The Wonder Years

<May 11, 2026>

It’s strange the things you vividly remember growing up. I still remember visiting my grandparents the summer after sixth grade and watching the Nightly Business Report with my grandfather.

We were in the family room. I remember the coffee table with its spindle-shaped legs and the compartment where my grandmother stored magazines. The television, larger than ours at home, sat in a wooden console cabinet. I even remember the boxy remote with its unusually small buttons. I can still see the couch beneath three windows overlooking the front yard, and my grandfather standing in front of the TV, intently watching his favorite show.   

He rarely missed an episode, which aired every weekday at 6 p.m. It was part of his treasured routine. He stood through the entire program as the anchors covered the day’s events in the financial markets. As the broadcast ended, the co-anchor signed off as he did every night, saying, “I’m Paul Kangas, wishing all of you the best of good buys.”

What I would give to stand next to my grandfather today and watch another Nightly Business Report with him. He wouldn’t recognize today’s markets or how much they’ve changed since he last tuned in. He would be shocked by stock valuations, fiscal deficits, government debt, quantitative easing, and the current cost of living. I wouldn’t even know where to begin explaining cryptocurrencies, prediction markets, trading apps, zero-day options, $4 trillion market caps, and mainstream speculation. We would have so much to talk about.

The time I spent with my grandfather sparked my interest in investing. He encouraged me to save and taught me the power of compounding. He loved his bond portfolio and kept a handwritten spreadsheet tracking each coupon payment and maturity. He owned a few stocks as well. He showed me his position in Archer Daniels Midland and how its dividend compounded over the years. He talked about his winners and losers and enjoyed discussing the savings and loan crisis of the 1980s. While I didn’t understand everything, it left a lasting impression. I wanted to be an investor, just like him.

My grandfather lived long enough to see me graduate from college and get my first job in a bank’s trust department in the early 1990s. I eventually moved into the investment group and began my career as a portfolio manager in 1995. Shortly after, I joined the Evergreen Funds in New York as a small-cap stock analyst.

It’s often said that when you begin your investment career shapes the kind of investor you become. I can certainly relate. I started during an economic recovery, as earnings and markets were rebounding from the 1991 recession. As a young analyst, most of the stocks I recommended worked out well. While I didn’t realize it at the time, much of my success was being boosted by broader economic and earnings tailwinds.

With corporate profits rising broadly, it was hard to make mistakes. The fund I worked on performed well, grew in size, and I received my first bonus. My confidence rose with stock prices. It all seemed too easy. And of course, it was. 

In 1998, everything changed. While company fundamentals remained favorable, capital began to flow out of small-cap value stocks and into high-growth technology stocks. The Internet boom was underway, and speculative ideas were thriving. I was blindsided by the first bubble of my career. Within months, I went from feeling like the next Warren Buffett to an investment buffoon.

Because of my refusal to buy technology stocks, 1999 was a disaster. To this day, it remains the worst year of my career. With the Nasdaq ending the year up 86% and everyone else seemingly getting rich, I somehow found a way to lose money. Convinced my career was over, I enrolled in graduate school and considered other paths. Fortunately, the firm stuck with me long enough for the bubble to burst and value stocks to rebound. Mr. Market saved my career just in time.  

The cycle I experienced early in my career was humbling but invaluable. It shaped my investment philosophy and deepened my appreciation for the cyclical nature of corporate earnings and markets. It taught me about crowd psychology and the dangers of extrapolation. Most of all, it reinforced the value of discipline and perseverance. 

Today’s bull market has been exceptionally strong and prolonged. Policymakers, in their determination to extend the cycle indefinitely, have inadvertently deprived many young investors of the education only free markets can provide. Nearly a third of investment advisors are under 40, meaning many have never managed money through a true bear market. While there have been declines since 2009, none have been sustained or severe. For most young investors, it’s been a lot of gain with little pain.

Much like my experience in the mid-1990s, many young investors today likely feel they can do little wrong. It has rarely been easier to make money in risk assets. Above-average returns are now expected with little fear of permanent capital loss.

As record-high stock prices are celebrated, valuable investment lessons are being lost. With profit margins elevated, unemployment low, financial conditions remaining loose, and a Federal Reserve eager to play market hero, the good times appear set to continue. Stock prices reflect a growing sense of investor invincibility. And that’s exactly how I felt as an overconfident young analyst.  

While my grandfather was a great teacher, there is no better learning experience than investing through a full market cycle. Managing money through a complete cycle can also distinguish genuine investment skill from simply benefiting from favorable conditions. How will today’s young investors respond and be judged when the current cycle ends? How prepared will they be without being exposed to the natural, and often ruthless, forces of free markets?

Although the natural cyclicality of capitalism and free markets have been suppressed for an extended period, we are confident this cycle—like every cycle before it—will end. When it does, young investors will be tested, learn valuable lessons, and grow. And for those who have studied history, remained disciplined, and maintained liquidity, we wish them the best of good buys.

Eric Cinnamond

eric@palmvalleycapital.com

The Palm Valley Capital Fund can be purchased directly from U.S. Bank or through these fund platforms.

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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.

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Definitions:

Wilshire 5000: a broad U.S. stock market index designed to measure the performance of nearly all publicly traded American companies. It’s often used as a proxy for the overall U.S. equity market.

S&P 500: (short for the Standard & Poor’s 500 Index) is a stock market index that tracks 500 of the largest publicly traded companies in the United States. It is widely considered one of the best indicators of the overall U.S. stock market and economy.

Nasdaq: NASDAQ Composite is a stock market index that tracks thousands of companies listed on the Nasdaq stock exchange, with a heavy concentration in technology and growth companies.

Maturity: the date on which a bond’s principal is repaid to the investor and the bond contract ends.

Quantitative easing (QE): is a monetary policy where a central bank creates money to buy financial assets—usually government bonds—to increase liquidity and stimulate the economy.

Zero-day options: often called 0DTE options (“zero days to expiration”)—are options contracts that expire on the same day they are traded.