Dr. Jeremy Siegel is a celebrated professor at Wharton and author of “Stocks for the Long Run.” He is also my longtime favorite investment thinker. I’ve read his books and listen to him whenever possible. Yesterday, I listened to him again and realized that there is a disconnection that has been bothering me. He argued … Continue reading In Praise of Math
The Flinchum File
Thoughtful Economic Analysis and Existential Opinions
My father was a fireman. He was always a little embarrassed that he was “just” a blue-collar worker. As a boy, I imagined him running into burning buildings and thought he was a genuine hero. Even after the firemen of New York proved their heroism during the 9-11 tragedies, when America lauded its firemen and … Continue reading A Thank-You Note
In 2002, Republican Vice President Dick Cheney said “Reagan proved deficits don’t matter.” Unfortunately, his comment unleashed a serious question – do deficits really matter at all? Modern Monetary Theory (MMT) emerged from that discussion and has since been popularized by Democratic Representative Alexandria Ocasio-Cortez (AOC). Under MMT, the U.S. Treasury can spend ANY amount … Continue reading AOC Wins . . . and Dick Cheney too!
If you are one of the millions under a Stay-At-Home order, if you are one of the millions “working-from-home”, if you are retired and worried, the first thing you should do is turnoff the television. You can do nothing about it, and it ruins your day. How about using your time more wisely . . … Continue reading Quarantine Chore #3
Every profession has its own professional association, and every professional association has conferences, where some professionals gather in the bar during the evenings. Gray-headed professionals often snicker at the innocence of younger professionals, especially if they are not there. When gray-headed investment strategists gather in the bar, the classic “put-down” used for absent younger strategists … Continue reading A better perspective . . . ?
The difference between a barbarian and an intellectual is more than just a change of clothes. All my life, I’ve heard the evil government is going to take my guns and my property. That is simply irrational. Maybe, some people have a need for paranoia? Nonetheless, gun sales are already up 17% this year, with … Continue reading NOT. . . A Bunch of Monkeys
Barely a decade ago, the nation was sliding into a recession, one that became known as the Great Recession for good reason. Like the Great Depression, the financial sector was at the heart of those economic problems. In 2010, Congress required banks of all types to increase capital, as a buffer to absorb future losses, … Continue reading Odd Thanks
This recession is very different than any before. It started as a biologic crisis and is rapidly morphing into an economic crisis. There are some hints that it MAY continue morphing into a financial crisis, but there is almost no sign of a credit crisis yet. The descent into this particular recession is not particularly … Continue reading Coronanomics 101
For those retired workers and for those newly stay-at-home workers — that insist on watching their portfolio shrink daily — let’s talk about something you will soon need . . . a Will. A Will is a legal document that specifies what happens to a person’s assets upon death. Like a court-appointed lawyer, if you … Continue reading Quarantine Chore #2
On October 19, 1987, my boss was winging across the Atlantic on the company plane to honeymoon with his new wife. Telecommunications in 1987 were relatively primitive by today’s standards, so he was relatively late receiving the news that the Dow just dropped a terrifying 22.6%, almost entirely in the last two hours of trading. … Continue reading
If World War II made the Greatest Generation see life in more absolute terms of black or white, good or evil . . . If Vietnam made the Baby Boomers more distrustful of both leaders and institutions . . . If the 9-11 attack on America made Gen-Xer’s more patriotic . . . If the … Continue reading The Long Arc ?
For those working from home and finding a little less work to do, this is the first in a series about using that gift of time. The most common misconception in financial planning is that the title of something doesn’t matter. WRONG! It is very important. Most people think “Oh, I’ve got a Will that … Continue reading Quarantine Chore #1
When the Titanic hit the iceberg, the captain didn’t say “I don’t take responsibility at all.” No, he manned-up and went down with the ship. He didn’t blame his crew or his predecessor. He was a real man and . . . a real leader. Typically, that was the actual quote from our current President, … Continue reading Leadership ?
While studying at three different universities, I enjoyed many courses in finance and economics. But, I only had one course in biology and none in epidemiology, which is actually the most important – for a while. Sometimes, the rules of investing get suspended – for a while. For example, diversification is a good thing. That … Continue reading . . . for a while . . .
There is a quarantine in your future. Staying inside your own home is not the worst thing that can happen, assuming you actually like the other people in your household. In addition to stocking the pantry for a minimum of 14 days, just plan for a “staycation.” Make sure you have that book you’ve been … Continue reading The “Q” Word
It was less than ten years ago, May 6th, 2010 at 2:36 PM, that the stock market quickly dropped a thousand points. Thirty-six minutes later, the market had regained the thousand points. This became known as the “Flash Crash.” Because the bottom resembled the letter “V”, analysts still speculate whether downturns will be V-shaped, U-shaped, … Continue reading V or U or L ?
It was 12 months ago that I predicted a recession this year. Brownie points for me! But, I expected it might be caused by a financial crisis, instead of a biological crisis. No brownie points for me! If I had thought about the problem of Russia’s struggle to dominate OPEC, this current oil crisis would … Continue reading Kudos 4 Jim ?
