Deposits continue to fly out of banks in search of better yields, the political world is fascinated by scandal and intrigue and ignoring most everything that matters, commercial real estate is really starting to freak investors out as the yield curve remains stubbornly inverted, signaling a likely recession by next year, and yet the stock market is showing great resilience as we head into April, at least partly because the inflation numbers continue to moderate… though, we should note, the positive performance of the stock market this month has been pretty much driven by five or six companies. The mega-caps are doing GREAT again, but once you get out of the top ten or so companies in the S&P 500, stocks are falling.

That was my obligatory commentary on the market and the state of the world. I have no idea where the stock market will go from here — most of the companies I follow are still doing quite well in their operations, though I remain worried in the near term about the cascading effect of inflation and higher interest rates, but I also remain resolved to not waste too much time trying to predict the future of the economy. People and companies will still need to buy goods and services, firms that are good at providing those goods and services will be profitable, and proven management teams who have gotten through past crises will probably get through the next one, too. I’m generally a little more cautious about buying these days, both because a lot of the best companies are getting a little pricey again and because of the worrisome macro outlook… but I also try pretty hard not to sell companies for “macro” reasons unless that macro impact is very direct (their industry is going to stink and I want to reduce exposure to that industry, like with Kennedy-Wilson (KW) a couple weeks ago, or the company’s customers are in such bad shape that it is almost guaranteed to have some bad news coming soon, like Innovative Industrial Properties (IIPR) at the beginning of the year). The only thing I know for sure right now is that I’m glad I don’t have to run a bank and try to keep my depositors happy.

So let me try to again cleanse my head of macro worries and dig into some of our investments… ...