Between 1816 and 1828 the Second Bank grew in stature and importance, so much so that it was considered an essential agency of the government. Biddle, as the head of the Second Bank, developed the concept of central banking.

The start of 2016 has been a turbulent time in the world’s equity markets. The world’s economies have been far less volatile. Once again, economics and markets seem to be moving in different directions.

"Though central bankers and talking heads on television speak about monetary policy as if it has a large and predictable impact on the real economy, decades of evidence underscore a weak and unreliable cause-and-effect relationship between the policy tools of the Fed and the targets (inflation, unemployment) that the Fed hopes to affect."

Bristlecone Pines do very well where most other plants cannot even grow. What would be the equivalent in today's markets?

A scatter plot for the S&P 500 January barometer with data ranging from 1951 to 2016.

"If the Fed tries to keep rates at or near the levels they are currently, it will signal that after so many years of policy accommodation, the U.S. economy is still too fragile to absorb even marginal rate hikes. Such a response would be tantamount to what we – and many others – have been saying for a long time: that the interest rate emperor has no clothes."

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" 2015 must be remembered as the year of divergence. The economy “unexpectedly” fell apart in broad-based and sustained fashion, yet Janet Yellen’s pedigree still counts far more in seemingly so many places"

"Take this widely acknowledged truism: Global growth is weak. This meme has constantly dominated headlines, not only this year, but throughout most of the current expansion."

The most important outbreak or story of 2015 had to have been the junk bond reversal. It combined all the major elements of what investors and economic agents are both fearing and, at one point in the past anyway, hoping.

"China may enjoy a net current account surplus, but she has simultaneously been borrowing huge amounts of US dollars. In short, the peg to the US dollar has effectively dollarized China’s inflating domestic financial markets, and the scale of this bubble is eye-watering."

"In the last five decades, there has never been less thinking going on in financial markets"

"Milton Friedman once said that laws should be judged by their results rather than their intentions. Liquidity has disappeared, and it is directly attributable to the Volcker Rule."

"QE started in September 2008 and TARP was passed in October 2008, but the stock market fell an additional 40%. Mark-to-market accounting was changed in March/April 2009 and that’s when the stock market and economy bottomed."

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We share these two charts from the August newsletter of Hinder Asset Management, showing the evolution of various asset classes for the past 65 years, from the perspective of a Swiss investor, with and without foreign currency hedging.

I can’t help but to admire these balanced portfolios. Simple and elegant in their asset allocation, easy to implement, highly liquid, transparent, low-cost; yet so profitable and consistent in their long-term results.