Expensive mates,
Welcome to the December Mutual Fund Observer, and to the vacation season.
The Christmas of the early American republic could be barely recognizable to us. In lots of colonies, it was a workday, ignored or mistrusted; just some immigrant communities handled it as a real pageant. You’ll bear in mind the Christmas of 1776, when George Washington compelled his military throughout the ice‑clogged Delaware and struck the Hessian garrison at Trenton, relying on an enemy formed by a Christmas‑conserving tradition going through a military for whom December 25 was, at finest, non-obligatory.
Between the founding of the Republic and 1820, New England’s premier newspaper – The Hartford Courant – had neither a single point out of Christmas-keeping nor a single advert for vacation items. In Pennsylvania, the Harrisburg Chronicle – the newspaper of the state’s capital – ran solely 9 vacation ads in 1 / 4 century, and people had been for New 12 months’s items. The good Presbyterian minister and abolitionist orator Henry Ward Beecher, born in 1813, admitted that he knew nearly nothing about Christmas till he was 30: “To me,” as a baby, he wrote, “Christmas was a international day.” In 1819, Washington Irving, writer of The Legend of Sleepy Hole and Rip van Winkle, mourned the passing of Christmas. And, in 1821, the nameless writer of Christmas-keeping lamented that “In London, as in all nice cities … the observances of Christmas should quickly be misplaced.” Although he notes, “Christmas continues to be a pageant in some elements of America.”
Why? At base, Christmas was suppressed by the actions and beliefs of simply two teams: the wealthy folks… and the poor folks.
The wealthy, the Protestant descendants of the founding Puritans, concentrated within the booming industrial and cultural facilities of the Northeast, reviled Christmas as pagan and unpatriotic. About which they had been not less than half proper: pagan definitely, unpatriotic… ehhh, debatable.
Right here we appear to have a contradiction in phrases: a pagan Christmas. To resolve the contradiction, we have to separate a non secular celebration of Christ’s beginning from a celebration of Christ’s beginning on December 25th. Why December 25th? An important piece of the puzzle is obscured by the truth that we use a unique calendar system – the Gregorian – than the early Christians did. Below their calendar, December 25th was the night time of the winter solstice, the darkest day of the 12 months, but in addition the day on which gentle started to reassert itself towards the darkness. It’s an occasion so essential that each historic tradition positioned it because the centerpiece of their 12 months. We’ve a file of not less than 40 holidays happening on, or subsequent to, the winter solstice. Our forebears rightly famous that the selection of December 25th was a calculated advertising resolution meant to attract pagans away from one celebration (Dies Natalis Solis Invicti, the birthday of the Invincible Solar) and into one other.
So the Puritans had been appropriate once they identified – they usually pointed this out so much – that Christmas was merely a pagan feast in Christian garb. Enhance Mather discovered it nothing however “mad mirth…extremely dishonorable to the identify of Christ.” Cromwell’s Puritan parliament banned Christmas-keeping within the 1640s, and the Massachusetts Puritans did so within the 1650s.
And whereas the authorized bans on Christmas may not be sustained, the social ones largely had been.
The wealthy, who didn’t social gathering, had been an issue. The poor, who did, had been a far greater one.
There was, by lengthy European custom, a interval of untamed festivity to have fun New 12 months’s. Society’s lowest lessons – slaves or serfs or peasants or blue collar toilers – quickly slipped their yokes and engaged in a interval of untamed revelry and misrule.
In America, the events had been fairly wild. Actually fairly wild.
Assume: Younger guys.
Plenty of them.
With weapons.
Drunk.
Ohhh … method drunk, a number of alcohol, to… uh, drive the chilly winter away.
And a way of entitlement, a way that their social betters owed them good meals, small bribes, and extra alcohol.
Then add tons extra alcohol.
Roving gangs, referred to as “callithumpian bands,” roamed night time after night time, by a up to date account, “shouting, singing, blowing trumpets and tin horns, beating on kettles, firing crackers … hurling missiles” and demanding some figgy pudding. Bear in mind?
