Cycles Anonymous
- Eric Cinnamond
- 2 hours ago
- 6 min read
<February 23, 2026>
Hello everyone. We’re Palm Valley Capital, and we believe in market cycles. It’s great to be here. The coffee is delicious.
This is our third market cycle, and believe us, it never gets easier. If we weren’t here tonight, we’d probably be at our computers considering buying a 3x QQQ and questioning everything we stand for.
You know the feeling. A stock mania that feels like it can go on forever. Everyone around you is getting rich. It’s easy to convince yourself that bull markets never end. The risk of falling off the wagon is real.
Maybe just a taste. Maybe we’ll buy a little SPY and see how it feels. We know stocks are overvalued. We know we’re not being adequately paid to assume risk. But dang it—just one sip of that endless price appreciation and prosperity!
But instead of giving in, we’re here at this Cycles Anonymous meeting with you, the ones who are left. The ones who remember what happens when markets reach these types of valuations. The ones who’ve seen leverage, runaway asset inflation, and speculation masquerading as disciplined investing. The ones who know that when everyone agrees stocks can only go up, the turn has likely already begun.
Cycles don’t disappear. They just lull you into believing they don’t exist. The hardest part isn’t knowing cycles are real—it’s believing in them while everyone else celebrates their death and chases prices higher and higher.
So, we’re here with you tonight as sober and humble investors. We’re not drunk on greed and leverage. We’re liquid and positioned for a cycle we believe will end. No fear of missing out. No pretending this time is different. While stocks may continue to inflate, we’ll avoid overpaying and hold on tightly to our discipline and patience.
We’re not falling off this wagon.
Since the Palm Valley Capital Fund’s inception on April 30, 2019, markets have experienced periodic volatility, yet the upward phase of this cycle has held. While we’ve been pleased with our risk-adjusted returns, we have yet to reach what we call the “main event”—a bear market that fully completes the current cycle.
Cycles aren’t just a theory to us—they’re the foundation of how we invest. Our process has been most effective when markets fluctuate with the natural ebbs and flows of capitalism. Although we’ve generated absolute returns during booms, our best opportunities typically appear during periods of volatility, uncertainty, and even recession. When cycles are suppressed by aggressive monetary and fiscal policy, asset prices inflate and opportunities diminish.
While this cycle has lasted longer than we expected, our belief in full market and economic cycles remains unchanged. In our view, the forces driving profits and asset prices are unsustainable and ultimately self-defeating. Extremely easy monetary policy is already producing late-cycle consequences such as wealth inequality, eroding purchasing power, and growing concerns over currency debasement. Equity valuations are also at or above levels we typically associate with cycle endings.
We don’t spend time debating whether we’re in the late stage of this cycle. For us, the real question is how much longer can it last. Monetary and fiscal support has kept profits and valuations elevated for years. So, when does it end? We’d love to tell you, but we can’t. No one can.
Some cycles give warning. Others just snap without notice. Today, we see no shortage of possible catalysts: political backlash over wealth inequality and the affordability crisis, exorbitant profit margins and valuations, capital shifting from buybacks to investment, housing bubble 2.0, persistent fiscal deficits and debt funding pressures, AI-driven capital spending and business disruption, a finite supply of “greater fools,” massive corporate bond issuance, fragile yen carry trades, repatriation of capital, “king dollar” instability, destabilizing hedge fund basis trades, and opaque pricing in private equity and credit—just to name a few.
Any of these catalysts could trigger the end of the cycle. Or none of them might—until something else does. Sometimes cycles end abruptly without warning, collapsing under their own weight. The tech bubble of 2000 is a clear example. There was little warning before it collapsed, but when it broke, it broke hard. In our opinion, today’s dip buyers would do well to study that period and how so many were suddenly trapped by their belief in a “new paradigm.”
More recent examples can be seen in commodity markets, where prices move more freely and are influenced less by policy intervention. Lumber, energy, and precious metals have all experienced violent swings and cycles. Even cryptocurrencies continue to exhibit cyclical behavior.
Current equity valuations suggest investors aren’t overly concerned about the risks of an abrupt end to this cycle. It seems cyclical risks are reserved for other asset classes, not stocks. For example, a recent Wall Street Journal article, “An Investor’s Guide to the Boom (and Bust) in Gold and Silver,” describes the sharp rise in precious metals as a “rally that has gone far beyond reality,” implying that the cycle had been taken too far.
Of course, equity investors know better. Overpaying for stocks isn’t the same as overpaying for gold and silver. Equities that rise sharply and trade at record valuations are viewed as responsible investments. The stock market is not a “rally that has gone far beyond reality.” It’s not speculating, it’s investing.
While the broader market has appeared largely immune to cycles for years, cyclicality within individual sectors remains. Even during the prolonged bull market, individual sectors have experienced painful bear markets. Shifting investor narratives and industry-specific recessions have driven meaningful price swings across energy, transportation, staffing, and even food stocks. Yet as capital rotates between sectors, it rarely leaves the broader market, keeping the overall cycle intact.
If cycles can appear in commodities, cryptocurrencies, and individual sectors, they can occur in the broader stock market. We remain committed to investing on the assumption that cycles still exist and that the current cycle will ultimately end. While the idea of perpetual bull markets and endless asset-holder prosperity is enticing, the risks of late-cycle valuations are simply too high for our absolute return strategy. Rather than joining the party and giving in to temptation, you’ll find us at the next Cycles Anonymous meeting. We hope to see you there!
Eric Cinnamond
The Palm Valley Capital Fund can be purchased directly from U.S. Bank or through these fund platforms.
There is no guarantee that a particular investment strategy will be successful. Opinions expressed are subject to change at any time, are not guaranteed, and should not be considered investment advice.
Past performance does not guarantee future results.
Fund holdings and allocations are subject to change and are not recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk. Click here for the fund’s Top 10 holdings.
Mutual fund investing involves risk. Principal loss is possible. The Palm Valley Capital Fund invests in smaller sized companies, which involve additional risks such as limited liquidity and greater volatility than large capitalization companies. The ability of the Fund to meet its investment objective may be limited to the extent it holds assets in cash (or cash equivalents) or is otherwise uninvested.
Before investing in the Palm Valley Capital Fund, you should carefully consider the Fund’s investment objectives, risks, charges, and expenses. The Prospectus contains this and other important information and it may be obtained by calling 904 -747-2345. Please read the Prospectus carefully before investing.
The Palm Valley Capital Fund is distributed by Quasar Distributors, LLC.
Definitions:
S&P Small Cap: The S&P SmallCap (also known as the S&P 600) is an index that measures the performance of about 600 different publicly traded small-capitalization (small-cap) stocks in the U.S. equities market.
3x QQQ: An ETF (symbol: TQQQ) that aims to triple the daily returns of the Nasdaq 100, using leverage to amplify gains and losses. The Nasdaq 100 is a stock market index that includes 100 of the largest non-financial companies listed on the Nasdaq stock exchange, representing various industries such as technology, healthcare, and consumer goods.
SPY: The symbol of the SPDR S&P 500 ETF Trust. The ETF tracks the S&P 500 Index, which consists of 500 large-cap U.S. stocks.
King Dollar: "King Dollar" refers to the U.S. dollar's status as the world's primary reserve currency, dominating global trade and finance. This status allows the U.S. to run trade deficits and provides significant advantages, such as lower borrowing costs and greater liquidity in international markets.