Along Came Polly. 2004 (really?).

Reuben Feffer (played by Ben Stiller) and his new bride are on their honeymoon. Then he discovers her cheating on him with the island’s scuba instructor. So he has to go back home to New York City and his buttoned-up insurance executive job looking like a loser. That’s Act One.

In Act Two, he meets Polly Prince, who, on paper, is completely wrong for him - she takes risks, doesn’t care about the details, lives in an edgy neighborhood downtown, barely has her career together, etc. Then another 30 minutes establishing how much of a mismatch they are. But love is developing. Until they have a fight.

Act Three. But wait, it turns out we miss each other and it’s actually a good thing that we have nothing in common! Because we are each the missing piece to the other’s puzzle! Go after her, Reuben! Get outside your comfort zone to win her back! Show her that not only can you accept her little quirks but, actually, you love them!

The end. And the former bride is still living on the houseboat with the scuba instructor and wants to kill herself. I left a lot of funny stuff out about the “best friend” character, Phillip Seymour Hoffman (god, he was great), and “the boss” character, Alec Baldwin. The point is we got the resolution and it was a good one.

I bring this up because if you were writing the year 2023 as a RomCom, based on the tried-and-true formula for this genre of films I laid out above, you couldn’t have scripted the ending of Act III (this past week) any better.

It brought tears to my eyes how beautifully all the pieces dropped into place. A happy ending with literally no loose ends.

Here’s how I broke it down for Scott Wapner on the Closing Bell, right after Fed Chair Jay Powell had completed his press conference:

Inflation is moderating rapidly. The Vix has fallen to new year lows. Stocks are closing out at all-time record highs. Earnings are growing again. Lagging sectors like real estate and financials are rallying hard. Lagging styles and investing disciplines like small cap value and high dividend are playing catch-up, rewarding the poor managers who’ve had to watch the Magnificent 7 soak up all the gains in the first 10 months of the year. Even international stocks are rallying, and that never happens.

Below: the Vix, which measures volatility expectations as priced by options traders:

Oh, and did I mention, we averted a banking crisis this year?

Double and triple digit gains for the most widely held stocks in America. An average of 250,000 jobs being created each month. Shelter costs falling, mortgage rates crashing lower, gasoline prices plunging, the biggest pop star in the world is dating America’s most handsome football player. Kanye’s back with new music and he’s done going after the Jews. Nikki Haley is raising boatloads of money and might actually spare us a civil war. Shohei Ohtani is going to the Dodgers, making baseball relevant again.

The awkward best friend of the guy is kissing the homely best friend of the girl. The bride’s parents are bonding with the groom’s. The weakling who spent the whole season on the bench finally got called into the game and he caught the winning touchdown. The ugly duckling took off her glasses and now she’s f***ing so hot. The nerd got her phone number. The bully got pushed into a dumpster and the lid slammed down on his head. The beleaguered intern got a raise.

Everyone’s smiling.

Bob Elliott on TCAF

Our friend Bob Elliott joined us on The Compound and Friends this week and was amazing, of course. Bob served on the Investment Committee at Bridgewater under Ray Dalio during its heyday as the world’s most successful hedge fund. He’s the founder of Unlimited Funds, which is building a suite of ETFs that seek to replicate the performance and exposures of various hedge fund strategies.

Bob gets into the true outlook for rates and inflation heading into 2024, the difficulty in selecting hedge funds, the ways in which global macro people look at recent market activity and a lot more. We had a lot of fun learning from him and you will too.

Listen on your favorite podcast app or find it using the link below:

Have a romantic, comedic weekend with a happy ending of your own. A lot of stuff could have gone wrong this year, but it didn’t. It’s okay to be glad about that.

Remember to smile - we’re not going to be here forever.

Josh

Updated Friday afternoon: Oh wait, Kanye is losing it on a livestream again. Oh well. Almost everyone gets a happy ending.