Alone with My Thoughts – 4/24/26
Scrapping off an inch of snow on April 19th can be disturbing with winter dragging into spring. But for stock market investors, there is an adage that winters are often short while summers can last some time. Similar to last year’s “tariff tantrum” which dramatically dragged stocks down almost 20% but then rebounded to finish the year at record highs, our recent market “weather event” has now been reversed and in the matter of 12 days, we are now back to record highs for the S&P. This is a nod to building resilient portfolios and to remaining committed to your long-term plan, using the inevitable dust-ups to position for the summer months ahead.
Alone with My Thoughts – 4/6/26
While Wall Street enjoyed the long Easter weekend, the Fed job report was released on Good Friday. In a surprise, non-farm payrolls increased 178,000, well above the expected gain of 65,000, which could be seen as a positive for the economy. Unfortunately, the job gains were again concentrated in certain areas, notably the health care sector, led by 31,000 returning workers after the Kaiser Pemanente strike was resolved. According to economic sources, the health care sector has accounted for approximately 70% of all jobs created since 2022. The baby boomer generation has noticeably impacted society and the economy throughout their passage of time and now with the boomers aging (in eight years there could be more 85 year olds than those 18 and less) it comes as no real surprise that healthcare, particularly targeting senior citizens, is in growth mode and has been since outpacing both manufacturing and retail in the early 2000’s. Two take aways, healthcare is strong and vibrant with respect to career opportunities and secondly, the jobs numbers might not be as good as the talking heads may have you believe.
Acclerating Into 2026
The last three years have been quite positive for the US equity markets, as have 6 of the last 7 years (did I really say “6-7”). For Investors, though, we now need to anticipate the direction of our investments going forward and, in many ways, the economy and the markets could be poised for possibly more good news. For the record, the S&P 500 rallied about 17% in 2025 along with international stocks finally catching a bid and popping over 20%. Not to be outdone, the bond market followed suit, with the Vanguard Total Bond Market ETF gaining 7% for the year. On to 2026… We believe that economic growth comes from a combination of savings (money available to invest) and innovation (witness AI). There appears to be plenty of both, with over $90 trillion in US investable assets and a recently announced 4.9% productivity gain, due in part to AI spending and now application. Another factor influencing corporate earnings is the realization of new tax cuts from the OBBBA Act which could act as a “buyback” mechanism as corporations can either reinvest stronger earnings or give these gains to shareholders as dividends. In addition, the current trend for interest rates is lower and even though it receives much headline attention, falling interest rates can be good for stock investors. Finally, potential M&A deals this year, on top of a breakout increase in deals during 2025, might also be a catalyst for economic and asset growth. In fairness, there are plenty of things that could go sideways in the world in which we are living. Geopolitical risk is certainly out in the universe, with potential flare-ups in Asia, the Middle East, etc. a possibility. There is also the risk that for all the hype, the cost and productivity savings stemming from AI fail to materialize, which could cause a major disruption to tech growth and spending which could lead to lower stock prices. Finally, inflation remains very sticky and is causing real financial burdens to the middle class in addition to being a threat to possible higher interest rates down the road. Our goal is to manage portfolios in a manner that continuously addresses risk while simultaneously striving to invest where our money is treated the best. Here’s to another New Year and above all, cheers to healthy and happy years to come.
Alone with My Thoughts – 1/21/26
Hats off to James “Jim” Moylan, the Ford engineer that created the “Moylan Arrow” or the arrow on most car dashboards that indicates which side of the car to pull up to at the gas pump. Unfortunately, Jim passed away in December, but his simple, novel, and practical idea in 1989 became a mainstay on cars around the world. It also points to the fact that how innovation, no matter how large (AI) or small (Moylan Arrow), can impact an industry or an entire economy. Further, with respect to direction, sometimes it helps to have someone help us navigate and simplify the financial world of Roths IRA’s, 403B’s, 401K’s, HSA’s et al.
Alone with My Thoughts – 12/19/25
Going Out On A High As we head into the year-end of 2025, we are fortunate to have hit all-time highs in the major stock averages this year. Speaking of all time highs, gold and silver are also in rarefied air and major international markets like the UK and Germany have hit the same highs in 2025. Not to be outdone, Keith Richards hit his new high of 82 years of age yesterday. Talk about a high within a high. Have a wonderful holiday season!
