Happy Birthday America!

July 12, 2026

Happy 250th to the United States!

“As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them.”John F. Kennedy

Thank you to all the people that have come before me in the United States. The people who had the audacity to believe they could form a better system of government (how thankfully arrogant), who had faith in humanity, who fought for truth and justice, who sacrificed themselves and their lives, so that you and I could have a life of freedom. Freedom of thought, freedom of speech, and the pursuit of happiness.

I approach this historic event with gratitude, and I will do my (small) part in trying to build on the foundations provided. I want to make the most of our opportunities and to use our resources in the service of others.

Despite numerous social, environmental, economic, and political issues currently in focus, and the anxiety it can cause, worrying never helps. Anxiety and depression won’t help, but putting energy and effort into improving situations just might.

A thought before my thoughts

Before reading, please consider that I generally don’t get emotional about politics or global events. I just interpret what I observe, and I express myself through financial markets. We are not always honest about reality nor the likely course of future events, but money tends to be brutally honest about what’s happening in the world. I appreciate that brutal honesty because it reflects reality.

As most of you know, I desire best outcomes for everyone, I look for reciprocal and mutually beneficial relationships, and I despise waste or abuse in any form. Of course, I also have strong opinions about which policies might produce optimal outcomes, but of course my opinions are often wrong.

My hope is that everyone can discuss potential policy paths without selfishly believing that their view is the only way forward. No matter how smart we consider ourselves, we do not have all the answers. It’s always better to start with “I don’t know” or “I am not sure”. And while it’s fine to be passionate about your opinion, it makes little sense to get angry with someone that doesn’t agree with you.

A movie to emphasize the point

For our younger readers, if you haven’t seen the movie: Ferris Bueller’s Day Off, I think you will enjoy it. John Hughes (writer, director, and producer) masterfully observes human nature and the truth about life.

One scene between Charlie Sheen and Jennifer Grey keeps surfacing in my mind because of the many stories I hear about people becoming so angry that they refuse to speak with one another because of someone’s political affiliation! I have even heard of people not dating because one person is a Republican and the other is a Democrat. It’s obviously crazy, but I hear this frequently.

If you have ever shut yourself off from someone because they have different views than yourself, my hope is that you recognize the harm you’re doing to yourself. Kind, good hearted people can vote republican and they can vote democrat. As most of us are aware, about 50% of us vote for one party or the other. Most people are intrinsically good; so, if you shut yourself off because you’re angry with half of the country, you’re obviously hurting yourself (even if you don’t see it). You are choosing to place limits on your own development.

This link to the scene in the movie is worth a watch:

https://www.youtube.com/watch?v=H19uKs99vIw

The selected dialogue is as follows: Charlie Sheen, played aptly as a drug addict in a police station; an ironic place to receive wisdom, Sheen addresses the angry behavior of Ferris Bueller’s sister:

“I know what’s wrong; I just want to hear you say it.”

She gets very emotional and expresses her fury about what her brother gets away with, but what she cannot get away with. And then Charlie Sheen says:

“Then your problem is you.”

“You ought to spend a little more time dealing with yourself, and a little less time worrying about what your brother does.”

Wise souls understand the simple and obvious core of her issue. She is the cause of her tumult, but she cannot see it. A highly unlikely helper (a drug addict) provides the wisdom and clarity she needs. It’s so simple, but most people cannot see the solution because they incorrectly blame their problems on others. I used to see things this way (still do sometimes; just less often).

If our eyes are open, if we are not close minded, we have a chance to open doors we could never even imagine.

Markets will be brutally honest even if we cannot be honest with ourselves

Ultimately, I believe this is why I gravitated to being a fund manager. A role that will reward openness and acceptance of the truth. We can deny the truth, we can create whatever narrative we may wish, but ultimately reality will assert itself.

I spend my days trying to uncover the truth, searching for probable outcomes, and how prevailing narratives deviate (lies) from them.

Given many people like snippets of quick information these days, and since so many thoughts and ideas have found their way into my head in the past month, I am going to list short rapid fire bullet points of my observations and thoughts on a disparate group of topics. I do not claim to be an expert on any of the below; it’s just my simple analysis of how the path looks. If anything strikes you as interesting, please reach out to us.

• New Federal Reserve Governor Kevin Warsh: He seems to clearly think that forward guidance is a bad idea regarding Fed policy. He also wants to reduce the size of the Fed balance sheet. Overall, I believe this is a better way to manage the central bank. I strongly suspect that the Federal Reserve buying of financial assets (expanding their balance sheet) led to the extreme wealth divide (owners of assets do well when money is being printed to purchase assets in the economy).

  • This could lead to slightly less market liquidity, a healthier approach to risk taking generally, and it may be a more challenging environment for novice investors. Probably a negative for assets like gold (and others) that do not pay a rate of return to investors.

• Artificial intelligence tools continue to amaze us here at August Wealth. Our team continues to become more skilled daily. More in-depth research, delivered robustly, quickly, and in excellent format. Internal information which will help with more proactive and helpful engagement with the families we serve, better risk analytics, compliance, and legal and tax know-how.

  • I suspect most businesses and industries will be improved by artificial intelligence. Quality should improve, and margins will expand across many industries.