“Oh, carry us a figgy pudding and a cup of fine cheer
We received’t go till we get some;
We received’t go till we get some;
We received’t go till we get some, so carry some out right here”
Again then, that wasn’t a track. It was a set of non-negotiable calls for enforced by rampant vandalism, and the cheery blue flame was a sign of the quantity of rum poured over it.
By the early 1800s, this annual eruption of dysfunction had turn into insupportable to the rising city center class. New York, Philadelphia, and Boston had been rising quickly, packing completely different lessons into anxious proximity. The previous rural rhythms, the place the poor may blow off steam in relative isolation, not labored when hundreds of armed, drunken younger males had been roaming streets lined with outlets and respectable properties. One thing needed to give.
Perversely, what saved Christmas was its commercialization. Starting in New York round 1810 or 1820, retailers and civic boosters – notably the New York Historic Society, intent on advertising their metropolis’s Dutch heritage – started ‘discovering’ previous New Amsterdam Christmas traditions. Conveniently, these rediscovered customs centered on household gatherings, communal meals, and presents. Plenty of presents. The timing was serendipitous: the Industrial Revolution was producing a surplus of manufactured items that wanted patrons, and the center class was longing for respectable methods to have fun that didn’t contain armed gangs on the door.
The industrial Christmas was a triumph of the center class, but in addition one thing extra helpful. Over a technology, it reworked a celebration of misrule into an event for household connection. It helped bridge centuries-old divides between Christian denominations, the Christmas-keepers and the others. Most significantly, it recentered the vacation round youngsters and the long run they represented, slightly than round younger males and the dysfunction they embodied.
Which brings us, nonetheless awkwardly, to why we make investments. To not maximize our portfolios or beat some benchmark. We make investments for a similar cause the center class of the 1820s desperately wanted a brand new model of Christmas, to create some measure of safety and chance for the folks we care about, to bridge the hole between the world as it’s and the world we hope to go away behind. The markets will proceed their callithumpian revelry – shouting, demanding, hurling missiles. Our job is the quieter, extra home work: defending what issues, planning for folks we love, and infrequently pausing to acknowledge that we’re doing this collectively, in defiance of chilly and darkish and uncertainty.
That appears value elevating a cup of fine cheer to, even with out the figgy pudding.
On this month’s Observer …
On this subject of the Observer…
Lynn Bolin examines portfolio building for an atmosphere the place elevated debt ranges intersect with longer-term dangers of monetary disaster and forex devaluation. In “Because the World Turns,” he constructs six mannequin portfolios optimized for Nice Monetary Disaster-level drawdowns whereas sustaining affordable returns, intentionally emphasizing current market conduct—COVID bear market, excessive inflation, tariff uncertainty—over the much less related 2022 normalization and 2024 valuation extremes. His conservative portfolio combines established defensive funds like Palm Valley Capital and Columbia Thermostat with tactical managers operating gentle fairness publicity, whereas including a small gold place he views as overbought short-term however positioned for long-term appreciation via debt monetization.
Lynn’s companion piece, “Portfolio Efficiency Throughout One Hundred Years of Bear Markets,” gives a century-spanning framework for understanding how portfolios behave throughout market crises. The evaluation reveals that blended portfolios (20-60% fairness) recovered inside 4-7 years after 1929, whereas all-stock portfolios didn’t get better earlier than WWII, and that gold has outperformed shares in each bear market over the previous 58 years, significantly throughout inflationary crises and extreme monetary dislocations. Lynn concludes that whereas gold is at present overbought, it presents long-term hedge potential as debt ranges strategy historic extremes.
Each essays mirror Lynn’s methodical preparation for elevated financial uncertainty, combining rigorous quantitative evaluation with strategic defensive positioning for a altering debt cycle. They’re value your time.
I share a Launch Alert for GMO Home Resilience ETF, which brings GMO’s 40-plus years of high quality investing self-discipline to corporations positioned to profit from reshoring and nearshoring. The fund represents a tactical guess on a policy-dependent industrial development, huge commitments via the CHIPS Act, Infrastructure Act, and IRA converging with real company motion and structural value shifts. Tom Hancock’s crew applies the identical self-discipline that has pushed GMO’s U.S. High quality technique to top-tier long-term returns, although this stays satellite tv for pc positioning slightly than core fairness publicity.