Third Time is a Charm
As we head full steam into the fourth quarter of 2025, we are celebrating the third birthday of the current Bull Market, which began in October of 2022. It has been an impressive rally, with the S&P 500 gaining about 85% over these 36 months. The new highs in the major averages have been a part of our daily conversations recently, which eventually leads to concern as to whether the good times can continue to roll. There is even a persistent question of whether we are in a “bubble” or not. So, what is an investor to think? Here are two cases to consider… Bullish Case. Bulls may point to the fact that the average bull market lasts about 4 1/2 years, giving legs to this rally as momentum is in their favor. The Fed has become accommodative, lowering interest rates twice and leaving an open door for more to come, which is like cat nip to Wall Street investors. Earnings have been solid and better than expected, but with some clouds forming around future projections. The AI build-out is incredibly powerful, combining hundreds of billions of Capex spending with the potential for real productivity gains. Seasonally, the fourth quarter has historically been a positive period for stocks and higher tax refunds could stimulate the economy in the first quarter of 2026. Bearish Case. Stock valuations are getting extended, primarily in the large cap tech arena, whose issues have dominated the overall index returns over the last three years. AI spending, for example MSFT, GOOG, and META alone, are committed to spending $80 billion per quarter on the build-out, needs to be monitored as to whether it is still coming from cash flow or are firms beginning to take on higher levels of corporate debt. And what is the level of cross dealing, as the large tech firms buy and make deals with each other. With respect to interest rates, long-term rates are staying stubbornly higher, and inflation continues to also remain stubbornly higher, with both indicators beginning to really curtail consumer purchasing power. Finally, government shutdowns, aggressive new tariff policies, and political divides are creating a sense of unease for business leaders trying to make investments for the future. Given this backdrop, we continue to recommend that clients and their money managers review and build portfolios that can weather periods of volatility and provide the returns and income expected during each market cycle. While we cannot predict short term swings in the markets, we can focus on these three things…manage the risk of the portfolio through diversification, selection, and income, manage the costs, and to also, maybe most importantly, manage the financial plan. Here’s to a great, dare I say it, holiday season and to healthy and prosperous years to come.
Alone with My Thoughts – 11/18/25
The CPI inflation gauge has been negative year over year for only 13 months since the year 2000. That is 13 times out of 300, so inflation is and continues to be a basic element of the US economy. The talk now is all about “affordability” as the weight of inflation continues to bear down on the middle and lower class. The problem is that we expect the government to have some magic cure to the problem. They try to divert our attention with names like the “Affordable Care Act”, the “Inflation Reduction Act”. Now this week, there is talk out of Washington about sending everyone $2000 as a kind of personal return on our new tariff policies. Or there is a suggestion of 50 year mortgages perhaps. We all need to say it out loud, more government spending does not cure inflation or created affordability, it is more likely to stoke the flames of inflation. Maybe we should use the Clinton playbook, ride a period of immense innovation (the internet) that stimulates the economy which leads to balanced budgets and low inflation. The AI buildout is upon us, let’s ride this time of incredible innovation like it was 1994.
Alone with My Thoughts – 10/10/25
There are two epic and related battles beginning to shape up as we go head first into the final quarter of 2025. First, the corporate bond market is on a tear, with record setting new issues at the most narrow credit spreads since 1998 according to the Wall Street Journal. This would make investors think that the economy is strong and the chance of default is low. On the other side, economists and politicians are clamoring for lower bond yields because the economy is weak based on much slower job and wage growth. This leads us to the other battle, significant slowing job growth representing a weak economy versus an AI driven new gold rush to higher productivity indicating a strong economy that just needs fewer jobs. There it is, the yin versus the yang, which could ultimately work out to higher inflation, lower job growth, higher productivity, and lower interest rates and hopefully bullish stock prices.
Alone with My Thoughts – 7/22/25
A quick public service announcement, Wall Street can resemble a factory, churning out shiny new products as fast as retail investors can buy them. These products can carry higher fees, more complexity, and liquidity issues. The White House is now in the process of allowing private equity to be invested within 401k plans. Private equity can carry higher fees, be very complex, less transparent in pricing, and illiquid. 401k plans have been arguably quite successful, now managing almost $9 trillion dollars. They are typically low cost, very liquid, and offer different levels of complexity, all with price transparency. Squirrel! Squirrel! Buyers beware.
Footsteps & Finances
In our family group chat, I have been inserted into a “million step challenge” that began on June 1st and runs throughout the summer, ending on August 31st. What this means is that over this 92-day period, everyone needs to walk 10,869 steps per day to get to one million steps. It is summer, so it is an achievable goal with some extra effort. On one of my recent walks, I began to think about what would a “billion step challenge” look like? Thanks to AI, I calculated that 10,869 steps per day would take about 250 years to meet the challenge, three months versus 250 years! Finally, what does a “trillion step challenge” mean to a dutiful walker? At 10,869 steps per day, it would take approximately 250,000 years to reach the goal!! The reason I mention this is that these huge numbers that get tossed around Washington, Albany and Wall Street are truly unfathomable to the human mind. A $3 trillion dollar deficit here, a $37 trillion debt there, and a $1 trillion yearly interest payment become just numbers. On a positive note, the recently passed “Big Beautiful Bill”, put the government deficit squarely into the public eye, and going forward we will have to address this economic time bomb possibly through GDP growth combined with lower spending, at the very least. Finally, today Nvidia became the first $4 trillion dollar company, followed closely by Microsoft. The law of large numbers can potentially make it increasingly difficult for these tech behemoths and their brethren to keep growth rates at the same pace. As for markets, we are halfway through 2025 with US stocks showing solid gains and we are at all-time highs for the S&P 500 and Nasdaq. International stocks have rallied significantly year to date, even in the face of tough tariff talk, providing the basis that strategic diversification in a portfolio can be an essential management tool. Gold and Bitcoin have been strong, and the bond market is behaving, with a possible rate cut in September still on the horizon. We continue to believe that a well-diversified portfolio that combines growth, with income from dividends and fixed income, that is also managed for risk, will serve us well over the many market cycles coming in the years ahead. If it means using a flashlight to get one more walk with the dogs at night to get some more steps in or consistently adding extra money to an investment account when it is available, being long-term goal oriented has proven to be an effective way to achieve success. We want to thank you for your confidence in our firm, and we look forward to speaking with you directly over the days and months to come. Enjoy the summer!