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Foundation Investment Advisors and Consultants

Insights and Publications

Colonial Consulting provides insights and analysis on current conditions and challenges, market environment, and industry trends.

Quarterly Commentaries

  • Next month, Samuel Clemens turns 180. The man better known as Mark Twain excelled at social criticism, calling attention to class relations, oppression, slavery, and the failures of Reconstruction through his prolific library of important works. Of course, Twain was also known for his biting observational wit, reflected in a number of notable quotes delivered over his lifetime. One of his more famous 鈥 鈥淩eports of my death have been greatly exaggerated鈥 鈥 was said in 1897, in response to an inquiry from a reporter for the New York Journal who tracked Twain down in London to get his response to reports in America that he was on his deathbed. The infirmed individual, as it turned out, was in fact Twain鈥檚 cousin (who recovered nicely), but this case of mistaken identity gifted history with another wonderful quip from one of its most well-regarded dark humorists, and provided us with an amusing story in the process.

    Unfortunately, there's one problem with this story. Mark Twain didn鈥檛 say what we think he said.

    To be fair, Twain said something close: 鈥淭he report of my death was an exaggeration.鈥 But great sayings are said greatly, and the popularized version reflects a cadence and rhythm the original lacks. One can certainly make the case that the details here are irrelevant, that the gist of it was Twain鈥檚 and that鈥檚 all that really matters. But Twain, a fierce social critic and supporter of truth and transparency, would likely disagree, and argue that integrity existing solely at the surface level is not integrity at all. This is true in cultural matters, and it鈥檚 true in financial matters as well, where markets have a tendency to misrepresent truths with staggering regularity. What seems strong and stable on the surface may be weak and tenuous below, and the challenge becomes determining how well perception is aligned with reality.

    Nowhere is this better reflected in financial markets today than in an area one may least expect: Bonds. Investors typically look at bonds as the insurance policy of their portfolio, the sector that shrugs when equities, its higher energy cousin, thrashes. But the Dodd-Frank Wall Street Reform and Consumer Protection Act, the government鈥檚 regulatory answer to the Global Financial Crisis, may have unintentionally altered the risk profile of bonds by reducing liquidity, one of its more important attributes. On the surface, bonds appear to act as a ballast in one鈥檚 portfolio, but digging deeper a different picture emerges, one that may not be as straightforward as investors would otherwise expect....

  • Few things can compete with a good book in the summertime. Whether you've migrated to the world of digital ink or prefer something in hard cover or paperback, finding a good book is a treasure, and these next few months offer an extra-special invitation to sit outside and get lost in absorbing stories and characters. One book flying off shelves (and servers) right now is David McCullough鈥檚 鈥淭he Wright Brothers,鈥 a fascinating account of the creation of the world鈥檚 first flying machine and the two men who played the most important roles in its conceptualization and realization. At its most basic, the story is a captivating account of the birth of human flight, told in part through letters exchanged among family members. However, like other great McCullough books, there鈥檚 more to the story than the straightforward narrative. 鈥淭he Wright Brothers鈥 is also a story of sacrifice, how true and enduring greatness comes through hard work, intense commitment, and unwavering perseverance in the face of continuous experimentation and failure. Viewed differently, it鈥檚 also a story about the benefits reaped from tight family bonds, and the creativity that can result from a family that supports each other and encourages both traditional and nontraditional forms of education.

    But one of the book鈥檚 most interesting stories is that of the plight of the independent thinker, how rejecting conventional thinking can lead to pleasantly unconventional results. The book subtly calls into question the wisdom of experts who stand confident and staunch in opinion, leaving little or no room for the possibility that their forecasts may be off, that their solid foundation of evidence may in fact have a series of fatal spider cracks. It served as a valuable lesson for the early 20th century, and endures as a valuable lesson for current times as well, where forecasters of financial markets make confident predictions, only to be stymied by the reality of a world that belies predictability.

  • Thirty five years - in May, Colonial Consulting will have reached this age. While some on our staff were not yet born in 1980, quite a few of us are now in our third decade with the firm and quite proudly state that we remain consumed with almost child-like levels of curiosity, alongside the more mature recognition, of how much more there is to learn.

    Amongst the fascinating aspects of the work of any investor is the need to contend with near constant change in markets and investor attitudes while at the same time seeking to remain grounded in simple but timeless principles that rarely if ever fail when given time to succeed. At some moments, we enjoy the highly probable and frequently outsized levels of client success that accompany decisions which were originally controversial and even a bit frightening. At other times we suffer in the knowledge that we had to learn, or re-learn, basic lessons. Successful investing is ultimately an exercise in assuming calculated risk, and as such, outcomes cannot be universally positive. While we dislike all disappointing results, those where we forgot basic rules of investing are the ones that trouble us the most鈥

  • It鈥檚 wintertime here in New York, and with both the Giants and Jets once again post-season bystanders, and the Knicks and Nets preparing to follow in their footsteps, many New Yorkers are already looking forward to baseball season. For Yankees fans, the upcoming season will be the first in almost twenty years that a recognizable face will not be manning the shortstop position. Derek Jeter played his final game this past October, wrapping up a storied Yankee career in predictably fairy tale fashion, with a game-winning hit in his final at bat at Yankee Stadium. It鈥檚 a moment that not just Yankee fans but all baseball fans can appreciate as a genuine reminder of why we love the game as much as we do.

    When you look at Derek Jeter鈥檚 final Yankee Stadium at bat, and the way in which it unfolded, it鈥檚 easy to remember his stunning career achievements. Over 20 seasons, Jeter amassed 3,425 hits, 1,923 runs scored, a .310 batting average, and an OPS (on-base + slugging percentage) of .817. When Jeter first becomes eligible for the Baseball Hall of Fame in 2020, the only question will be whether or not he becomes the first unanimously-elected inductee. As that date approaches, the Jeter highlight reel will surely roll. All of those heroic moments will be played and replayed as Jeter deservedly prepares to takes his place among the game鈥檚 greats. People in and around the sport will say all sorts of nice things about him, singing his praises, cementing his legacy. What they likely won鈥檛 discuss, however, is a single, indisputable truth, a reality that can鈥檛 be hidden behind his lofty career achievements:

    Like all players, sometimes Derek Jeter was flat-out awful.