Out of the Box: The Life of Riley
I have had the good fortune to be around here for 45 years now. I think I must be approaching some sort of record. It has been a wonderful adventure. Sure, there have been some tough moments, and some mistakes, but then Wall Street is a “learn as you go” enterprise. There is nothing, and I mean nothing, that is more important in our profession than experience.
I have had the opportunity to run Capital Markets at four investment banks and to be President of one. I have served on the Board of Directors of four investment banks and on the Boards of other enterprises and companies. Recently, I joined the Board, as the head of the investment committee, of the Wounded Warriors Family Services charity.
As the Chief Global Strategist, Fixed Income, for my firm, I get to engage with some of the brightest guys on the planet. I deal directly with some of the largest money managers in the country and it is a delight to get to interact with these people. I am involved in calls and conference calls daily where, “Whadda you think,” is the premise of the call. The subject varies from day-to-day.
About 18 years ago, I decided I had enough of being in senior management. It takes a toll on your psyche and the constant people problems, the discussions with lawyers and accountants, was not the way I wanted to spend my day any longer. Hence, “Out of the Box” was formulated standing in my swimming pool, while smoking a cigar, and it has carried me forward ever since.
Then it wasn’t until about five years ago that I started dealing with individuals. I have a very unique approach with them. For decades I had declined to help people and then some friends of mine approached me and said, “Help, we need help” and I said “Ok, Ok, Ok.”
Then, because I am on CNBC, Fox, Bloomberg TV with some frequency, or I am quoted in Reuters or the Wall Street Journal or MarketWatch or somewhere, other people reached out to me with calls for help. I have a very specific criteria for individuals and it has nothing to do with the amount of money they have, at all. If I like them, I will help them, and if I don’t, well, Bon Voyage.
The funny thing, for me, working with people, as differentiated from large financial institutions, is that I carry their accounts around on my back. I feel a “Huge” responsibility when trying to help someone, and it wakes up with me, and goes to sleep with me, daily. The markets are always difficult to navigate and I feel that I am obligated, to get them down the course, in one piece.
You may have noticed, in my commentary, that my prime focus is on warning people, and institutions, where not to go. “Preservation of Capital” are Grant’s Rules 1-10 because I have learned from my four decades of experience that keeping your money in tact is the “prima facie” of managing money. I concentrate on “Risk,” and I do not handicap it, as most do. I just identify that it is there, and then I react accordingly.
These days we are facing three outsized risks. The first is in the United States. Our politics has denigrated to a level lower than I have ever seen in my life. These calls for Socialism, the rancor of the political arena, and the doing anything, and everything, to topple your political opponent with not one whit, of what is right for the country, concerns me greatly. There used to be some civility, some manners, some politeness, some sense of doing the “Right Thing” but I am afraid that has evaporated into thin air. It has gotten to the point, in my view, that almost no decent person will run for office and so we are left with the stragglers and the scruffed up to choose from when we vote. Not good, not good at all.
The second risk is China. Someone, at some point, had to stand up to them and object to the manner in which they did business, stole trade secrets and undermined governments and finally, someone, President Trump, did just that. My comment here is NOT political but someone had to do it and no one had done it before. I do not blame the Chinese for their aspirations, but I do blame them for their method of achieving them.
Now we are engaged with them in a “Game of Thrones” trade match. Push, pull, threaten, cajole, and all manners of high level negotiating tactics. “It ain’t pretty,” would be my comment but I would guess, in the end, that something will come of it. The world’s chessboard is being reshaped, and did you think it was going to be an easy go of it? Don’t be absurd.
“Power resides where men believe it resides. It’s a trick, a shadow on the wall.”
-The Game of Thrones
The third, and the most dangerous risk, in my estimation, commences on May 23 in Europe. It is the start of the EU elections and I think that the glory days of Germany and France running the European Union are finished and done. The populists, the nationalists, have gathered in earnest to totally change the governance of the construct. I think, in the worst case, that they will control a significant block of votes and I also think that there is an outside shot that they will win a majority position. In either case, the Franco/German alliance is about to be finished off and we will all be facing a new and very different reality. Consequently, as I have stated many times before, I would not have any investments in Europe now until the game is decided and we can get a real sense of what is going on.
“Could of, should of, would of……. didn’t.”
-The Life of Riley
Mark J. Grant
Chief Global Strategist, Fixed Income
B. Riley FBR Inc.
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