The health of your portfolio is like a stool, dependent upon three strong legs, i.e., economic issues, market issues, and geopolitical issues. But, how can you determine if the legs are strong enough to support the value of your portfolio? Looking for economic data is definitely “drinking from a firehose.” There is almost too much to absorb and is never 100% consistent. Nonetheless, I am…
The history of popular economic thought really started in 1776 with the seminal work of Adam Smith, entitled The Wealth of Nations. It was the genesis of the classical or Austrian school of economics, popularized by Ludwig von Mises. During the Great Depression, another school of economic thought was popularized by John Maynard Keynes, and it was understandably called Keynesian economics, although it is sometimes…
I like holidays. I like Christmas and Easter,the high holy days for Christians,as well as Hanukkah and Passover,the high holy days for Jews. I like Veterans Day,a thank-you note to those who wore a uniform,as well as Fourth of July,a celebration of summer and politicians. I even like the silly holidays,such as Valentines’ Day,a high holy day for romantics and jewelers.Did you know there is…
Conventional thinking about the current condition of the labor market is misleading. That thinking is that unemployment is getting low, so low that it will pull discouraged workers back into the market to look for jobs. They point to the low percentage of the population that actually has jobs, dropping from 63.4% in 2007 to 58.2% in 2010 although rising to 60.1% now. The Republican…
President Trump is correct in calling terrorists “evil losers,” but I suspect they were losers first, who subsequently became evil. Maybe, they were losers because they never had a chance to “hold a job or hold a woman’s hand.” When the birthrate exceeds job growth, heartbreak follows. Better birth control and more jobs would help. Poverty often produces misfits, but religion can make them evil,…
Young economists believe there are two types of economists. There are those who STILL believe in the Phillips Curve, and then there are the young economists. The Phillips Curve suggests there is a predictable relationship between inflation and unemployment. Graphically, it looks like this: In this academic example, if the rate of unemployment is 4%, it can be reduced to 2% by raising inflation from…
It was March 21st that I predicted the President would be impeached. My objective then was to study how impeachment might impact my clients’ portfolios. After studying the impeachments of Andrew Johnson, Nixon, and Clinton, I concluded there is no predictable pattern. (Still, as the market goes down when uncertainty goes up, I felt it would be appropriate to remove some risk by raising cash.)…
Economists are fond of discussing opportunity costs. According to Investopedia: (1) An opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action. (2.) The difference in return between a chosen investment and one that is necessarily passed up.In other words, the cost of an…
I don’t know how many generations of my family have served in the military, except that we have served during every war since the Civil War. We were always taught to love this great country, which makes it difficult for me to understand Republicans or Democrats. When Democrats get in trouble, they blame rich people, like the Koch brothers. When Republicans get in trouble, they…
Sitting here on a cold rainy morning contemplating the political turmoil ahead of us, I am grateful for those who manufacture smiles: https://www.youtube.com/watch?v=KnYjQHkHnD8
A recession is coming! There is ALWAYS a recession coming. We just don’t know when or how severe it will be. But, we can ignore that! This is not about the economy. It is about the stock market. They are certainly related but still different. The economic data is a fairly even stream of good, if not great data. It gives no indication of a…
At the gym today, I was lucky enough to find a treadmill that could see two separate televisions, with Fox News on one and MSNBC on the other. As you know, they are slightly different. After all, one speaks Greek, and the other speaks Polish, i.e., languages coded to their particular viewers. The Fox screen showed much consternation about the hypocrisy of Democrats,who cursed fired…
Like most commodity prices, the price of oil reflects basic supply & demand for the commodity plus currency fluctuations. In the case of oil, rising price has traditionally been an economic indicator of improving international growth. Up to a point, rising oil prices have always been viewed as positive. So, how would you interpret this graph: A technical analyst would interpret this as saying oil…
Traditionally, financial advisors have been strongly Republican. My unscientific feel is that they are split about 60% Republican and 40% Democratic. So, it was slightly surprising to see 50.6% of financial advisors disapprove of the President’s first 100 days, while only 40.6% approve and 7.9% have no opinion. Far more surprising to me is the difference between those who strongly approve or strongly disapprove. 40.3%…
During the Obama Administration, I marveled at the sheer, blinding and irrational hatred that some Republicans had for him. They would not support the President, even when they agreed with him. While it was not entirely racial bigotry, it was still bigotry, and it reflected badly on Republicans! Now, with the nascent Trump Administration, I see the same bigotry – from Democrats toward the President.…
A beautiful tragedy is still a tragedy. That’s the way I see the U.S. territory of Puerto Rico. I fell in love with her beauty in 1970 when I first visited her, with her lush hills surrounded by white beaches and crystal-clear azure water. I worried about her in 2006 when the U.S. withdrew the income tax credits that had transformed her agricultural economy into…
My monthly spending was cut today,because my grandson has a “pre-existing medical condition” andbecause his parents are proud entrepreneurs, who depend on Obamacare andlive in the deep red state of Texas. Because I know his health insurance costs are going up andbecause I will have to help his parentsbecause I don’t know how much I will need to help,I do know that I will need…
USC professor Cary Frydman has been doing some interesting research into “neuro-finance” or how the workings of the brain impact investing. His latest research suggests that the two biggest mental blocks to successful investing are the Disposition Effect and the Repurchase Effect. The Disposition Effect is that investors are so afraid of losing their book-profit that they sell too soon, thinking it is important to…
I’ve never been called a man of superstition, as far as I know. I flatter myself, thinking I’m more a man of science, despite the fact that I do have respect for intuition. According to Psychology Today, intuition is described as: “We think of intuition as a magical phenomenon—but hunches are formed out of our past experiences and knowledge. So while relying on gut feelings doesn’t always…