….

The Times They Are A-Changin

Song by Bob Dylan (1964)

“Come senators, congressmen, please heed the call

Don’t stand in the doorway, don’t block up the hall

For he that gets hurt will be he who has stalled

The battle outside ragin’

Will soon shake your windows and rattle your walls

For the times they are a-changin’

“Come mothers and fathers throughout the land

And don’t criticize what you can’t understand

Your sons and your daughters are beyond your command

Your old road is rapidly aging

Please get outta’ the new one if you can’t lend your hand

For the times they are a-changin'”

…

Introduction

New highs in the stock market are as American as apple pie—greed is good. In the midst of headlines like Liberation Day, California wildfires, DOGE, TACO, “Bomb Iran,” Epstein, $5 trillion added to the deficit, tariff inflation, and more—the outcome remains the same: new market highs. Is this new? Far from it. It's the historical norm. (See chart #3 below from Peter Mallouk at Creative Planning.)

But today’s version of this familiar story has a twist. The senators and congressmen Dylan once sang about are now running personal trading accounts—outperforming most hedge funds in the world.

According to Tom Lee at Fundstrat, we’ve endured six “Mini-Black Swans” in just five years—compressing a decade’s worth of volatility into half the time. Yet markets continue their march upward. American investors are seemingly immune to the noise, as 401(k) contributions hit all-time highs and retail stock buying reaches its highest level since 2018.

The second twist? The rise of the speculation economy—an ecosystem of crypto, gambling, prediction markets, and derivatives trading. As Dylan wrote, “Your sons and your daughters are beyond your command.” If you can’t lend a hand, best to step aside. This is nowhere near a top yet.

We’ve said this in past letters, and it bears repeating: it can be argued that we haven’t seen a traditional recession since the 1990s. Instead, we endure speculative frenzies—bubbles in tech, housing, crypto—that periodically burst. In between, the market delivers three 5% corrections a year, one 10–15% correction annually, and a 20–30% drawdown every five years.

6 Mini-Black Swans in 5 Years

The S&P 500 witnessed a decade worth of volatility in 5 years

Not only are new stock market highs as American as apple pie, but volatility is the patriotic soul of the U.S. market. As Peter Mallouk illustrates in the chart below, seemingly world-ending events occur multiple times each decade—yet the S&P 500 continues to push higher.

Investors have fully embraced the “buy the dip” mentality in the 2020s. Until we experience a true second-leg selloff—like in 1999 or 2008 that breaks prior lows—the inflows keep coming.

For perspective: between 70 to 85 million people died in World War II, including more than 50 million civilians. Markets recovered and marched forward. Volatility isn’t new—it’s the price of admission for long-term gains.

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