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I say this a lot and I’ll say it again. I am grateful to be at the hub of our growing exclusive research network. Every day provides a tremendous opportunity to learn from my investment strategy mistakes.

It builds confidence to know that we can take a point of view, put it on the tape real-time, and receive real-time feedback. We learn what we don’t know first, then we evolve our thinking. Below is a note from a man who I have a great deal of respect for. He’s been in the macro “fire” for years. He says “Trust Volcker.”

Unedited, from Mark.




Keith –

Your morning perspective got me thinking.  In 1979, I was an up & coming executive at a mortgage bank that now is the core of Chase’s mortgage lending operation.  It was quite a time.  The certifiably worst president in our history was dealing with one crisis after another, running around and crying “Oh, me…Oh, my”.  His political crony, G. William Miller, had sacrificed the Fed’s independence and the US economy was on the verge of collapse.  My job, at the time, was to manage our firm’s secondary marketing + sales & trading.  Hedging an inventory of mortgages was quite an experience.  GNMAs traded in at least a ½ point spread (bid to ask) and markets for FNMA/FHLMC securities were as thin as Twiggy (are you old enough to remember her?).  Daily volatility was in the stratosphere.  Gov’t changes in the FHA rate (it was set by fiat then, not by the market) were occurring in matters of weeks instead of years as in the past.

Then along came Paulie. A real grown-up took charge.  And, saved America’s financial system.

During that time, I wrote a weekly market letter for our national sales operation + an addendum for our executive committee regarding hedging opportunities, risks and costs.  I remember one day being challenged by our CEO about my belief that rates were headed higher, but that the impact would be incredibly positive for the economy.  The CEO was an ardent Keynesian and had a hard time with monetarist prescriptions (he was a very quick study, though, and changed fast – even became a devotee of Milton Friedman & Jude Wanniski).  As I tried to make my case, I finally spurted out “TRUST VOLCKER!”

That became a byword for our management for years and years.  Our company managed through the era and came out the other side in fantastic shape.  My career took a decidedly upward tilt, too.

When Volcker came out in support of Obama last year, I was willing to hold back my visceral dislike for our new president.  After all, the man I believed saved our financial system couldn’t be a radical.  So I tempered my view.  What a mistake!

You used the word “muted” when discussing the lack of influence PV is having right now.  A better choice would have been “ignored”.  All the measured men who are supporting the ideologues in the WH are enablers.  When and if PV disowns the Obama Administration, I’ll trust him again.  Until then, I’ll chalk it up to old age.  It’s sad to see so many thoughtful people become apologists for the indefensible.  Volcker knows better and may yet be willing to stand athwart the establishment and yell “STOP!”  I sure hope so.  He is one of my great heroes.  I hate thinking he has become another hack in Washington.

Hope to see you again soon. 


Trust Volcker! - pv