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Waterloo Capital Commentary and Outlooks


The first half of 2023 has concluded following a second quarter that saw concern on the direction of markets and the economy giving way to resilient data and optimistic sentiment. Throughout the quarter, investors received earnings reports, economic indicators, and banking sector news displaying that the worst-case scenario of an imminent, banking led recession in the US was not in the cards. Instead, the economy has maintained a steady...

Golf and What It Can Teach Us About Investing for Retirement

“A good golfer has the determination to win and the patience to wait for the breaks.”

- Gary Player


In the midst of recession fears, a banking crisis, and historically high interest rates, the S&P 500 is up 7% YTD. Meanwhile the corresponding equal weighted index of the same 500 companies is roughly flat. What is driving this intra-index divergence, is it sustainable, and where could we go from here?

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Investing and game theory have a lot in common, and one TV program that demonstrates the intersection between the two is “Let’s Make a Deal.


Markets, and more importantly, investor expectations, fluctuated drastically throughout the first three months of 2023. Beaten down areas came out of the gates quickly as they forcefully rallied on optimism that global central banks would soon halt rates. This soft-landing hope quickly sputtered as markets faced a banking crisis and thoughts of tighter financial conditions leading to a larger than expected slowdown in the global economy...


The failure of Silicon Valley Bank was caused by a run on the bank. The company was not, at least until clients began rushing for the exits, remotely insolvent. But banking is an enterprise that relies as much on confidence as it does liquidity — and if that runs out, the game is over.


Linear regression is a simple statistical method most of us are familiar with if we have ever taken an introductory course in statistics. Linear regression is used to model the relationship between a dependent variable and an independent variable. Suppose you are studying the relationship between the number of hours studied (independent variable) and the score on a math test (dependent variable) for a group of students. In this example, the...


An easy way to determine if an investment is a good deal or not is to compare your forecasted rate of return to a risk free rate such as a 10 year government bond yield.

However sometimes it is hard to come up with an accurate forecasted return because there are so many assumptions that have to be estimated and many have a large impact on the calculation.


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Although the famed Santa Rally sputtered out, Q4 was a net positive for stocks and bonds after a dismal third quarter. The story of a hawkish Fed, high inflation, and a strong labor market remained. As we enter the new year, there is growing discussion on if the economy might enter a recession as many leading indicators have turned negative. So far, business earnings and the consumer have been holding up, however the lag effect in...

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The volatility experienced in the first half of the year continued in the third quarter. Most asset classes rebounded strongly to start the quarter on indications that inflation may be topping and inklings that central banks may relent their tightening cycles sooner-than-expected. Subsequent inflation data, however, forced the hand of the Federal Reserve to continue tightening and led Jerome Powell to concretely state that the bank will...