In this much‐loved passage from the Book of Ecclesiastes, King Solomon encourages patience in the conduct of our earthly affairs. He specifically recommends an unhurried attitude toward the accumulation of wealth.

The King’s 2400 year‐old reflections offer timeless wisdom and practical insights for our work of managing investments for families in this hurried and hectic 21st century. I am thinking especially of Solomon’s idea that there are rhythms in the affairs of men that cannot be hurried and ought not be ignored… that seasons come and go in turn, and that each is appropriate for different purposes. In this issue of the Blue Sheets we’ll reflect on the natural rhythms of the credit cycle. We’ll try to understand how this cycle influences our economic behavior and its implications for investment decisions. I can almost hear a whisper from across the centuries, “There is a time for borrowing… and a time to refrain from borrowing”.

J. Michael Martin, President and Chief Investment Officer of Financial Advantage discusses what he expects the market to look like in the next 10 years.

Our mission at Financial Advantage is to promote the prosperity and, thereby, the economic freedom of our clients and their families by thoughtfully investing their savings; to pursue opportunity wherever we find it, while diversifying the risks that attend even the most promising enterprises. 

As the door swings open to a fresh new decade of opportunity, and as we survey the exciting array of businesses in which private capital might be invested, we are conscious of three large-scale risks that have the potential to overwhelm ordinary investment considerations. These risks have to do with how governments respond to...

People close to or in retirement need investments that will beat inflation. CDs—one of the lowest-risk investment options available—won’t do it in the current market. So how can you top inflation without exposing yourself too heavily to the stock market?

In investing, sometimes the best offense is a good defense. Does today's market environment require us to consider a radical new kind of portfolio design? I think we have a lot of correction possibilities going on here. That led me to say, what can we do that is totally, dependably opposite?

Our process for preserving your capital in a volatile world- In the last issue of The Blue Sheets® we examined some of the profound ways in which the world is changing, and the new opportunities and new kinds of risk that may proceed from those changes. In this issue we take a look inside the Financial Advantage process for investing our clients’ irreplaceable life savings during what is likely to be a volatile period of transition to an unfamiliar future.

Thomas Rowe Price, founder of the eponymous mutual fund giant, opined famously that “Change is the investor’s only certainty.” As our thoughts ramble back across the eons, a startling range of famous change agents parade before our mind’s eye: The taming of fire; the first tradesman to hitch a wheeled wagon to a camel; the Code of Hammurabi (rule of law); the Exodus from Egypt and the carpenter from Nazareth; the Battle of Hastings; Adam Smith’s Wealth of Nations; the American Revolution; the Crash of ’29; D Day; the integrated circuit (microchip); and we are tempted to add, subject to revision, the collapse of Lehman Brothers.

As advisors probe for answers, many have begun to examine their basic big-picture assumptions about the world in which we live and earn our living.

The answer matters profoundly-The most valuable advantage in the battle for investment survival is to understand the context* in which we are making investment decisions; that is, to correctly appraise the economic and political forces that are shaping tomorrow’s risks and opportunities.

To observant investors, the collapse of global securities markets and the near hysterical efforts by governments to stop it signal a global contextual transformation that will be broader, deeper and more pervasive than any disruption since WWII. As everyone now knows, this upheaval was triggered by the implosion of the postwar credit expansion which had soared beyond the limits of prudence during the last five years.

J. Michael Martin interviewed for the Christian Science Monitor. As the list of wealthy individuals, institutions, and charities that have lost millions, even billions of dollars in the Bernard Madoff fraud case continues to grow, other investors have been asking an important question: Why was there no independent custodian holding the securities and other assets Madoff's firm was said to be investing?