle. We’ll
know more about that on February 1st.

“Equity fund managers always tell you what’s going to go right, but what risk managers want to know… Read More »

“The Future has many names. For the weak it is unattainable. For the fearful…”

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The Perry Capital Portfolio remains unchanged (75% cash.) The discipline to maintain a cash position
throughout the year was not easy but proved fortuitous. Those who correctly expected a hawkish Fed beat the market in 2022. Those who did not, underperformed. It will be more complicated in 2023.

“The Future has many names. For the weak it is unattainable. For the fearful…” Read More »

“Everything we see hides another thing; we always want to see what is hidden…”

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An old axiom in finance posits that averages hide more than they reveal. It’s true and supported by history,
as is the view that consensus forecasts will be wrong. The above quote (“Everything we see hides another
thing; we always want to see what is hidden by what we see.”), from the great Belgian artist Rene Magritte,
captures that axiom. Magritte’s art challenges the observer’s preconditioned perceptions of reality, as do
markets and large swaths of market strategy.

“Everything we see hides another thing; we always want to see what is hidden…” Read More »

“You never know what is enough unless you know what is more than enough.”

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I thought very hard about increasing exposure to Long Treasuries and the S&P 500 a month ago; I decided
not to. My decision was based on my forecast—earlier this year—of a 3.5% yield. We spiked from that level
up to 4.33% and then right back down, which I did not expect. Volatility quite elevated. Therefore, my cash
position continues to migrate toward Treasury Bills. Consequently, I must ask… what is wrong with a
guaranteed return of 4% until the dust settles and volatility settles down. Not much, in my opinion!

“You never know what is enough unless you know what is more than enough.” Read More »

“Often the difference between a successful person and a failure is not one…”

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The most significant risk facing investors is the Fed’s march towards a restrictive monetary policy.

Indeed, there are others: the invasion of Ukraine, lockdowns in China, the crypto fallout, and even the
nature of free speech in America as encapsulated in the Twitter saga. All make top headlines.

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“What comes next is weak economies and tough policy choices.”

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The battle at hand is to reduce inflation. The Fed has been aggressively raising Interest rates while
reducing its balance sheet by $95bn/month, liquidity is being drained from both the financial system and
the economy, and market volatility is rising. The ramifications will be significant. Therefore, I remain
defensive and have maintained the status quo in my portfolio.

“What comes next is weak economies and tough policy choices.” Read More »

“You can reason with a bulldog, astonish a bull, fascinate a boa, frighten a tiger…”

Newsletter /

I have an immense appreciation for the great Victor Hugo, who is, I would suggest, perhaps our
finest writer of nautical fiction, among others. I could not help but recall, while witnessing the
margin call on the British pension system, a piece of terrific writing by Master Hugo that describes
the tumult of a loose cannon as a supernatural beast.

“You can reason with a bulldog, astonish a bull, fascinate a boa, frighten a tiger…” Read More »