My second Launch Alert examines MFS Lively Mid Cap ETF, portfolio supervisor Kevin Schmitz’s 17-year mid-cap worth technique now accessible in an ETF wrapper. The parallel mutual fund has by no means completed within the backside quartile in any calendar 12 months since 2009, a testomony to consistency slightly than heroic outperformance. It’s the sort of fund that earns phrases like stable, wise, and dependable: constant, competent, hardly ever good, nearly by no means disastrous.
“The Youngsters are Alright” identifies 10 notable rookies from the 1,087 funds launched via November, separating legitimately attention-grabbing alternatives from the 300+ area of interest buying and selling toys destined to perish in droves. The bottom-risk rookies aren’t experiments; they’re confirmed managers bringing examined disciplines to buyers who couldn’t beforehand entry them, whether or not via Capital Group’s ETF variations of franchise methods, T. Rowe Value extending their closed Capital Appreciation self-discipline into new codecs, or GMO bringing institutional deep-value methods to retail buyers.
And The Shadow, as ever, tracks down a horde (maybe a hoard) of trade developments, together with the return of Tiffany Hsiao to Matthews, the conversion of a bizarre fund to a barely much less bizarre however doubtless nonetheless great ETF, a bunch of fund launches or conversions, and a remarkably lengthy record of liquidations.
When Despair Drives Markets
The US inventory market continues its unbelievable rise via elevated valuations and mounting financial uncertainty. Extra troubling nonetheless: that rise is paced not by the market’s highest-quality corporations however by its lowest-quality ones. One thing elementary has shifted.
The proof factors to a phenomenon commentators name “monetary nihilism,” a rational response by younger buyers to an financial system that has locked them out. Three in ten Gen Z have deserted hopes of homeownership. The median age of first-time homebuyers hit an all-time excessive of 40 this 12 months, up from the low 30s a technology in the past. Stagnant wages, crushing pupil debt, and housing prices which have outpaced earnings development by 60% since 1985 have made conventional paths to safety appear unattainable. The response: swing for the fences. Meme shares, leveraged ETFs, crypto derivatives, prediction markets the place you possibly can guess on all the pieces from Fed choices to Taylor Swift’s being pregnant—something providing moonshot potential over regular accumulation. Month-to-month wagers on platforms like Polymarket and Kalshi now exceed $1 billion.
In the meantime, veteran investor Louis Navellier surveys an financial system the place “the Fed’s been backed right into a nook,” corporations navigate surging tariffs, and “many households are more and more struggling to make ends meet as layoffs rise and pay raises shrink,” and presents his evaluation for 2026 in two phrases: “financial nirvana.”
Financial nirvana?
Rattling, dude.
The disconnect is beautiful. Wall Road doesn’t dwell on Essential Road, and billionaire advisors don’t navigate the financial system their purchasers face, don’t stand in entrance of the meat counter questioning what they will afford, and don’t fear about what occurs when the cash runs out earlier than the month does. When conventional success metrics turn into unreachable for a whole technology, hypothesis stops being irrational and begins being a survival technique.
This dynamic, if it proves to be broadly true, complicates your life and your portfolio. Markets pushed by despair don’t appropriate like markets pushed by fundamentals: they prolong additional, persist longer, and collapse sooner. Shares that capitalism ought to obliterate as a substitute thrive on social media momentum. An AI bubble of epic magnitude, constructed on trillion-dollar compute clusters and pure religion, comforts buyers slightly than terrifying them. Conventional threat metrics break down when the funding thesis is “nothing else will work anyway.”
Many observers have struggled to clarify the lagging efficiency of so-called “high quality” methods—ones that (foolishly) imagine that basically good companies are extra engaging than actually unhealthy ones. A lot of what we’ve famous above suggests the motive force: of us in despair for his or her (or America’s or the world’s) future don’t adhere to the adage “sluggish and regular wins the race.” They’re drawn to the bravado of despair, “go massive or go house,” as they pour sources into moonshot belongings.
