Senator Sheldon Whitehouse of Rhode Island used the time allotted to him for questioning of Supreme Court nominee Amy Coney Barrett to make an expansive argument about conservatives’ activist efforts to influence the judiciary.

Without asking Barrett a single question, Whitehouse laid out what he said was a strategy by small group of influential conservatives to cement control of the federal judiciary. He displayed a series of charts drawing connections between organizations that promote the careers of favored judges and also write amicus briefs supporting conservative causes that appear before those same judges.

“This, more and more, looks like it’s not three schemes, but it’s one scheme. With the same funders selecting judges, funding campaigns for the judges, and then showing up in court in these orchestrated amicus flotillas to tell the judges what to do,” Whitehouse said.

Whitehouse also rebutted claims from Republicans on the Senate Judiciary Committee that Barrett’s nomination was unrelated to the Affordable Care Act case set to be heard on the Supreme Court later this year.

“Don’t act as if we’re making this stuff up,” Whitehouse said. “This is what President Trump said. This is what your party platform says. Reverse the Obamacare cases. Senator after senator, including many in this committee, filed briefs saying that the Affordable Care Act should be thrown out by courts. Why is it surprising for us to be concerned that you want this nominee to do what you want nominees to do?”

It’s an argument that Whitehouse has made before. Last month, for example, he called the situation “a problem of court capture.”

“This has been the product of a very orchestrated scheme to control who gets nominated, to provide funding, to provide political cover, to run certain cases before the Supreme Court,” he said then. “The big donors

Safe Yields by Lipper Category

Chart #1 shows Total Return for the past 12 months of funds in Lipper Categories versus risk as measured by the Ulcer Index which is based on the length and duration of drawdowns. Three clusters of categories can be seen. The upper leftmost cluster are those with low risk and higher returns. The size of the sphere is proportional to the yield. The lower left most cluster are those with lower returns and higher risk. The center cluster represents those with moderate risk and returns. What the chart shows is that most higher yielding funds have higher risk.

Figure #1: Seeking Yield with Low Risk

Seeking Yield With Low RiskSource: Created by the Author Based on Mutual Fund Observer Screens

Table #1 contains the data used in Chart #1. All categories have at least 2% yield. The green area is the low risk categories with moderate 12-month returns. The yield divided by Ulcer Index represents the yield that an investor receives for the risk (Ulcer Index) that they are taking. Martin Ratio is the risk free, risk-adjusted return. The yellow cells contain categories that have slightly more risk, decent 12-month returns and slightly higher yields. The categories in the red shaded area are higher risk categories which have also had lower returns. I added a fourth category of funds that have exhibited low risk, but I believe with COVID recurring in some regions have higher risk. The top two categories are the ones where I prefer to invest.

Table #1: Lipper Categories by Return, Yield and Risk

Source: Created by the Author Based on Mutual Fund Observer Screens

Table #2 contains some of the top-ranked funds from my ranking system based on risk, risk-adjusted returns, momentum, income, and quality. These correspond to the green shaded “lowest risk” categories in

MLPs followed up last week’s modest bounce with a huge week in a risk-on surge for equity markets, commodity markets and everything else this week. MLPs led the way for a second straight week, beating the AMNA by nearly 300 basis points. Oil prices, natural gas prices, and the stock market were all strong this week, which helped.

Monday’s big positive move was helped by an MLP roll-up announcement and TRGP’s positive update. Wednesday’s big positive move seemed to be short covering after the vice presidential debate where Kamala Harris was emphatic about Biden not banning fracking. PAA was particularly strong after being pressured as the posterchild for a fracking ban on federal land.

This year, including this week, the AMZ has rallied 8% or more in a week five times, reflective of the heightened volatility of 2020. For context, 2019 had just one such week (the first week of 2019), and 2017 and 2018 had no 8% weeks.

AMZ has bounced 11% off the low point of September, and AMNA has bounced 6%. The positive move after the horrible September has been a nice respite, but it does feel like the rest of 2020 will continue to exhibit high levels of volatility in both directions as hedge funds whip things around and investors trade through the election and tax loss season.

Universe Update: Right Now

It’s been a few months since I updated the below chart. A few notes on the changes in the last few months:

  • CNXM and EQM have exited the MLP structure (although ETRN is still out there)

  • I also moved TCP’s market cap into TRP-CA’s in the chart below and removed it from the MLP count.

  • There are only 28 midstream MLPs left with $250mm or more in market cap.

    • There are 7 midstream MLPs

Some securities I own are illiquid. A few are very illiquid. When I wrote for, we had a warning that we posted for every security mentioned where the market cap was less than half a billion dollars, because what we wrote could budge the market, and sometimes it did. I remember when I wrote a post about personal lines P&C insurers, and I mentioned Safety Insurance (NASDAQ:SAFT), which was definitely small, as one of the companies that I thought was worth owning, and we did own it at the firm that I worked for. The stock popped about 5% before settling down.

But frenzies to buy are usually tame compared with frenzies to sell. There is an urgency to preserving value that makes the seller particularly zealous in getting out rapidly.

In the last three weeks, I’ve experienced this twice with two securities that I own. In both cases I bought more as the seller got aggressive. Let me show you what happened.

Image Credit: Aleph Blog

This is a graph of National Western Life Insurance (NWLI) over the last three weeks. It’s my largest holding in one of my strategies. On September 23rd, near the close, an aggressive seller, on no news, sold a large block of stock, driving down the price temporarily. I was one of those buying from him, but by no means the biggest buyer.

Image Credit: Aleph Blog

Then there is TCW Strategic Income Fund (NYSE:TSI), which is the second-largest holding as bond funds go for my clients, behind PIMCO Enhanced Short Maturity Active ETF (NYSEARCA:MINT), which I use for liquidity. Yesterday, someone was aggressively selling until 2PM or so, and then they seemed to be done. They may have been selling for three days prior to that. In this

“Markets can stay irrational longer than you can stay solvent.” – John Maynard Keynes

Stocks Are Very Expensive

The famous economist John Maynard Keynes recognized long ago that markets can deviate from their fundamental value for an extended period. His insight applies to U.S. equities today. As measured by the S&P 500, the broad-based market trades well above the historical average according to the 10-year cyclically adjusted P/E ratio. Stocks have been only before the 1929 and 2000 crashes more expensive than today.

Shiller CAPE

Source: Robert Shiller, Yale University, Online Data

Equities had an impressive bull run over the past decade. The Nasdaq 100 returned almost 20% p.a. That’s more than double the typical long-term total return that academics calculated from hundreds of years of cross-market data. Today’s market action is even more impressive if we put it into a historical perspective. The chart below compares today’s tech bull run to the stock market in the roaring twenties. Fears of excessive speculation by the Federal Reserve caused the Wall Street Crash of 1929 according to Wikipedia. The roaring twenties bull cycle lasted slightly less than 100 months and is depicted by the black time series. The period is iconic for a decade of wealth and excess. However, it looks pale and boring next to the Nasdaq 100 during the past decade.

Roaring Twenties vs Nasdaq 100

Bubble Characteristics

Excessive speculation is not an artifact of the past. It is among the major drivers of the rally this year. The chart below shows the amount of premium spent by retail traders on call options into the September selloff. Call options are among the most speculative investment vehicles and their demand skyrocketed during this year. The development is clear evidence for elevated risk-inclination among investors. Speculative bubbles can get quite exciting but are not sustainable. Fundamentals are not