Return from Summer Vacation
Thank you for reading. I’ve just returned from a two-week trip to New Brunswick, Canada, and in this post, I’ll share a few stories from the trip before turning to some updated thoughts on the major long-term themes shaping our investing experience over the next decade.
A Refreshing Change of Pace
Phoenix summers are brutally hot, so I always look forward to escaping to the cooler, greener Maritimes. This year, my wife Kaylee—now seven months pregnant with our second daughter—stayed home to focus on her health, while I traveled with my daughter Annie and my Mom.
We settled quickly into “cottage life” (pictures below): swimming, kayaking, walking, and indulging in East Coast favorites like fish and chips, fried clams, and lobster rolls. A highlight of the trip was a lakeside gathering to honor my Mom’s cousin, Stephen, who passed away earlier this year. Reconnecting with his family and reflecting on his positive influence was deeply meaningful.
Lessons from the Cottage
Spending time at the family cottage always sparks reflection. As I dried off in the sun after a swim, I found myself thinking about the choices my grandparents made decades ago to acquire the property, budget around its operation, and preserve it for future generations.
I also considered how much the replacement cost of the cottage has risen since it was built in the mid-1980s, despite advances in manufacturing efficiency, and how scarce waterfront property is. These observations naturally led me to broader themes around stewardship, rising costs, and the role of monetary policy in shaping markets. Then, with the help of a Moosehead Lager, I let those thoughts drift away.
OBBBA and the Long-Term Themes
While I was away, the One Big Beautiful Bill Act (OBBBA) became law. The legislation:
Permanently extends many 2017 TCJA items and revises others, especially timed sunset provisions
Deregulated key industries
Encourages re-shoring through generous business expensing rules and billions in defense industrial base investment
Expanded the government’s ability to sustain higher levels of deficit spending by lifting the debt ceiling to around $41 trillion
These policies align with several themes we’ve discussed with clients for years: The Fourth Turning, Currency Debasement, Financial Repression, and Fiscal Dominance.
The Fourth Turning (from Neil Howe’s work) helps us understand that societies move through long cycles. In the “winter” phase, social contracts fray, nationalism rises, and crisis-driven stress ultimately resets the system, laying the groundwork for a new era.
Financial Repression occurs when governments use command-and-control tactics to direct resources, often bypassing market forces.
Fiscal Dominance emerges when deficit spending becomes the central lever of economic policy. If there isn’t enough demand for government debt, central banks buy it directly, reshaping the economy.
Currency Debasement, devaluing money over time, is a byproduct of these interventions. It’s often used as a pressure relief valve to keep the system functioning.
These dynamics are not abstract. They influence how markets behave and, ultimately, how we should position portfolios to preserve purchasing power over time.
Indexing and Market Behavior
Another trend to watch: the growing influence of index and systematic investing (think 401(k) contributions and ETF flows). These steady inflows have changed how markets operate, often driving persistent bull markets with high valuations. When corrections occur, they tend to be sharp and volatile, frequently prompting policy interventions.
What This Means for Investors
None of these outcomes are set in stone; markets remain path-dependent and highly conditional. But understanding these structural forces helps us make better decisions.
Thank you for trusting us to actively guide you through these complex dynamics. Our goal remains clear: to help you maintain and grow your purchasing power, no matter how the landscape shifts.
