Performance Update Q2 2017 – Vintage Investing

i-Cthru’s consolidated time-weighted return over Q2 2017 is USD 1.32%; EUR -5.43% and Year-to-Date USD 11.27%; EUR 3.32%. These results are unleveraged, net of all trading costs, fees, dividend tax withholding for non-US clients and cost of protection of individual portfolio holdings.

If we want to understand the currency, bond and equity markets’ medium-term moves it makes sense to decrease our granularity so we can see the markets from afar in the light of liquidity. Liquidity, or the availability of monies and credit, drives the markets between expansion and contraction in the medium-term. They are mainly driven by policies set by the Central Banks whether in reaction to critical events or more benign inflation targets.

Critical events and inflation have been around since we were able to count but not so much for Central Banks. 180 years ago, the United States had something close to a central bank called “the second bank of the United States”, but its charter was under attack of then President of the U.S. Andrew Jackson, yes the face on your $20 bill. He argued against its merits, and rumors of corruption, as well as other fake news, lead to its demise. President Jackson vetoed the renewal of its charter and it would take another 75 years for the Federal Reserve to be established.

Coincidence or not, the same year as Jackson’s veto, world-liquidity contracted sharply, initiated by the Bank of England’s squeeze on credit. Wholesale prices tumbled; imports plummeted, as did property values. The result was devastating for the economy and the stock market crashed, now known as “the panic of 1837”. Of 850 banks operating in the USA at that time, 40% went out of business and a four-year depression followed.

For great investors, these are just events passing by on the calendar, either creating opportunities or non-events on their long-term optimistic growth path. One such great investor was Andrew Carnegie. Despite living through depressions, wars and many stock market crashes, he became the all-time richest man in the US, only to give his fortune away.

His philanthropic idea continues to live in the minds of the super wealthy today. Andrew Carnegie was at the right place at the right time and loved taking risks. He saw opportunities where others did not and was lucky enough to be connected to the right people. His business history loosely resonates to living titans like Elon Musk (Tesla, SolarCity, SpaceX) or Jeff Bezos (everything you want to buy). Keep an eye on these people.

With or without a Central Bank, optimistic business people are extraordinary investors in their own right. Increase your granularity and focus on their actions to learn what they learned from Andrew Carnegie. Liquidity is important for the markets as a whole, but successful business people make your investments sing despite all the negatives.

At i-Cthru we are confident we can always find companies that fit our investment strategy for the long-run. We stick to the basics and don’t have to change. We love “Vintage” Investing.

Thank you for your trust. It means a lot to us.

Happy Fourth of July!