“It's tough to make predictions, especially about the future'” - Yogi Berra

I am not going to make a forecast because forecasts are more often wrong than right.

I will say I think we are in the midst of going through an inevitable period of adjustment.

We have just gone through a decade of abnormally low interest rates. In Europe, the inconceivable occurred and interest rates turned negative. Now we are simply returning to a normal interest rate environment. It shouldn’t come as a surprise or be disturbing that we are returning to normal.

No one could accurately forecast when inflation would become a problem but it seemed inevitable to me.

It also seemed inevitable that central banks would stop keeping interest rates so low for so long. Now governments are pushing up the rates globally. Just because it isn’t possible to predict something does not mean one can’t prepare for it. Building in a floodplain ignores the inevitable consequences. Building on high ground makes sense. I think all of my client’s portfolios are built on high ground.

The markets have been complicated by people not seeing the forest for the trees. All assets are tied to interest rates. Real estate is very sensitive to interest rates. Real estate and high flying companies with negligible earnings are having their day of reckoning. I expected both - but just like a flood it wasn’t possible to predict when. However, we are experiencing the baby being thrown out with the bath water. Many companies have very strong earnings and those earnings are substantial even in the face of higher interest rates. Those earnings are also growing. These companies’ shares have a foundation that is like building on high ground. I can’t predict exactly when the share prices of these companies will rise. I will say that we may need some patience but our patience will be very well rewarded. I made the same statement during the gloom of 2009. That worked out very pleasingly.