Research by Chronological Order


Published in Uncategorised
Thursday, 11 April 2013 Written by

Politicians frequently blame inflation on greedy corporations, commodity or energy price increases, or on an “overheated” economy (a Keynesian concept).  However, prices should remain relatively stable as long as the amount of money in the system remains constant.  That is because an increase in one good means there is less money to spend, or less demand, for another good, thereby causing the price of the second good to fall.  Thus, the net effects will leave the general price level unchanged.

Such red herrings for inflation as “overheated” economies avoid the central fact: that money, like any other good, has a price set by supply and demand. So, what actually causes rising prices?    Milton Friedman correctly observed that “inflation is always and everywhere a monetary phenomenon.”  Since the demand for money does not typically change significantly, it must be money printing and the increase in supply of money itself that causes prices to rise.

In the United States, money creation is caused by both the Federal Reserve and the fractional reserve banking system.  Since its inception a century ago, The Federal Reserve has been increasing the money supply.  Banks further leverage this money supply by lending more money than they have in deposits.  The word “fractional” in fractional reserve means banks hold only a fraction of what can be demanded from them at any given time.

In the U.S., the last several years have witnessed a never before seen expansion of the money supply.  Although the timing of the emergence of price inflation can only be estimated, the correlation with money supply growth is indisputable.


Published in Uncategorised
Thursday, 11 April 2013 Written by

Economic fluctuations have existed throughout history (e.g., a failed crop or a technological innovation which disrupts a particular industry), but such fluctuations were not cyclical until the 19th century.  Unfortunately, these business cycles coincided with the Industrial Revolution, and hence capitalism was blamed.  But that century birthed another institution: central banking.  Which is responsible for business cycles? 

To be viable, a business cycle theory needs to explain three phenomena which are always observed:

  • The cluster of error in judgment by businesses.  Why do successful businesses, having survived their competitors by better planning for the future, suddenly suffer losses en masse?
  • The greater cyclicality experienced by industries producing capital goods (e.g., construction, machinery & equipment, etc.) relative to that of consumer-goods industries (e.g., food, pharmaceuticals, etc.)  Why do companies in the capital-goods industries perform better (during the “boom” of a business cycle) and then worse (during a recession) than companies in the consumer-goods industries?
  • The rise and then fall in the money supply.  Why does every “boom” period of the business cycle shadow an increase in the supply of money while there is sometimes (but not always) a reduction in the supply of money during a recession?

To explain these, the Austrian theory depicts a typical business cycle as follows:  In the beginning, the government increases the supply of money, which artificially decreases interest rates.  Interest rates are a universal market signal to all businesses, so suddenly investments which previously appeared unprofitable now make economic sense.  However, the attractiveness of these projects is a mirage.  These borrowed funds are actually being “malinvested” given the “true” level of interest rates absent the artificial stimulus.  As investments in the capital-goods industry projects are the longest dated, they are the most sensitive to changes in interest rates.  This makes them the most prone to downturns. 

As the central banks continue to increase the money supply, they eventually risk significant inflation or a financially unstable banking system.  At this point, the central bank may choose to limit their money printing, triggering an ensuing downturn and disruptive liquidation of the malinvestments made on the premise of artificially low interest rates.  This is known as a recession.  Recessions, while they may be postponed, cannot be avoided.  As Ludwig von Mises wrote:

There is no means of avoiding the final collapse of a boom brought about by credit expansion.  The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

To “fix” or “stop” a recession, central banks return to printing more money, sowing the seeds of the next boom and bust cycle.   The Austrian theory of the business cycle thereby explains the cyclical nature of economic fluctuations.  It also describes causes for the three phenomena observed in every cycle.  Finally, the theory accounts for the historical timing of business cycles.  Specifically, why they primarily originated in the 19th century and have become more pronounced in the U.S. since the establishment of the Federal Reserve in 1913.