All of which makes the argument for getting out, diversifying deeply into belongings uncorrelated with meme-driven momentum, whereas the getting’s good. High quality will matter once more, finally. However “finally” presents chilly consolation when your retirement timeline doesn’t accommodate a decade-long detour via monetary nihilism. We would need to take into consideration the implications of embedding despair as a precept in our youngsters’s lives, which we’ll take up in “The High quality Conundrum” in our January subject.
Thanks from, and to, Warren Buffett
Warren Buffett is exceptional, for his persistence and humility and self-reflection fairly as a lot as for his huge funding success. On November 10, 2025, he issued what is probably going considered one of his final Thanksgiving letters during which he hints, distantly and with out drama, at the truth that his physique is failing. He talks, laconically and with humor, in regards to the previous and heroes and mates, earlier than closing with a mirrored image on these latter days and his Thanksgiving needs for you.
One maybe self-serving statement. I’m blissful to say I really feel higher in regards to the second half of my life than the primary. My recommendation: Don’t beat your self up over previous errors – be taught not less than a bit from them and transfer on. It’s by no means too late to enhance.
Get the appropriate heroes and duplicate them. You can begin with Tom Murphy (former CEO of Capital Cities/ABC and the man who taught Buffett extra about operating a enterprise than anybody else); he was the perfect.
Bear in mind Alfred Nobel, later of Nobel Prize fame, who – reportedly – learn his personal obituary that was mistakenly printed when his brother died and a newspaper received blended up. He was horrified at what he learn and realized he ought to change his conduct. Don’t rely on a newsroom mix-up: Resolve what you prefer to your obituary to say and dwell the life to deserve it.
Greatness doesn’t come about via accumulating nice quantities of cash, nice quantities of publicity or nice energy in authorities. Whenever you assist somebody in any of hundreds of how, you assist the world.
Kindness is costless but in addition priceless.
I write this as one who has been inconsiderate numerous instances and made many errors but in addition grew to become very fortunate in studying from some great mates learn how to behave higher (nonetheless a good distance from good, nonetheless). Take into account that the cleansing girl is as a lot a human being because the Chairman.
I want all who learn this a really blissful Thanksgiving. Sure, even the jerks; it’s by no means too late to vary. Bear in mind to thank America for maximizing your alternatives.
However it’s – inevitably – capricious and generally venal in distributing its rewards.
Select your heroes very fastidiously after which emulate them. You’ll by no means be good, however you possibly can all the time be higher.
Buffett urges his readers to “select your heroes correctly.” That struck me, significantly within the fraught second in our nation’s political life and this season after we’re meant to mirror on gratitude and what we owe one another. So I’ll ask: Do you have got a hero?
The phrase hero has turn into oddly sophisticated. In modern life, we frequently use it as a class slightly than an outline — a title mechanically conferred on anybody who wears a uniform or holds a sure job. It’s an earnest intuition, born of gratitude and respect. However it may possibly additionally make the phrase more durable to make use of for its older function: to call an individual whose conduct, in a second of actual testing, reveals one thing distinctive in regards to the human spirit.
That’s not fairly the sense I imply right here. I’m not utilizing hero as a standing or a social honorific. I’m making an attempt to make use of it in a extra private, extra demanding sense to level towards the uncommon people whose selections beneath strain illuminate what we would hope to be ourselves.
Maybe a hero is somebody who, within the worst of instances, embodies the power we present solely in our greatest moments.
Do you have got a hero?
Not a star, not somebody you comply with on-line, not even merely an individual you admire for a single advantage, however somebody whose conduct beneath pressure evokes you to think about the way you may rise to your individual second of testing. Somebody, maybe, whose spirit you would like you can bestow upon your individual youngsters. Somebody who would encourage, in a eulogy, the individual you most admire to develop misty-eyed and admit, “they had been my hero, although I by no means instructed them.”