  • New jobs will be created for younger workers. Our recent crop of summer interns all utilized AI tools to present their final projects. Some spent time coding to make AI models that mimic their investment process.

  • I see artificial intelligence as an opportunity to develop expert knowledge quickly which will compliment and cross pollinate other fields. It will allow progress to move forward at exponentially higher rates of growth.

• I still do not see an inflation problem that would harm the economy. For all the drama around oil prices because of the bombing of Iran, oil prices are essentially back to where we were before the war started. There are some commodity inflation and bottlenecks from a capital expenditure buildout, and inflation is running a little higher than central banks want, but I think it is well within central banks’ ability to manage prices. The chart below of inflation does not worry me.

  • We continue to hold US Treasury fixed income (bonds) as a part of most portfolios. Yields of 4% plus remain an attractive asset if inflation ends up closer to 2% and it provides a hedge against economic turmoil.

• In Iran, it appears the Revolutionary Guards hold too much power domestically. I suspect it has far less to do with religion and far more to do with money, power and comfort for their families. There are many similarities to how the mafia operates, and that means it must be dismantled. Otherwise, their power will grow back again. Even if politics in Europe and the United States make this more difficult in the short run, it is hard to envision an alternative policy that makes sense. Iran must engage or their leadership destroyed, and I still see this

  as bipartisan in the USA (except for the far left of the Democratic Party which makes it tricky as they gain power).

o It seems most middle east countries, even if they dislike Israel, would prefer to engage and normalize relations.

o Iran’s proxies are a shadow of what they once were (Syria, Hamas, Hezbollah). They need more money and weapons from Iran in order to destroy Israel.

o Iran’s ability to earn money will be limited if they do not engage with the USA and the West. The Revolutionary Guard may want to have revenge, and control shipping in the strait of Hormuz. However, commodities are already moving around this chokepoint, and no country desires this outcome.

o Lebanon and Israel would prefer to move towards peace which means Hezbollah power needs to be diminished further.

• As I have been saying for years, the most likely path continues to be full regime change in Iran. This is almost certainly desired by all countries (regardless of the media stories) apart from China, Russia, and the Revolutionary Guard in Iran (mainly to destabilize western liberal democracy). If Iran and its proxies will not engage, and they continue to promote the destruction of Israel, it is likely that war will have to continue for a longer period of time. If the goal of regime change in Iran is achieved, I believe the USA will force Israel to stand down and engage with their neighbors. Then the rebuilding process could begin. Peace is possible in Iran, Lebanon, Gaza, and the West Bank. But not if Iran is allowed to continue the destructive path they’ve been on for 50 years. Let’s hope peace has a chance because everyone can benefit.

• I continue to find excellent opportunities for growth globally, but some of the best beneficiaries of the growth will continue to be USA companies. The capital expenditure required for artificial intelligence infrastructure is increasing the need for debt issuance. There is a lot of activity happening in many different parts of the economy both in the USA and globally.

o We have purchased shares in the ratings agencies after a decline in their share prices. The need for debt ratings will be increasing, and there are essentially two companies that provide those ratings.

o We have purchased sponsors (private equity firms) that will be active in dealmaking globally. Many of these company share prices are down 30-40% from their highs. Private credit and private equity have had a rough time recently as investors realize many of the problems we have pointed out in the past (high fees, illiquid, and not that special). We have largely avoided all the trouble in these markets and have kept our families on track through public markets. However, these companies provide a necessary function in the global economy, they are made up of some of the smartest and best-connected people in the world, and they continue to successfully raise money for new fund vehicles. They charge high fees for this access, they lock up capital, and their share prices are trading at deep discounts compared to 18 months ago. We are now buying many of these businesses.

• Exit from the United Kingdom. After several years of exposure to the United Kingdom, we are less interested in my adopted country. I love London, I love England, I love my friendships (congratulations to my good friend and old boss on his retirement, thank you for everything KS), but their challenges are abundant: Over-regulation, crime, lack of accountability, too much immigration without integration, tax increases on income and real estate, increased social spending, Brexit, and a lack of leadership have all weighed heavily on England. London is still a great place to visit, but I was shocked by the number of empty homes in the capital. The government has driven away many wealthy residents and citizens, but government spending has continued. It’s hard to stop social spending without a crisis, and I fear that one must happen before positive change can occur.

o The benefit the United States has is the ability to move from one US state to another, as opposed to the United Kingdom where the only place to move is out of the country. Californians can move to Texas, New Yorkers to Florida. It is another way that the USA has checks and balances. This dynamism makes a difference.

o Real estate investors that are overweight in one location anywhere should take note. London is still amazing, but prices have been in decline for many years. The FT article below suggests that average sale prices have fallen 12% since 2016. Talk about a lost decade! If you take into account inflation, people have become much poorer, and many of my friends unfortunately feel this. Another reason investors should consider diversification to protect lifestyle and grow wealth.

https://www.ft.com/content/1daad2c2-fd9e-4fc8-af16- 22a1c5775fd1?shareType=nongift

There are many more topics on my list, but let’s leave it there for now. I hope everyone has a wonderful summer.

Best,

Joe

Investment advice offered through August Wealth Advisors.

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