For most families, the monthly mortgage payment is their biggest expense, which is largely determined by the interest rate. The lower the rate, the more affordable the mortgage. Over the last year, millions of Americans have refinanced their mortgages at lower interest rates, improving their monthly cash flow. That’s great, isn’t it?? Investors know the … Continue reading Good = Bad ?
A month ago, the sky was blue, birds were singing, and the stock market was at a record high. Then, things started to change. First, there was rumbling about some virus outbreak in China, but President Xi assured us they had it well contained. Move along, he said, nothing to see here. Second, Wall Street … Continue reading The 1 – 2 – 3 – 4 Punch
The first outbreak of bubonic plague was in the 6th century and killed 25-50 million people, estimated at half of the world’s population. The next outbreak of bubonic plague was called “The Black Death” in 1347 and killed another 25 million people. It took 200 years for the world’s population to regain that population level. … Continue reading Pandemics Matter
For many years, that has been the most interesting time of the month, because that’s when the Bureau of Labor Statistics releases their monthly “jobs report,” which normally moves the stock market, either up or down. This month, economists expected 175 thousand jobs were created last month. Instead, we learned that a whopping 273 … Continue reading 8:30 AM ET, First Friday of Each Month
Anybody who has ever traveled by car with a child remembers the repetitive question of “are we there yet?” Over and over again! That is the current perspective of investors traveling through this major correction in the stock market – “is it over yet?” Remember: The stock market HATES uncertainty. When uncertainty rises, the stock … Continue reading Daddy, Are We There Yet?
The Pentagon has often been accused, unfairly, of always preparing to fight the last war. During the initial build-up in Vietnam, they sent two Armor battalions, one into the Mekong Delta and the other into the highlands. Unfortunately, tanks don’t do well in swampy jungles nor with long supply lines without roads. Right objective, wrong … Continue reading Old Habits Die Hard
I have long preached that an economic recession is different than a financial recession, which is far worse. (Think 2009) A financial recession always triggers an economic recession, but an economic recession does not always trigger a financial recession. Personally, I believe that I can smell a financial crisis coming on. I look for sudden … Continue reading Rolling Recessions
We’ve never had a President that paid such close attention to the stock market. With the coronavirus pandemic causing the Dow to lose over 1,600 points on Monday and Tuesday, he wisely hurried back from a state visit to India, for a hastily called press conference on Wednesday. The market was relatively calm that day, … Continue reading What A Week !
We’ve been here before!! It was just 15 months ago that the market fell 19% in the fourth quarter of 2018. That was a result of the Fed raising interest rates and reducing its balance sheet. There was the possibility that a financial recession was brewing, and I was worried. Now, we are facing another … Continue reading Here We Go Again . . .
If Bernie Sanders leads us into socialism, could the next “Trump” lead us into communism? Socialism and communism are not the same thing. While all communists are socialists, not all socialists are communists. The traditional definition of socialism is state ownership of the major means of transportation, communication and production capabilities. Note that it is … Continue reading An Ugly One-Two Punch
Thou shalt not panic! Thou shalt not panic! Thou shalt not panic! Thou shalt not panic! Thou shalt not panic! Thou shalt not panic!
Jean-Jacques Rousseau was a highly influential French/Swiss philosopher, who also wrote “The Social Contract” in 1762. It opens with the famous sentence that “Man is born free, and everywhere is in chains.” Among the notions in this important work is that individuals are the result of their upbringing or social environment. It helped me to … Continue reading Mad Men . . . or Just Unfair?
In the early mists of time, high priests could predict the future by reading the entrails of a chicken, lamb, or goat. From a mess of goat guts, they could see the future. “Technical” analysts look at price movements of stocks to rationalize the buy-and-sell decisions of investors. Sometimes called “chartists”, they don’t even need … Continue reading Waving at the Future
Probate has earned a bad reputation. When a person dies with assets that become part of their “estate”, the probate court steps in, making sure the assets are distributed to the right person. It is a necessary public service but an annoying public service. It is slow, paper-intensive, and costly. The good news is that … Continue reading Title Troubles
In March of 2017, I predicted Donald Trump would not serve a full term. Long before he could be impeached and removed, I expected this most thin-skinned of men would tire of the inevitable criticism and just walk away. Declaring victory and resigning would allow him to retain some minimal dignity after office. However, I … Continue reading The Greatest President’s Day?
Due to the coronavirus outbreak, estimates of China’s GDP growth are dropping fast. Starting the year at a relatively modest 6%, most forecasts are now in the 0 – 1% range. This is a huge drop in short time. While I have great sympathy for the thousands of sick and dead, I feel a certain … Continue reading China Fog
The most common question over the last few weeks is how is the coronavirius going to impact the stock market? The obvious answer is nobody knows, of course. But, the history of this great country is that major problems develop, get resolved, and then we keep growing. That history is why advisors recommend clients stay … Continue reading The Next Black Swan?
