I hope everyone had a great holiday. I certainly did, as my sister and her family hosted us for a wonderful Thanksgiving dinner and very fun weekend. Thank you, Beth and Kevin, and thank you, Jake, Jesse, and Max.

Once upon a time, a turkey hatched in the dead of winter. He lived in a nice warm coop, had plentiful corn and seeds to eat, and spent much of his poult-hood playing with all of the other little turkeys. When spring came, he and his friends ventured out into the yard and played some more; they continued to have corn and seeds to eat and shelter from the rain. The summer brought more of the same, along with nice people who regularly cleaned the coop, refilled corn and seed stores after the turkeys gobbled it all up, and chased away scary critters like foxes and cats when they got too near.

One more reason to be grateful we live in the U.S. is the peaceful nature of our geopolitical neighborhood. With Canada and Mexico as our major neighbors, we really don’t have to worry about facing a local war—something Americans don’t appreciate enough. The fact that the Cuban missile crisis continues to resonate suggests what an exception it was. Other countries aren’t nearly so fortunate.

In several posts last year, I wrote about the increasingly serious face-off between China and Japan—with Taiwan and Korea also in the mix—over territorial claims in the local seas. Although the problem hasn’t gone away, it’s been subsumed in other, more urgent news since then. Recent events suggest it’s time to take another look.

I spend quite a bit of my professional life looking for things to worry about, to the extent that I’ve been referred to as “Eeyore.” There’s certainly some justice to this, but I do recognize good things when they happen. For example, I turned bullish on the U.S. economy about two years ago, well ahead of the crowd. That has played out well.

While I do have a bit of bias to the downside, in the spirit of the season (and because I haven’t done it in a while), let’s look at some of the many things we have to be thankful for.

A great comment came in recently from Commonwealth advisor John Smallwood. He writes: “My problem is that it is difficult to match a client’s risk profile with a model, since modern portfolio theory has been shown to be invalid and cannot measure risk, as we saw in 2008.”

I actually think there are at least two issues there, along with an assumption, so let’s unpack this a bit. To start, the fundamental question here seems to be “What is risk?” If we haven’t properly defined risk, at least in our own minds, then the rest of the investment process becomes guesswork.

In many respects, cyberspace seems like old hat today. The ironic Onion article about the man who lives in cyberspace, basically buying books on Amazon and checking his friends on Facebook, sums it up nicely. William Gibson’s seminal novel Neuromancer, which introduced the term cyberspace, holds up pretty well, and The Matrix remains entertaining.

My experience yesterday at the Markets Media Global Markets Summit, however, really brought home for me how technology continues to evolve and affect what we do, as investors, on a daily basis. By and large, the panels were concerned with the changes in the trading infrastructure—legal, technological, and institutional—that underlie the financial system.

Bob Mestjian, one of our advisors and a fellow resident of Melrose, Massachusetts, wrote in with a very good question, to wit: “At the National Conference, you mentioned margin debit balances skyrocketing. However, I'm trying to reconcile skyrocketing margin debt with what I keep hearing about record levels of cash on the sidelines. Is there cash on the sidelines? Are there select investors who want to take risk ‘all in,’ using margin, while others are in cash and want nothing to do with stocks?”

Good question. First, let’s look at the concept of “cash on the sidelines.” This is a commonly used phrase, but unless the cash is actually stuffed in a mattress, it has to be somewhere in the financial system, where its removal—or relocation, really—would have effects. The phrase is usually a misnomer, as it reflects an investor preference for other asset classes over stocks.

I’ve been doing a number of interviews recently, and the one thing everyone wants to talk about is the new records being set by the market. With the S&P 500 touching 1,800 and the Dow touching 16,000, the question is whether this is the start of another upward run or whether it marks the peak.

There’s something about round numbers that gets people going. The end of the world in 2000, the hype over Dow 10,000 (both ways), and the repeated questions at every 1,000 mark suggest that somehow this number is different.

The photo below comes from an old B movie called Independence Day that I’ve always enjoyed. The plot is pretty simple: A race of space aliens shows up in orbit around the Earth and utterly destroys Washington, DC. Later on, though, it turns out the aliens are actually hostile.

Watch Brad’s interview on Reuters TV, where he discusses the Dow hitting a historic high of 16,000 and what this means for the markets going forward.