Investors have been living in a world of increasing booms and busts as central banks continue to manipulate the system.  However, today the stakes are much higher.  The amount of money printed since the 2008 downturn makes this next recession even more dangerous for investors.

Investment Management

Published in Uncategorised
Tuesday, 09 April 2013 Written by

We offer an array of investment solutions for clients ranging from high net-worth investors to family offices and foundations.  Wealth management includes both the holistic management of an entire portfolio as well as management of individual components including:  Hard Assets, Financial Assets (Global Equities and Bonds, including Tactical Strategies) and Unique Private Opportunities.  Unique Private Opportunities are offered through our strategic alliance with Iridius Capital as well as through other private investment firms and family offices.  Our clients also benefit from access to our network of third-party service providers.

Research & Analysis

Published in Uncategorised
Monday, 08 April 2013 Written by


The Fourth of July

Resolved, That these United Colonies are, and of right ought to be, free and independent States, that they are absolved from all allegiance to the British Crown, and that all political connection between them and the State of Great Britain is, and ought to be, totally dissolved.
-          Richard Henry Lee, June 7, 1776

This proposal was adopted by the Second Continental Congress on July 2, 1776.  So technically speaking, July 2nd is America’s true Independence Day . . .

Read More

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Inflation: Why, When,
and How Much?

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Why Gold?  Part I of V
A History of Gold

Only Criminals Use
Honest Money

Research By Topic

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All content and matters discussed are for information purposes only. Opinions expressed herein are solely those of WindRock Wealth Management LLC and our staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser prior to implementation. Fee-based investment advisory services are offered by WindRock Wealth Management LLC, an SEC-Registered Investment Advisor. The presence of this presentation shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. WindRock Wealth Management may have a material interest in some or all of the investment topics discussed. Nothing should be interpreted to state or imply that past results are an indication of future performance. There are no warranties, expresses or implied, as to accuracy, completeness or results obtained from any information contained herein. You may not modify this content for any other purposes without express written consent.

Japan: Land of the Setting Sun

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Monday, 08 April 2013

A History of Gold

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Monday, 08 April 2013

Under Construction

Published in Uncategorised
Wednesday, 03 April 2013 Written by

We will be back soon.

Since August 15, 1971, we have been living in a unique time period in history. On that day, the United States terminated the ability of foreign governments to convert their dollars into gold.  This action severed the last links of currency to any backing by precious metals which had been the case for much of human history.

The impact has been dramatic. Without needing gold to back the value of the currency, central banks could now create money without constraint, facilitating proliferate government spending and borrowing by serving as a “buyer of last resort” for debt. It has brought us to the point where, today:

  • “Official” federal debt stands at approximately $17 trillion which exceeds the economy’s annual production of goods and services (Gross Domestic Product or GDP).
  • This “official” federal debt excludes many federal unfunded liabilities (including pensions, healthcare and Social Security) with low end projections estimated at $70 trillion.
  • Together, total U.S. federal liabilities equal a staggering $87 Trillion or over 5 times GDP.
  • This gross overspending is not slowing down. Nearly all U.S. tax revenue is consumed by entitlement programs.  Expenditures for all discretionary programs, including defense, are borrowed.
  • In addition, annual deficits continue to multiply at an alarming pace. In 2012 alone, under standard accounting practices, federal liabilities grew by $6.6. trillion (equal to 42% of that year’s GDP).
Even with talk of tax revenue increases or cost cutting, the U.S. national debt, like that of many countries, can never be repaid.  Nor can the economy “outgrow” these debt levels. Ultimately, the governments will repay debt with their last remaining option – printing more money.  As money floods the system, this will drive inflation higher even with continued weakness in the economy. 

We foresee dramatic changes which, if investors are properly prepared, will allow them to prosper.  However, portfolios must be immediately positioned for two major challenges ahead:

1.  Finding satisfactory returns in an increasingly return-starved world.   
2.  Preserving the purchasing power of wealth in light of the coming inflation.

