Both Republicans and Democrats agree the economy needs additional stimulus but disagree on the amount. The Republicans believe $1 trillion is enough, while Democrats want no less than $2 trillion. It should be emphasized that the Republicans think we do need $1 trillion! Now, the President freely admits he will stop that stimulus if it contains the money needed by the Post Office to assure…
While I am not qualified to discuss psychology, I can still wonder about it. For example, I don’t understand the sadness and exasperation at the loss of sports this season, due to Covid. One pundit estimated college football alone contributed $4 billion to our annual GDP, a paltry contribution in a $22 trillion economy. Of course, the whole ESPN-world surely contributes much more. Sports is…
Because the bond market is so much bigger than the stock market, it has long been the accepted-wisdom that you could “read” the bond market for a reliable understanding of change in the financial markets. For example, one could learn a great deal about risk appetite and about inflation expectations. That is no longer true. Because of massive quantitative easing (official) and yield curve control…
It will be a long time before we get meaningful estimates of the total monetary cost of the pandemic, but I’m confident TEN TRILLION DOLLARS will be low. If you measure only the 6% GDP drop in Q1 and the 33% drop in Q2, you get about $3 trillion. Now, let’s assume that was the cost of the lockdown, which politicians swear we will never…
A gun lover is NOT the same thing as a gun-nut. I have had guns since I was a boy and am not sure how many guns I have today. After the Army, I even joined the National Rifle Association for a few years. In those days, it was primarily an interest group and sponsored gun-safety training. I actually taught a few classes in Texas. …
Mark Warner is the senior Democratic U.S. Senator from Virginia. When he was running for the office in 2008, he described himself as an “extreme moderate.” While I always liked that philosophical description, I was slightly suspicious that it might be self-serving, as Virginia was still a fairly Republican state at the time. Recently, I heard him taking questions from voters. One question was how…
The stock market can handle bad news, but it hates surprises. No economic data is more closely watched than the monthly “Jobs Report” issued by the Bureau of Labor Statistics on the first Friday of each month. It is always a comparison against expectations. If the data is better than expected, the market will go up. Usually, expectations are in a narrow range. Expectations for…
First, there is an increasing certainty of future tax increases. Both Republican economists and Democratic economists agree on one thing — an over-concentration of wealth is bad for democracy. Of course, that’s where the agreement ends! The Republicans think it is a small problem that will eventually fix itself, as succeeding generations divide up the wealth. Democrats think it is a clear and present danger.…
Every business has a seedy side. Not even the church business is spared. In the financial world, I’ve always found the world of offshore asset-protection-trusts (APT) to be one of the most seedy places. There are many legitimate financial planning reasons for asset protection, such as protecting a kid’s inheritance from bad marriages, etc. The legitimate reasons can be handled in several U.S. states onshore…
Everybody knew that our GDP would drop badly in the second quarter, following a 7% annualized drop in the first quarter. Estimates were that our GDP would drop 30-35%, and it dropped 32.9% – the biggest drop in history, by a factor of three times. The lockdown from mid-March to Mid-May was costly indeed. Estimates for the third quarter are a huge improvement – up…
From my first investment course many years ago, I’ve known Warren Buffett as a legendary investor. I learned he was clearly one of the best investors of all time, if not the best. However, from 2009 through last month, he has under-performed the S&P by 4.4% each year. More recently, that under-performance was even worse from 2017 through last month, when he under-performed by a…
Even before 2002, when former Vice President Cheney famously said “deficits don’t matter”, economists have begged the question of whether deficits actually do matter. Out of that discussion, a new isolationist school of thought has emerged, i.e., Modern Monetary Theory (MMT). It has also been widely popularized by Democratic Rep. Alexandria Ocasio-Cortez of New York. A new book by Stephanie Kelton called the Deficit Myth: …
Given my love of the outdoors, nobody was surprised when I volunteered for the infantry in the Army. Backpacking with a buddy in the Appalachian mountains as a boy eventually led me to the majestic Muir Woods north of San Francisco as a man, where I developed great respect for John Muir, the iconic founder of the environmentalist Sierra Club. Following approval of Central Park…
One would not immediately think that the coronavirus would impact Social Security, but it will. Here’s the good news: From near bankruptcy in 1980, the Social Security Trust Fund now has $2.9 TRILLION. (Yea, Congress!) Here’s the bad news: This is the year – 2020 – that cash flow turns negative. From now until 2035, the trust fund will shrink, at which time benefits must…
I live in a perfect world, don’t you? Whenever you look out the window, don’t you see rainbows and lovely unicorns? In fact, at ground-level, little girls throw pretty flowers from their little baskets and sing pleasant little songs. It is a perfect world, indeed! One characteristic of this perfect little world is that shareholders actually control big corporations. Technically, yes – but actually, no. …
There is an anti-mask rally in Dallas today. People, who feel they have a right to spew water droplets on other people, will mass and swarm into various retail stores, overwhelming the store policy about wearing a mask. This is sick! Having been raised in an area with many Revolutionary War memorials . . . and having family members who hated Yankees during the Civil…
