How Heavy is this Shoe?
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 1 March 2024
⏱️ 19 minutes
🧾️ Download transcript
Summary
Today's Post - https://bahnsen.co/4cbq1G7
This last week appears to (as of Friday morning’s press time) not been a particularly active one in equity markets. The Fed had no big announcements. Bond yields barely budged. Earnings season is very close to complete, and companies doing reporting of results have become few and far between. We are in a market news cycle lull, which is the perfect time to talk about alternative investments. “Huh?,” you ask. “What does the news cycle have to do with alternative investments like private credit?”
All will be revealed. But in the meantime, I guess I should clarify that I never believe Dividend Cafe should be tied to a particular headline or market event. I may choose to do so here and there. But even then, those “ad hoc” news events become relevant to the Dividend Cafe only to the extent the lesson or message itself is a permanently relevant message. Some may be delivered in a more “timely” context than others, but what I want every week’s Dividend Cafe to be is something that can be read any time past, present, or future, and stand up. Day-to-day market reporting and analysis has its place (barely), but the Dividend Cafe is my baby for macro, evergreen truth and perspective. It will be the last thing I ever give up in this full-time endeavor, and by give up, I mean something rather morbid.
So I write in today’s Dividend Cafe about something unrelated to the news cycle, the headlines, and big market noise, not merely because it was a quiet week on the western front but because every week should be a topic divorced from noise and focused on substance. Noise is the enemy of investor success. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the Dividing Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:10.0 | Hello and welcome to another edition of the Dividend Cafe. I am sitting in our Newport Beach office studio and I don't think I have recorded a Dividing Cafe from here since maybe the second week of January. |
| 0:26.8 | I mean, it's really been quite a whirlwind. I've been in New York office a lot, and then there's been travel around the last couple of weekends at different hotels and offices and other sites. |
| 0:39.7 | And so it's nice to be here at the home base and record in the comfort of this beautiful studio. |
| 0:44.7 | And it's also nice to be doing a dividend cafe for you today on a topic that we don't address a whole lot. |
| 0:51.6 | We talk about the Fed. |
| 0:52.8 | We talk about Japanification, we talk about monetary |
| 0:55.4 | policy, the macroeconomic picture, growth expectations, applying all of this into the orbit of |
| 1:02.6 | dividend growth. These are things that are pretty frequent topics in the dividend cafe. But something |
| 1:07.9 | like private credit can seem more niche. It can seem a bit more bespoke. Yet it's a pretty |
| 1:15.0 | substantial part of portfolio strategy at the Bonson Group. And it's become a very big part of what a lot |
| 1:23.1 | of high net worth and ultra high net worth investors are looking at generally as a source of return |
| 1:30.9 | and a source of risk that is outside the conventional elements of stock and bond markets. |
| 1:37.4 | That is to say we view it as an alternative investment, which is to say we view its source |
| 1:43.6 | of risk and reward as non-correlated to traditional |
| 1:47.7 | investments like stocks and bonds. And so that broader rationalization as to why we own alternatives |
| 1:55.6 | at all has always been the diversification benefits that come from non-correlation and the use of private |
| 2:04.5 | credit within alternatives has picked up just in terms of our view of the opportunity set. |
| 2:12.3 | It's something we've been mostly very right about for a long time. First of all, not only just in the return sense, |
| 2:20.3 | targeting high single digit returns in an asset class with lower relative volatility. |
| 2:27.3 | It's tough to do and it's been happening for quite some time. And frankly, because of the floating |
| 2:32.3 | rate nature of a lot of private credit, |
... |
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