We fear that most investors with a static mix of stocks and bonds will see their portfolio worth significantly less in the years ahead, diminished by the ravaging effects of inflation. To learn how we build portfolios for clients to address these challenges, additional information can be found here. For more insight on the state of the world, view our featured video: Gold, Government and a Game Plan.

Worldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally.
- John Maynard Keynes, famous 20th century British economist.

On this single point we agree with Keynes.  Who does not find a feeling of safety in numbers? Therefore, it is easy for investors to find comfort in copying the actions of the investment community at large.  If they lose when markets collapse, at least they are no worse off than most others. And no doubt the investor’s wealth manager will console them by pointing out that “no one saw this coming.” 

This happened with technology stocks, then with housing, and most recently with the stock market as a whole. Why did the investment community fail to see these past bubbles and advise their clients accordingly? There are a number of reasons which we discuss here, but ultimately it is their misplaced faith in the economics of John Maynard Keynes.

Today the financial community generally adheres to Keynesian economic philosophy.  They believe government, through significant regulating, spending, and the printing of money, can steer economies towards prosperity and avoid financial calamities.  We disagree.  In subscribing to the free market-based Austrian School of Economics, we understand the inevitable repercussions of government intervention. 

So why are we “entrepreneurial-minded advisors”? Conventional wisdom associates the word “entrepreneur” with the assumption of risk.  While risk can never be fully avoided, what actually makes entrepreneurs unique is their understanding of risk. Our unique insight of the risks posed by governmental interference in the economy serves to protect our clients’ wealth.  As entrepreneurial-minded advisors, we emphasize independent and creative thought to boldly seize opportunities while minimizing key risks.

Go to State of the World

Today, policy makers and the mainstream investment community generally follow the Keynesian school of economics, which adheres to the writings of John Maynard Keynes, a famous British Economist of the 20th century.  In short, Keynesians believe government, through significant regulation, spending, and the printing of money, can steer economies towards prosperity while minimizing economic downturns.

In contrast, a free-market based economic theory began in the late 19th century with the publication of Principles of Economics by Carl Menger.  As Menger and many early leading economists hailed from Austria, it became known as the “Austrian School of Economics”.  Austrian economic theory was honored by the 1974 award of the Nobel Prize in economics to F.A. Hayek, and it has grown in recognition with the founding of the Ludwig von Mises Institute. Understanding the Austrian economic theories of Inflation and Recessions provide powerful advantages for investors.

Our Team

Published in Uncategorised
Tuesday, 02 April 2013 Written by

Brett K. Rentmeester, CFA®, CAIA®, MBA

President and Chief Investment Officer        
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Brett founded WindRock Wealth Management to bring tailored investment solutions to investors seeking an edge in an increasing uncertain world. Brett is a veteran and entrepreneur in the investment business.  As a founding partner of Altair Advisers, a $3 billion investment firm, Brett served as the trusted investment advisor to clients with wealth ranging from $3 million to $1 billion.  He served on the Investment Committee with a specialty in alternative investments opportunities and also oversaw the firm’s business strategy.  Previous to that, Brett was a manager at Arthur Andersen, helping to build their Investment Advisory and Private Client Services practice.  Brett is a Chartered Financial Analyst charterholder (CFA®) and has earned the Chartered Alternative Investment Analyst designation (CAIA®). Brett has an MBA from Northwestern University’s Kellogg Graduate School of Management with specialties in strategy, marketing and entrepreneurship.  He graduated magna cum laude from the University of Arizona with a degree in Finance and was honored with the Wall Street Journal Student Achievement Award.

Brett’s media appearances include appearances on the PBS Nightly Business Report program, the Chicago Tribune, and the World Presidents’ Organization.  Brett is also a three-time recipient of the Chicago Magazine 5 Star Wealth Manager Award.  He is an active member of the CFA Institute and serves on an index advisory committee for Gresham Investment Management, a $16 billion commodity manager in New York.  His philanthropic activities include serving as a founding Board Member of the Northwestern Center for Integrative Medicine and a member of the Major Gifts Committee of the Edward Hospital Foundation in Naperville.

Brett has a great interest in wellness-based health care and supporting entrepreneurs who are creating opportunities and improving lives in their communities.  Brett and his wife Shannon, along with their two children, reside in Naperville, Illinois.



Christopher P. Casey, CFA®, CPA

Managing Director        
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Chris has a deep understanding of economics and has served as a trusted advisor to a diverse range of business owners, advising them on financial issues impacting their companies and their personal wealth.  Throughout his career as a Director with the national financial services firm Stout Risius Ross, Chris advised business owners from a variety of industries on the risk and return profile of their equity interests.  In addition, Chris advised high net worth individuals and families related to their financial, tax and estate planning.  At his previous firm, Chris was also in charge of marketing Private Client Services on a nationwide basis.  Previously, Chris worked as an accountant with Miller Cooper & Co.  Combining a degree in economics from the University of Illinois with a specialty in the Austrian School of Economics, Chris advises clients on their investment portfolios to maximize their returns and minimize risk in today’s world of significant government intervention.  

Chris has been a frequent speaker before a large number of organizations including various bar associations.  His writings have appeared in a variety of publications and websites including Family Business and The Ludwig von Mises Institute.  Chris is a Chartered Financial Analyst charterholder (CFA®) and a Certified Public Accountant (CPA). Chris enjoys cycling, cooking, reading, writing, and spending time with his children. Chris resides in Elmhurst, Illinois.




Resulting Portfolio

Published in Building Portfolios
Tuesday, 02 April 2013 Written by

A typical portfolio includes investments in Hard Assets, Global Equities & Tactical Strategies, and Global Bonds.  These allocations are determined based on a client’s unique objectives and risk profile as well as our prevailing macroeconomic big-picture view.  Some portfolios my also include Unique Private Opportunities.

Unique Private

Outside Research

Published in Building Portfolios
Tuesday, 02 April 2013 Written by

There is a dizzying array of investment choices for investors today: the selection of the investment manager, the various types of investment vehicles such as mutual funds, exchange traded funds (ETFs), separately managed accounts and limited partnerships (LPs), and tax considerations.   To efficiently filter the universe of investment choices, we partner with a group of third-party outside research providers and utilize their research recommendations as a starting point for our own analysis and evaluation.

We also share ideas with a private network of trusted investment professionals and family offices that we have developed over our careers.  This network broadens our access to investment opportunities and gives us valuable feedback in our analysis.  Further, we have a strategic alliance with Iridius Capital to provide unique private investment opportunities to clients in the areas of real estate, cross-border international investments and specialty financial services.

WindRock Research

Published in Building Portfolios
Tuesday, 02 April 2013 Written by

The final filter in selecting specific investment managers and opportunities resides with WindRock.  We utilize the best research from outside firms and strategic partners and combine it with our internal research to deliver unique investment opportunities to clients.  This entrepreneurial-minded process of gathering the best ideas from a host of trusted sources delivers a superior array of choices for our clients.

WindRock Views

Published in Building Portfolios
Tuesday, 02 April 2013 Written by

In addition to the views of these experts, we utilize our own insights and experience to identify opportunities and risks in the environment ahead.  We seek to identify the macroeconomic path of highest probability while remaining aware of varying outcomes.

Outside Experts

Published in Building Portfolios
Tuesday, 02 April 2013 Written by

In our world of data overload, there are too many conflicting investment views and opinions for investors to process.  Therefore, it is critical to identify a select group of trusted voices and to filter their views into a manageable process.  We have identified a group of leading independent forecasters that have consistently gotten the big picture macroeconomic calls right regarding the direction of the economy and stock market.  They sounded warning signals well in advance of prior bursting financial bubbles, while most in the industry stood silent.  We aggregate these expert views, looking for similarities and seeking to understand differences of opinion.

The best investors are independent minds, not beholden to Wall Street influence.  We embrace this mindset of creative and independent thinking in our investment process.  The outcome of this process is a portfolio of carefully selected investments that offer the opportunity of enhanced returns while diversifying risks.