Last week, the Bureau of Labor Statistics released their monthly “jobs report.” It showed the labor market is strong and getting stronger. The three-month rolling average was 211 thousand jobs, compared to a 2019 average of 175 thousand jobs created each month. The market yawned. Can you remember that from October of 2008 to March … Continue reading Ho-Hum
Walter E. Williams is a long-time economics professor at the conservative George Mason University. His most recent article is interesting. It is entitled “How to tell good economists from the bad,” explaining a good economist can see the obvious – obvious to his eyes, anyway. He gives two examples. First, who pays tariffs? He goes … Continue reading Judgemental Economics
Early on, I recognized that Google’s motto of “Do No Evil” was a joke. They sold personal information on their customers to anybody who can pay for it. Then, Facebook came along and made the sale of personal information into a major industry. Now, nobody is certain how many companies are selling your personal information. … Continue reading Innocence Lost
While I have great respect for The Office of the President, I have rather less for the current occupant. Therefore, when he does earn some respect, he deserves credit for it! At the prodding of his daughter, the President signed an Executive Order last week establishing an office to combat human trafficking, which is a … Continue reading Thank You, Mr President
The four greatest innovations in the history of mankind are: FIRE — used to provide heat, to provide light, and to cook food THE WHEEL — used to transport people and goods more efficiently THE INTERNET — used to bring the world’s body of knowledge to every person BLOCKCHAIN — a worldwide “read-only” spreadsheet using … Continue reading True or False ?
For reasons best understood by your neighborhood nerd, yesterday’s blog dropped the most important paragraph!?! With apologies, the corrected blog appears below: While I have been a long-time advocate for exchange-traded-funds (ETFs), I never thought they could bake bread nor cure the common cold. Yesterday, I attended a lecture entitled “Combating Fake News: Why Exchange-Traded-Funds … Continue reading Just Another Useful Tool – corrected
While I have been a long-time advocate for exchange-traded-funds (ETFs), I never thought they could bake bread nor cure the common cold. Yesterday, I attended a lecture entitled “Combating Fake News: Why Exchange-Traded-Funds Won’t Cause the Next Market Sell-off.” I saw a great many graphs documenting that ETFs continue to grow during both bear and … Continue reading Just Another Useful Tool
In 1988, I completed my financial planning studies and proudly earned a CFP certificate. Over all those years, I have enjoyed the prestige of being certified, even as the costs increased, the red tape mounted and the continuing education droned on. Last summer, I was asked by Old Dominion University to teach the capstone course … Continue reading What’s The Point?
I hate long-term bond funds. I hate annuities. And, I really hate IPOs (initial public offerings). IPOs happen when a private company wants to sell part of its ownership on a public stock exchange, like the NYSE. (Of course, it begs the question of why would I want to sell part of my company when … Continue reading Lukewarm IPOs is Good News
Bernice King once said “In my view, it was no accident that Nelson Mandela was chosen by God to lead the people of South Africa. There are very few people who could be imprisoned, kept away from their family and loved ones, and exit that same prison with such a powerful spirit of love and … Continue reading A Plea for Healing
Imagine you make $100 thousand a year and then imagine carrying $322 thousand in debt. You would probably be in trouble. Fortunately, the interest rate on your debt is artificially low. Now, think globally, where worldwide debt has reached $257 TRILLION, which is 322% of worldwide GDP. Some people see that as proof of profligate … Continue reading Praying for Inflation
One of my favorite analysts is the affable Dr. Jeremy Siegel of Wharton. In his last commentary, he doesn’t foresee any recession but thinks the stock market has gotten ahead of itself. It is just going up too fast, and “trees never reach the sky.” He recalls January of 2018 when the same thing happened, … Continue reading The Wizard of Wharton
Logic is not always the same thing as truth. Sometimes, logic is absurd. I have voted for numerous Libertarian candidates over the years. Recently, I was talking with a long-time Libertarian friend. He saw nothing wrong with arming school kids. Anybody should be able to buy as many guns as they like and take them … Continue reading The Danger of A Clever Thought
The Bank of America has an interesting forecast. The current bull run in the stock market resulted from the relatively-sudden easing of geopolitical tensions, a decision on Brexit finally, and confidence in the November election, as well as highly supportive central banks (Fed & ECB). The Bank believes these problems are not over, but merely … Continue reading Consistent With History?
For faithful readers, my latest quarterly column for Inside Business can be found here: https://www.pilotonline.com/inside-business/vp-ib-expert-flinchum-0113-20200106-paeou5gjtbaivmhr6y5bpmatou-story.html
I enjoyed listening to pundits talking this morning about how boring the monthly “Jobs Report” was. Compared to expectations of 160 thousand new jobs, only 145 thousand were created last month. Big Deal! The unemployment rate was unchanged at 3.5% — a 50 year low. The U-6 level of under-employment dropped to 6.7% — a … Continue reading In Praise of Ho-Hum
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