• Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.

    Warren Buffett

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Capital Market Review

Iron Capital’s quarterly review of capital markets performance and updated market forecast.


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  • Capital Market Review
  • January 2024
  • Iron Capital Advisors

Fourth Quarter 2024

Patience is a key ingredient to long-term investing success. This past year we have been recovering from the 2022 bear market, and it has been a frustratingly slow process. The wind finally came back around to end 2023 with a strong rally, which we predicted and were well positioned for.


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  • Capital Market Review
  • October 2023
  • Iron Capital Advisors

Third Quarter 2023

We continue to hear that higher interest rates are going to slow down our economy. Logic may say yes, but observation says no: In the 3rd quarter, the economy grew at 4.9 percent, which is far and away the best growth we have seen since the first quarter of 2021.


  • Capital Market Review
  • August 2023
  • Iron Capital Advisors

Second Quarter 2023

AI has become a mania. I am no technology expert, but I do know a little about how the market reacts to technological breakthroughs. The market response is a phenomenon called the Gartner Hype Cycle, and AI is at the peak of inflated expectations.


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  • Capital Market Review
  • April 2023
  • Iron Capital Advisors

First Quarter 2023

“How is your business?” I recently asked that question at three different locations for one of our clients and got three slightly different answers. These three stories are a great indicator of the actual impact the Fed has on the economy by raising interest rates: it depends on one’s perspective.


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  • Capital Market Review
  • January 2023
  • Iron Capital Advisors

Fourth Quarter 2022

Does the Fed have any real power? Wall Street strategists are far more bearish than Wall Street analysts. The strategists see the current situation as driven by the actions of the Federal Reserve, while analysts see the world from the bottom-up, and it simply does not look so bad from that view.

  • Patience is a virtue.

    Patience is a key ingredient to long-term investing success. This past year we have been recovering from the 2022 bear market, and it has been a frustratingly slow process. Things started off looking better, yet it was only seven stocks that were going up while everything else went nowhere or even down. The wind finally came back around, and we ended 2023 with a strong rally. We predicted this and were well positioned for it.

    So, how do we know? Experience certainly helps, but there are fundamentals that can help too. Prudent investing is done from the bottom-up. This means we make investment decisions based on each individual investment. It is much easier to analyze a particular company and assess its future than it is to guess where the entire market is going. This is obvious to anyone who thinks about it for a second, yet the standard question we get is, “Where is the market going?” That is what the media focuses on, so that is what people think about.

    This is also true in analyzing managers. We need to understand how they make investment decisions and if we believe they have a solid process and are able to execute efficiently. This is far easier than trying to understand what the market will do to them in the short run. That patience leads to long-term success.

    To read the full report, please download the PDF.

    ~Fourth Quarter 2024

  • Aristotle vs. Galileo

    Which will you believe, your sense of reason or your sense of sight? Galileo took two balls, one heavy and one light, and dropped them simultaneously to see which would hit the ground first. Before Galileo and his fellow pioneers of observational science the leading theory belonged to Aristotle who simply used reason to suggest that a heavier object will fall faster than a lighter object. That makes sense, but that isn’t what happened…and the science of Physics was born.

    We continue to hear that higher interest rates are going to slow down our economy. It makes sense: higher rates make home mortgages and car loans more expensive. Rates on credit cards will be higher. It must have an impact, right? Logic may say yes, but observation says no. In the 3rd quarter, the economy grew at 4.9 percent, which is far and away the best growth we have seen since the first quarter of 2021. The same pundits who have been predicting recession for what now seems like forever are still at it, and everything is selling off. Rates are up, which means bond prices are down, and stock prices are dropping with them. Will this continue, or will we get a rally until year-end? It depends on the market siding with Aristotle or Galileo – because reason may say that high interest rates equal bad economy, but in reality, it just isn’t working out that way.

    To read the full report, please download the PDF.

    ~Third Quarter 2023

  • Artificial Intelligence

    At the beginning of June, Goldman Sachs research indicated that all of the return for the S&P 500 year to date through May was attributed to just seven stocks; the other 493 stocks in the S&P 500 have an average return of zero, nada, zilch. How did that happen?

    It started as reversion to the mean, but as we moved into the month of May, something else started to take over…something that is certainly artificial, but is it intelligent?

    AI has become a mania. I am no technology expert, but I do know a little about how the market reacts to technological breakthroughs. The market response is a phenomenon called the Gartner Hype Cycle. It begins with a technological trigger, and we move to the peak of inflated expectations as early publicity leads to grossly exaggerated claims of potential. Then we enter the trough of disillusionment: Technology is never adopted as quickly as the zealots believe it will be, and when the fantastic predictions fail to materialize immediately, bubbles burst. That leads to the slope of enlightenment – Technology is never adopted as quickly as zealots believe, but it is adopted faster than naysayers would suggest. People start to see realistic applications, and these realistic applications eventually lead to the plateau of productivity, where the new technology is being used to make our lives easier – not as first imagined, but in real ways nonetheless.

    To read the full report, please download the PDF.

    ~Second Quarter 2023

  • How is your business?

    I recently asked that question at three different locations for one of our clients and got three slightly different answers.

    The first answer came from the CFO, who told me they would probably do fewer acquisitions this year because of higher interest rates. The second came from a field office who said that business was good; last year had been a record for them, and this year looks slightly better.

    The third location rep said they were doing fine, but one of their clients was seeing a slowdown because part of their business had come from Russia.

    These three stories are a great indicator of the actual impact the Fed has on the economy by raising interest rates: Actual daily life, including most business, does not rely upon borrowing, therefore is not impacted by interest rates rising.

    Financing activities are directly impacted. They will not be shut down, but the higher cost of borrowing will mean that some deals are no longer profitable. This impacts Wall Street’s view.

    Structural barriers, such as sanctions against Russia or other regulations, have a large impact. Supply, demand, interest rates – none of that matters if regulators shut the activity down.

    To read the full report, please download the PDF.

    ~First Quarter 2023

  • Does the Fed have any real power?

    Wall Street strategists are far more bearish than Wall Street analysts. The strategist community sees the current situation as driven by the actions of the Federal Reserve; the theory goes that the Fed raising rates will cause economic activity to slow down, the economy to go into a recession, and the market to crash. This argument seems logical, but it ignores a significant factor and makes some assumptions that might not hold true.

    First, it ignores the fact that the market has already dropped well into bear market territory. Secondly, it assumes that Fed actions have a significant impact in the real economy.

    How does the increase in interest rates impact companies? There are two possible ways. First: If they sell a product that requires most customers to use financing, but most businesses do not sell products that are so expensive that their customers must finance them. Second: If a company must borrow a great deal of money to run its operation, the interest expense on that debt would cause earnings to go down. In the manufacturing days of the 1970s and 80s this was true, but is it today?

    Analysts, on the other hand, see the world from the bottom-up, and it simply does not look so bad from that view.

    To read the full report, please download the PDF.

    ~Fourth Quarter 2022