“When sorrows come, they come not single spies, but in battalions.”

—Claudius, in Hamlet

Over the long term, measured in years, the investment markets mimic the overall economy. We have seen many periods when the two diverged for a short time, sometimes significantly.

“The essence of intelligence is the ability to predict. To plan ahead, we simulate the world. The optimal action taken minimizes the predicted cost.” Yann LeCun, artificial intelligence pioneer.

This is the question we are all asking ourselves as the Federal Reserve throws money at Wall Street and the federal government throws money at Main Street. The market’s rise this past week has many hoping it’s a sign that recovery is imminent, and we’ll be getting back to normal soon. A look at the recent unemployment figures, however, suggest that normal may take more time.

To state the obvious, this economic downturn has been sharp and painful to many. Though undoubtedly still painful, it has been less so for our clients. We have been warning of a growing instability within the financial markets and also preparing to weather it for quite some time. Although no one likes to see losses in their investments, the year-to-date losses our clients have experienced to date have been far less than their respective market benchmarks (in many cases it has been 40-70% less).