Frances Newton Stacy
The Autodidactic Economist Changing the Discussion of the Financial System
Some might suggest Frances Stacy is prophetic. She predicted and successfully traded the 2007 crisis and her knowledge of finance, economics, and central bank history has helped her to navigate major market volatility as the director of strategy for Optimal Capital Advisors, LLC. But Frances isn’t sitting still. She’s on a mission to bring the stagnated world of investing into the future. And it’s working. Frances’ star is in the ascendency. She regularly appears on Bloomberg, Fox News, Fox Business, Yahoo Finance, and a host of other outlets. Despite her obvious success, Frances is very hard to categorize. She eschews ideology. She doesn’t belong to any school of economics. Rather, her insight is the product of three things: tireless study, deep thought and frontline market participation.
We spoke with Frances to learn more about her life and thought—both inside and outside Optimal Capital Advisors — her extraordinary performance in predicting markets, and how she has offered her expertise on modern monetary policy to a senator on the banking committee, the British Consulate-General New York, and the Bank of England.
You have two roles in life. You work with government officials and the media to elevate the financial services industry and you use your expertise to help clients achieve financial security. We’ll talk about the first momentarily, but just briefly, as director of strategy with Optimal Capital, what does your role entail?
In my role, I provide technical analysis for securities across various asset classes. Meanwhile, I apply my understanding of monetary policy to anticipate the macro environment and its effects on those assets. When it comes to my clients, I really try to tap into what gives their life meaning. How does increasing their financial security help them achieve a meaningful purpose? I feel that just making and having money isn’t as fulfilling as helping someone achieve a deeper sense of personal purpose. I want the world to be better and my clients’ lives to be better, and for that to be my legacy. I want to change the game for the better.
Your passion and particular area of expertise is on central banking history and policy. Let’s talk about your contributions to elevating the industry as a whole. What drives your efforts to “change the game for the better?”
The financial structure has winners and losers, so I always strive to have my clients win. I also believe that the modern financial structure has some unsustainable components. We live in a debt-based monetary system. Eventually, that’s going to require restructuring, as occurred around the time of the Great Depression and the Global Financial Crisis. There are inefficiencies that are going to exacerbate the wealth gap and be painful for many. Coming out of COVID, we’ve added so much debt to the system in such a short amount of time, and with our country’s current tax and financial structure, it’s just not a sustainable trajectory. For us to thrive as a country and as individual citizens, we need to change the model so that it benefits everyone.
You not only predicted the 2007 crash but took gains at all-time highs and successfully traded the downturn during unprecedented market volatility. Just briefly, what were you seeing that others were not?
In early 2007, I was analyzing the quintessential charts of the Great Depression. As a self-taught economist without the constraints of formal macroeconomics training, I developed a lucid picture of the parallels between the business and credit cycles of the Depression and the Global Financial Crisis. I just didn’t have a lot of the noise that I would have had through the lens of trying to consider a lot of other variables at the time, or neoclassic models, and without those distractions, I think I could see the bigger picture more clearly.
Does that same expertise and insight, and distilled view of market and economic cycles, also help your clients successfully navigate times of extraordinary market events or volatility, such as the onset of the COVID-19 pandemic?
I was definitely expecting a correction ahead of COVID and we were positioned defensively, which benefited our clients immensely. Because we had a much smaller drawdown than the S&P, we didn’t have to play catch-up when redeploying assets after the Fed essentially backstopped credit markets. My understanding of policy also allows me to analyze the current debate around whether inflation is transitory, as well as how inflation may affect the assets in the portfolio.
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