In our view, investors should have little faith left in the mainstream approach to protect them from these severe declines given three permanent problems in the industry:

  • An inability to see the big picture
    The industry takes comfort in phrases like “markets are efficient” and “no one could see it coming”. In fact, bubbles are often so obvious that experts are blind to them.  Most in the industry are so focused on the details of their research that they fail to step back and observe the big picture unfolding. Seeing the big picture through all of the noise requires common sense, adherence to a sound economic philosophy and a keen understanding of human history and behavior.  After all, as the philosopher George Santayana prophetically warned: “those who cannot remember the past are condemned to repeat it.”
  • Misaligned incentives
    The industry remains riddled with hidden conflicts of interest and incentive structures that are sales-oriented and not in the best interest of clients. Most investment advisors are not trusted voices for clients, but rather sales teams for Wall Street very far removed from the actual investment research. Further, few advisors share the key ingredient to successful investing – the edge of an entrepreneurial mindset that is found in most prominent business owners and savvy investment minds.
  • Career risk
    Portfolios must look different than benchmarks to beat benchmark performance. Yet, advisors worry that this approach may get them fired in the interim since there is so much focus on short-term results.  Most in the industry believe clients may fire them if they perform out of sync with benchmarks. Accordingly, they would rather track benchmarks down 38% when the market is down 40% to be able to say “we did better”. They construct portfolios that over-diversify and do not deviate much from general stock and bond benchmarks because the main risk in their careers is deviating from benchmarks. We think this is the wrong way to invest.
Page 12 of 13

Unique Private Opportunities

Investors’ immediate challenge today is finding reasonable returns in a world of compressed interest rates and overvalued markets.  We believe investors can take advantage of unique investment opportunities that offer compelling returns today.  Our strategic partnership with Iridius Capital provides select investors with unique opportunities in real estate, cross-border international investments and specialty financial services.    Currently, Iridius Capital is focused on hybrid rental real estate, developing all-rental communities that deliver a single family home experience.

Hard Assets

Unlike financial assets such as stocks and bonds, hard or “tangible” assets represent ownership in physical assets.  These assets include energy, agriculture and metals as well as real estate.  We identify investments that will benefit as the amount of paper currency in the global system continues to expand.  These investments will perform well in the current weak growth environment, but are poised to excel as an inflationary path takes hold.    We combine our own research with recommendations from outside research firms.  Our strategy is to preserve the real purchasing power of client assets from the inflationary damage caused by currency debasement. Our hard assets may constitute a diversified mix of assets in the following categories:


Financial Assets

Our approach to identifying investment managers is to utilize the best ideas of outside research providers combined with our internal research.  We seek proven investment managers as well as low-cost index mutual funds and Exchange Traded Funds (ETFs) that mimic market performance. Our general bias in selecting managers is to identify those with a strong track record of outperformance who are not afraid to be contrarians and will position portfolios based on the macroeconomic forces shaping the world ahead. 

In general, we will adjust allocations to stocks and bonds to match our prevailing macroeconomic view.  For example, in periods with a heightened risk of a downturn, we will reposition exposure into more nimble and defensive tactical strategies. These tactical strategies involve managers that respond quickly to changing market conditions.

Financial Assets

Our approach to identifying investment managers is to utilize the best ideas of outside research providers combined with our internal research.  We seek proven investment managers as well as low-cost index mutual funds and Exchange Traded Funds (ETFs) that mimic market performance. Our general bias in selecting managers is to identify those with a strong track record of outperformance who are not afraid to be contrarians and will position portfolios based on the macroeconomic forces shaping the world ahead. 

In general, we will adjust allocations to stocks and bonds to match our prevailing macroeconomic view.  For example, in periods with a heightened risk of a downturn, we will reposition exposure into more nimble and defensive tactical strategies. These tactical strategies involve managers that respond quickly to changing market conditions.