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Crescat’s Research

Crescat’s investment approach rests on a foundation of identifying the key macroeconomic themes which will shape the investment environment of tomorrow. Next comes identifying those equity sectors and asset classes that will be impacted favorably or unfavorably by those key themes. Then comes selecting individual securities within those equity sectors and asset classes.

Crescat conducts rigorous research to get those foundational themes right. The team reads and reviews a broad spectrum of material regarding macroeconomic, geopolitical, financial and industry trends. It defines hypotheses for key themes then tests those hypotheses through both quantitative and logical analysis as well as internal debate. The resulting themes are then used to shape the portfolio. They are also summarized in monthly performance reports and less frequent research letters.

Click on a date below to view Crescat’s in- depth macro-economic research letters:

  • 17 October 2011:  We discuss the implications of record high global debt levels, China’s unsustainable fixed asset investment binge, the European debt crisis, declinging real household income in the U.S., understated CPI, gargantuan off balance sheet derivatives.  Central banks have been behind an upward spiraling series of bubbles, busts, and bailouts.   The biggest busts and bailouts are likely still ahead of us, possibly the end game for fiat money itself.  Long and short opportunities abound.  Hard money, scarce resources, and equities of competitive and innovative companies offer ways to protect and grow capital amidst central bank money printing and debt devaluation.  Cash and government bonds are not the safe havens they appear – neither is China the export driven growth juggernaut it appears.
  • 1 June 2009: Crescat highlights unprecedented monetary and fiscal stimulus and still extreme financial sector leverage.
  • 29 August 2008: Crescat predicts worsening Financial Sector Crisis, Global Economic Slowdown, Global Fiat Currency Crisis, U.S. Treasury Bust, and Cyclical Commodity Correction.

“… we are on a crash course … where China and other creditors wake up to the idea that  they stand to lose much more than they gain by continuing to finance unsustainably growing U.S. public and private deficits.”

“We appear headed toward a massive turn away from U.S. debt and hence the dollar that will only accelerate the U.S. monetary inflation as the U.S. is forced to monetize its increasing debt.”

  • 15 August 2007: Crescat predicts worsening Housing Bust, related Financial Sector Bust and U.S. Dollar Crisis

“We don’t think the final homebuilder bottom will be reached until at least one of the majors files for bankruptcy.”

“Given the size, leverage and inter-related nature of the derivative market, we believe the credit crunch is necessarily spreading far beyond sub-prime.”

“… Mark-to-model pricing is structurally unsound as it encourages accounting manipulation and excessive risk-taking.”

  • 27 October 2006: Crescat highlights Housing Bubble, Economic Slowdown, Financial Sector Bubble and Scarce Energy.

“We think the current market for housing in the US is akin to the market for tech stocks in the year 2000. We are at the top of a bubble that only just started to burst.”

“We expect home equity withdrawals to decline materially … negatively impacting US consumption, the largest component of our economy’s GDP.”

“The sector that jumps out as being the most over-extended … is the financial sector. … The housing bust logically should be a catalyst for a decline in the financial sector …”

“… we believe that the energy sector has only just started another major secular move up.”

As noted, Crescat incorporates third-party research into its investment process. Over time, Crescat has come to respect these third-party research sources:

We obtain base economic data from many other sources: