The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

When ?

12/26/2018

The most common question I’m hearing is — “When will the market stop falling?” What they mean is — “When will the pain stop?” Once investors stop asking when the market will bounce back and start asking when the pain will stop, that is a bullish signal. The answer is — “Not this week!”  Mutual … Continue reading When ?

Wayward Bull ?

12/25/2018

Unfortunately, many parents have had the experience of raising a wayward child.  You spend decades teaching and coaching to the best of your ability.  You are proud of them!  Then, disturbing little signs start to worry you.  Suddenly, she is gone, and you are worried sick.  One day, you see her in the distance, returning home.  … Continue reading Wayward Bull ?

Wayward Bull

12/25/2018

Unfortunately, many parents have had the experience of raising a wayward child.  You spend decades teaching and coaching to the best of your ability.  You are proud of them!  Then, disturbing little signs start to worry you.  Suddenly, she is gone, and you are worried sick.  One day, you see her in the distance, returning home.  … Continue reading Wayward Bull

Who To Believe ?

12/24/2018

Both Fox News and The Wall Street Journal are controlled by the same person, Rupert Murdoch.  Watching Fox News, one gets the clear impression that Americans are resoundingly in favor of the President and his goal of building The Wall along the Mexican border.  However, the newspaper reported that, three years ago, 49% of Americans believed … Continue reading Who To Believe ?

A Pleasant Memory

12/24/2018

As my hair gets whiter and my wrinkles deeper, I find the holiday season less and less interesting. Except for one silly American custom. On Christmas Eve each year, NORAD pretends to track the journey of Santa Claus. They discuss it with great seriousness on television — tongue securely in cheek. NORAD was already doing … Continue reading A Pleasant Memory

Best Loser of 2018

12/23/2018

My favorite stock in 2018 was Facebook (FB) — not because it did well, but because it did poorly,  losing 30% of its value! Early on, I recognized their business model was to sell the privacy of others, albeit with their “consent.”  The need to connect with others was more important than privacy.  The need … Continue reading Best Loser of 2018

Interest Rates — Part Two

12/22/2018

In Part One, we discussed how the supply and demand for bonds impacts interest rates.  In particular, we discussed how Quantitative Tightening (QT) was putting upward pressure on interest rates.  In this part, we’ll discuss how changes in interest rates cause changes in the market value of bonds. Let’s say you bought a new bond … Continue reading Interest Rates — Part Two

Only Human . . .

12/21/2018

If I was under six different investigations and . . . If I worried my kids might go to jail and . . . If people didn’t want to work for me . . . If American banks wouldn’t do business with me and . . . If my allies decided I was unpredictable and … Continue reading Only Human . . .

Interest Rates – Part One

12/20/2018

There are many definitions of interest rates.  One is that interest rates are the price or cost of liquidity.  As liquidity increases, the cost goes down.  (The supply of liquidity is greater than the demand for it.)  As liquidity decreases, the cost goes up.  (The demand for liquidity is greater than the supply of it.) … Continue reading Interest Rates – Part One

mano-a-mano

12/20/2018

Fighting is easy.  Walking away from a fight is difficult. The Federal Reserve is a creature of Congress and can be terminated whenever Congress chooses.  Fortunately, Congress recognizes that independent economic guidance cannot come from either the Executive or Legislative branches of government.  After all, somebody has to guide the economy who cares more about … Continue reading mano-a-mano

The Wall

12/19/2018

I am confident that, if my family depended on it, I would find a way over or under or around or thru any fence.  (Of course, I still remember how to use C-4 plastic explosives, as well as “bangalore torpedos.”)  Assuming that is mere bravado or over-confidence on my part, then a wall on the … Continue reading The Wall

One More Time ?

12/18/2018

During the global financial crisis of 2007/8, the assessed value of my home starting dropping.  Two years later, it had dropped 29%.  Did I cry?  Did I sell my home?  Did I curse my realtor?  Of course not!  I just waited for it to recover. The S&P 500 has now dropped 11% and is still … Continue reading One More Time ?

