The Signal Or The Noise?

Dear Clients and Friends of Berkeley Capital Partners & Access Private Capital,

We, as most, were hoping for a better start to what has to be a better year. But alas, recent events suggest that cautious optimism (with an emphasis on cautious) remains an appropriate course of action.

To that end, we wanted to share a recent letter from long-time investor, Jeremy Grantham.  Though we consider ourselves stringent curators of information, this piece stood out to us as a signal apart from all the noise.  It aligns with the inherent defensive posture of our firm and illuminates the difficulties in prioritizing defense over offense, even when markets continue to put points on the board with seemingly reckless abandon.

We hope you will take a few minutes to read Grantham’s note and, as always, we welcome your input.


Your Berkeley Capital Partners & Access Private Capital Team

Waiting for the Last Dance
The Asset Hazards of Allocation in a Late-stage Major Bubble

By Jeremy Grantham

Executive Summary
The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.  These great bubbles are where fortunes are made and lost – and where investors truly prove their mettle. For positioning a portfolio to avoid the worst pain of a major bubble breaking is likely the most difficult part. Every career incentive in the industry and every fault of individual human psychology will work toward sucking investors in.  But this bubble will burst in due time, no matter how hard the Fed tries to support it, with consequent damaging effects on the economy and on portfolios. Make no mistake – for the majority of investors today, this could very well be the most important event of your investing lives. Speaking as an old student and historian of markets, it is intellectually exciting and terrifying at the same time. It is a privilege to ride through a market like this one more time.

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