I do, although you’ve doubtless by no means heard of him. Frank Minis Johnson (1918-1999). Johnson was born within the hill nation in northwest Alabama, son of the one Republican within the Alabama legislature, thrice-decorated veteran of the Normandy invasion, appointed by President Eisenhower first as a US Legal professional, the place he efficiently prosecuted modern-day slavery costs towards white farmers, after which because the youngest Federal district choose within the nation.
Decide Johnson’s rulings weren’t a couple of single subject or his private preferences. They embodied an uncomfortable precept: the regulation applies to everybody, not simply the highly effective. He desegregated public parks, faculties, services, and employment, together with the state troopers who’d enforced segregation. He upheld girls’s rights to serve on juries and obtain equal therapy within the army. He made the Selma to Montgomery march attainable by ruling that the state couldn’t bar residents from public highways their taxes had constructed.
However his dedication prolonged past civil rights to anybody the highly effective had deemed unworthy of authorized safety. He dominated that sufferers dedicated to psychological establishments have a constitutional proper to satisfactory care, that prisoners can’t be confined in services unfit for human habitation, that undocumented youngsters have the appropriate to a free public schooling, and that Georgia’s regulation criminalizing homosexuality was unconstitutional. The regulation is the regulation for all, he insisted—for the mentally sick, the imprisoned, the undocumented, the homosexual, not only for these with energy to implement their preferences.
On what would have been his 100th birthday, the conservative Federalist Society aired a brief documentary on his life during which Johnson defined a elementary tenet: “I by no means appeared on any desegregation case with ethical requirements in thoughts … I wasn’t employed to be an ethical choose. I wasn’t employed to be a preacher or an evangelist. I’m employed to use the regulation.”
In keeping with the Academy of Achievement, “His former regulation college classmate, George Wallace, referred to as Johnson an ‘integrating, scallawagging, carpetbagging liar.’ The Ku Klux Klan referred to as him ‘essentially the most hated man in Alabama,’ and white college students burned a cross on his garden. The choose and his household acquired fixed dying threats. His aged mom’s home was bombed – they’d meant it for him – however she escaped damage and refused to maneuver.” Federal marshals offered around-the-clock safety for his household from 1961–1975.
Invoice Clinton awarded Johnson a Presidential Medal of Freedom in 1995. Civil-rights chief Martin Luther King Jr. as soon as referred to as him “the person who gave true that means to the phrase justice.” Decide Johnson modified the world via the easy, principled, repeated utility of the phrase “no.” As in: no, you could not order troopers crushed. No, you could not shut the roads to the residents whose labor and taxes constructed them. No, you could not exclude girls from public service for a easy cause of their intercourse. No, no, no … quiet, reflective, principled, unpopular, unbowed “no.”
Saying “no” to what’s mistaken issues, even when—particularly when—it’s unpopular, harmful, and yields no fast reward.
Do you have got a hero? I do, and when you ever surprise why I persist at being kind of quietly unpleasant, maybe it’s as a result of I’ve a really peculiar angel on my shoulder.
And because of you, now and ever
Augustana college students, December 2025
You’d be shocked at how troublesome this part is for us to put in writing, principally as a result of phrases so poorly seize the sense of gratitude that your religion evokes in us. To our devoted “subscribers,” Greg, William, the great of us at S & F Advisors, William, Stephen, Wilson, Brian, David, Doug, and Altaf, thanks!
Thanks, as ever, to The Grinch, passing on his approach to the Whobilation, who tossed a present, although not the roast beast—he’s saving that for himself.
Nick and Debbi
That is the fourth anniversary of the passing of my buddy, Nick Burnett, who lives in reminiscence but inexperienced. Debbi shared a present with MFO in his reminiscence.
When you share our sense of gratitude for the blessings which have come to you, this could be an opportune second to decide on to share them with those that battle. Chip and I’ve a robust and ongoing dedication to supporting our regional meals financial institution, our neighborhood basis, and conserving of us heat throughout these winter months.
From Chip, me, and all the oldsters on the Observer, finest needs for a joyful finish to the 12 months. We’ll see you on (or about) New 12 months’s!