I love capitalism! Government can never be as resilient as business. As an example, with fewer people going to malls, there are many large parking lots being ignored. Brookfield Properties is turning those unused assets into pop-up drive-in movies with great success. (Can you believe that many people are too young to remember drive-in movies?) Social distancing is easy. You can eat in your car. …
My hero is dying. Over the last forty years, I have admired him and prayed for him, which makes it so painful to watch him now, crippled with arthritis and writhing in pain. Before he graduated, his professors adored him, especially his mathematical ability. Sadly, at his graduation, on January 1, 1994, he was shot in the leg, shattering the bone. My hero walked with…
YOU – yes, YOU – need a Certified Financial Planner! Nobody else can coordinate and synthesize the myriad advice thrown at people. I should know – after all, I was a CFP over 30 years. When I voluntarily relinquished that certification earlier this year, some friends thought I was retiring, which is not true. Some friends thought I had simply outgrown it, which is also…
Traditional conservatives (as opposed to Trump Republicans) tend to support the Austrian school of budgeting, largely based on the economic teachings of F.A. Hayek. He often pointed to the problem of economists and other scientists in predicting the future, particularly with quantitative models that presume human behavior. He called it “an ambition to imitate science in its methods rather than in its spirits.” I remembered…
For many years, I have enjoyed writing a quarterly column for Inside Business, the business journal of southeastern Virginia. My latest column can be found here: https://www.pilotonline.com/inside-business/vp-ib-expert-flinchum-0713-20200710-y7nfhs2dzjczbbtweon2lfou7q-story.html
For many years, I would buy or sell stocks only when the market opened at 9:30 each morning, because that was the only time of day that I could predict the market price, as indicated by the futures market. The world has changed. Futures are no longer a reliable indicator of market action. They flop constantly all night. A few years ago, I attended a…
Despite being crushed by the pandemic, the stock market just enjoyed one of the best quarters in 22 years, with the S&P 500 rising a whopping 20.54%. Before popping champagne corks, let’s look a little deeper. One of the most useful ways to look at stocks is the distinction between value stocks and growth stocks. Basically, value stocks use their profits to pay dividends to…
If you want to see a grown man cry, just watch my eyes when they play “taps” at a military funeral. As an existentialist, I don’t grieve for the veteran, as death is only one side a coin . . . one side with pain and one without. Of course, as a human, I do grieve for the family and loved ones of the veteran,…
If I had to say something nice about the current economic collapse, I would say — at least, it is NOT also a financial collapse. Our banking system has remained relatively strong, thank goodness. If not, this “flash-depression” would easily turn into another Great Depression. Keeping our financial system solid is desperately important. After the Global Financial Crisis of 2008, our Congress acted responsibly to…
On Wall Street, the favorite game is guessing what outcome is already “priced-into-the-market.” It is a game of guessing expectations. For example, I think the stock market currently expects Trump to lose the Presidency, while Republicans hold onto the Senate. Remember, Wall Street always over-reacts to surprises! If the Senate remains Republican, the Trump tax cut remains safe, but that is already priced-into-the-market. So the…
One of my favorite thought leaders is the brilliant but affable Jeremy Siegel of Wharton. In his latest commentary, he thinks the stock market will remain relatively range-bound for the next 3-4 months before a breakout upwards. The continued flow of cash from the Fed is the major support of the economy. For example, M2, the conventional measure of money supply continues to reach new…
One Sunday morning many years ago, I sat in a pew, listening to a minister who preached that God loves all people, even bad people — because every person has some good in them. Unfortunately, he went on to say God even loved Hitler. Everybody sitting in the pews immediately straightened their back and listened. The minister smiled, waved his hand, and said “Hey, he…
There’s more to investing that mere numbers. There’s more to accounting than mere debits and credits. There’s more to financial planning than canned software programs. Clients are human. They need fewer numbers and more human advice, even young millennials . Alexander Kearns was a 20-year-old resident in Illinois. Like so many, he signed up with a robo-advisor, thinking he could out-smart the stock market. He…
Do you remember the year of 2010? That was the year of the “Flash Crash”. It happened on May 6th, when the stock market suddenly fell almost a thousand points, losing a trillion dollars, before recovering 36 minutes later. It was a market event . . . of temporary significance. Do you remember the year of 2020? That was the year of the “Flash Depression.” …
Without numbers, an opinion is nothing more than a gut-feeling. So, here’s my gut feeling: 1. The stock market hit a bottom in March. 2. A modest rebound was expected. 3. Instead, the market rebounded very, very strongly. 4. Market watchers could not explain the strength of the rebound. 5. However, an increase in retail traders and day-trading was also inexplicable. 6. Professional sports were…
Imagine looking out your front window. On the sidewalk across the street, a man, an auditor-looking man in a trench coat sits in a lawn chair with a clipboard on his lap. When your lights come on each morning, he makes a note on his clipboard. When you get the newspaper off the front porch, he makes another note. The time you leave for work…
Last week, the Bureau of Labor Statistics (BLS) released their monthly unemployment report. It was much better than expected, showing unemployment dropped 1.4% instead of increasing 4-5%. I wrote “Something Smells” about this. After all, how could 30 million workers be receiving unemployment benefits, when the BLS said only 20 million workers were unemployed? Later that day, the President used the report to claim we…