Alone with My Thoughts – 1/05/25
Are Wall Street traders and economies from all around the world telling us to have more babies? For example, Barron’s recently reported that the 3.7 million births in the 27 European Union countries in 2023 was the largest annual decline (-5.5% a new record) ever. They also reported in another recent issue that there were 33 major European corporate defaults so far in 2024, which is the second highest number of failures since 2008. Maybe we need to follow Elon Musk’s lead (he has 12 children) when it comes to his concerns about the lower population rates and the resultant effects on world finances and civilization. Investors take note.
Alone with My Thoughts – 11/01/24
Famed hedge fund manager, Paul Tudor Jones, remarked recently on CNBC that with respect to the upcoming election, all roads point to inflation. In other words, neither of the candidates is known to be or is even suggesting to be an inflation fighter. Whether it be the usual suspects of pre-voting giveaways like no taxes on tips, no college loans, money for start-ups, or deductions for car loan interest, they all are inflationary. Throw in some tariffs and infrastructure spending under the guise of the Inflation Reduction Act and you get the picture. Paul Tudor Jones’ main concern is that prices will seemingly go higher as our national debt, and more importantly, our national debt interest costs go up exponentially, which will keep rates higher and costs higher, etc. The ten year is ending the week at about 4.24%, while gold is setting new records. We are positioning for a potential soft landing with the possibility of some Halloween surprises over in the bond patch.
Alone with My Thoughts – 8/20/24
Time in the Market Iconic Wall Street observer Jeremy Siegel reminds us in a recent Barron’s article that stock investing is the most volatile asset in the short-term and the most stable asset in the long-term. Most volatile in the short-term and most stable in the long-term. Traders are chasing the next great earnings opportunity or corporate development. Investors, in contrast, are more concerned with compounding earnings, dividends, and share buybacks because that is where wealth is created. This message is so simple, yet so many fail to understand it.
Alone with My Thoughts – 6/25/24
We Need a Diet Shot for Governments Last Thursday, the Wall Street Journal reported that France was facing disciplinary action from the EU for running a high budget deficit. Not only are the French dealing with this deficit, they are also above the EU requirement of no more than 60% of debt above GDP. In the US interestingly, our debt is about 100% of GDP and just this past week our deficit is now projected to be about $2 trillion for the year. Good news, we are not a member of the EU, bad news, our interest on our debt is now almost $1 trillion dollars a year, or about the same as our entire defense budget (or for those keeping score, about 30% of our tax revenues so far this year). Mon Dieu!
Alone with My Thoughts – 5/14/24
The stock market can be so emotive. From the elation of riding the wave of the “next biggest thing” like AI to the despair of outdated technologies (think Kodak, VCR’s, and Blockbuster). As for amazement, consider that Sam Bankman-Fried is sitting in jail for the next 25 years as a result of his crypto financial fraud schemes. It has now just been reported by both the Wall Street Journal and Barron’s that his schemes owe investors $11 billion dollars and that after liquidation, the fund has about $15 billion dollars to pay off the aforementioned creditors. So…he gets 25 years and investors “gain” $4 billion on his strategy. Rarely, if ever in history, has financial fraud resulted in a windfall for investors. The feeling of perplexion comes to mind…
Alone with My Thoughts – 2/15/24
Super Planning The recently played Super Bowl will go down as one of the most exciting finishes ever, as the KC Chiefs pulled out an overtime victory. Andy Reid, the future Hall of Fame coach of the Chiefs, did what he does best, and what the greatest coaches do best, and that was to make adjustments at halftime. Many people will consider getting a financial plan, to help map out their financial future. Instead of a financial plan, we try to look at it as financial planning, meaning that life will throw us many changes, curve balls, and situations that may require halftime adjustments. Speaking of Super Bowls, “Just because you made a good plan, doesn’t mean that’s what’s going to happen.” Taylor Swift
Alone with My Thoughts – 2/1/24
A record high in the S&P 500 was made on January 2, 2022 and now, just over two years later, we are making record highs on a daily basis. Here are three takeaways…One, the S&P has now made up for the viscous declines of 2022. Secondly, an interesting stat that comes from Ned Davis Research (thanks to our friends at Riverfront and JPMorgan) shows that making new highs after at least a one year time period, have historically resulted in positive performance over the next 3, 6, and 12 month periods. Finally, with the expectation of future rate cuts from the Fed in 2024, has there been other times when the Fed cut rates while stocks were making new all-time highs? 2024 is off and running.
Alone with My Thoughts – 1/25/24
A common investment theme around here is that “savings and innovation equal economic opportunity”. The 2023 market certainly benefited from that view even though an MIT study had previously indicated that innovations are less likely to trigger economic growth because the big ideas are harder to find. With two letters, AI, innovative new technology arguably single handily carried the market through the first three quarters of last year. After pausing in October, the rest of the year was led by medical innovations, most notably in weight loss and to a lesser extent Alzheimer’s. As we look to 2024 and beyond, the future remains bright for innovative solutions to the world’s most vexing issues. Hopefully, potential gains on Wall Street may follow.
Alone with My Thoughts – 12/26/23
We don’t know what AI is going to unleash in the future but in 2023 it saved the day. After a disastrous prior year, when the Fed began their interest rate hikes to the sea, excitement on Wall Street over AI has lifted tech stocks and the major averages. At the end of October though, the “magnificent seven” accounted for most or all of the gains for stocks. Then in early December, the Fed finally abruptly pivoted, rates went from 5% to less than 4%, and the markets broadly took off across the board. Instead of a Santa Claus rally, we can call this the Santa Claus Pivot. Enjoy the holiday season!
Alone With My Thoughts – 11/14/2023
Next time you are shopping for a birthday card, look at the lowest level of the rack. There you will find birthday cards for 100-year-olds. Think about it, birthday cards commemorating that huge milestone. In fact, ages 85 and older is considered the fastest growing segment of the US population by percentage, and those over 65 should double in number in less than 20 years. For investors, the idea of retiring and going completely into bonds is probably a risky strategy, when confronted with inflation. Stocks and growth assets may then be a bigger part of portfolios for a much longer period of time. Speaking of time, the best time to invest is today, releasing the exponential compounding to do its thing. Thanks to First Trust for the birthday wishes, even if they are jumping the gun.