Dark Pools

12/14/2018

Let’s say you’re a large pension fund that wants to buy 100,000 shares of Apple.  If you enter such a large BUY order into the market, it would drive the price up.  Of course, you don’t want to pay any more than necessary.  So, what do you do? You enter a “dark pool.”  Large financial … Continue reading Dark Pools

Maintaining Focus

12/13/2018

I parted company from my Republican friends, when they impeached Clinton for lying about sex with a woman. I will part company from my Democratic friends, if they impeach Trump for lying about sex with two women. Sure, there are nuances of differences, but they are only nuances. HOWEVER, if Trump — or any other … Continue reading Maintaining Focus

Dirty Word

12/11/2018

Like most people, economists like to argue.  However, one idea that almost all economists agree with is:  “If you want less of something, tax it.  If you want more of something, subsidize it.” Otto von Bismarck said:  “Politics is the art of the possible, the attainable — the art of the next best” The president of … Continue reading Dirty Word

Dirty Words

12/10/2018

Like most people, economists like to argue.  However, one idea that almost all economists agree with is:  “If you want less of something, tax it.  If you want more of something, subsidize it.” Otto von Bismarck said:  “Politics is the art of the possible, the attainable — the art of the next best” The president of … Continue reading Dirty Words

Fox Failed Trump

12/09/2018

When I go to sleep at night, I reluctantly relinquish control of the TV remote.  By then, that poor piece of plastic is exhausted, breathing heavy, and sweating profusely.  That’s because it has been worked so hard — after all, every commercial break requires a channel change. In the never ending search for a balanced … Continue reading Fox Failed Trump

Layers of an Onion

12/08/2018

Many years ago, the mentor of Warren Buffet was Benjamin Graham.  He taught:  “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” Colleges teach us that the stock market reflects both current economic conditions and future expectations.  It weighs economic data.  Today, the economic data … Continue reading Layers of an Onion

Importing Trouble

12/06/2018

Inside our country, the stock market has been fretting over the possibility of slowing growth in corporate earnings and GDP, as well as rising interest rates, an ominous yield curve, the trade war, and the perpetual political circus.  As if all that was not enough burden on U.S. investors, we just imported two more – … Continue reading Importing Trouble

Importing Trouble

12/06/2018

Inside our country, the stock market has been fretting over the possibility of slowing growth in corporate earnings and GDP, as well as rising interest rates, an ominous yield curve, the trade war, and the perpetual political circus.  As if all that was not enough burden on U.S. investors, we just imported two more – … Continue reading Importing Trouble

Yield Curve Over-Reaction

12/05/2018

Think of buying a bond like loaning money to a friend.  If he must repay the money tomorrow, there is not much that can go wrong before then.  However, if he must repay you in twenty years, there are many things that could go wrong, and you might not get repaid.  An example would be … Continue reading Yield Curve Over-Reaction

Wrong + Wrong = Right ??

12/04/2018

Democrats did a bad thing!  Back in the 1930’s, they introduced the concept of gerrymandering in Virginia.  Instead of voters picking their legislators, the legislators picked their voters.  Hiding behind the valid concept of redistricting, which is required every ten years following the census, the Democrats packed Republican voters into as few districts as possible.  … Continue reading Wrong + Wrong = Right ??

R.I.P. 41

12/01/2018

There are good Republicans and there are bad Republicans. George H. W. Bush was a great Republican. More importantly, he was a good and decent American, who will be missed. Rest in a well-deserved peace . . .

A Silk Purse?

11/28/2018

Living close to the water in a coastal community, sea level rise is not an academic issue to me – it is personal.  I know we cannot just build a wall to hold back the sea, nor can we elevate entire cities, but I have been impressed with how effective “improved drainage” can be, including … Continue reading A Silk Purse?

According To Oz

11/26/2018

While I would not do any business with Wall Street giant Goldman Sachs, I do have great respect for their research and just read their 2019 outlook.  In a word, they are quite bullish on December of this year but less bullish on 2019, predicting only a 5% rise in the S&P, mostly in the … Continue reading According To Oz

Thanksgiving Wish

11/22/2018

A veteran of the Pacific Theater during World War II, Bert Aaron is a patriot, living in Williamsburg.  I am thankful that he has been a friend, a client, and an inspiration for so many years!  The local paper, Virginia Gazette, just published his latest column.  With his permission, I quote it below: ********************************************************************************************************************************************************************** Stop.  … Continue reading Thanksgiving Wish

Take A Break, Please

11/17/2018

The Fed has been under increasingly heavy criticism.  No president has ever been happy when the Fed is raising interest rates, but the current one is especially loud.  Now, Wall Street is beginning to complain more loudly as well. There is a belief that rising interest rates mean falling stock prices, and it’s only logical … Continue reading Take A Break, Please

Treason!

11/16/2018

Some years ago, a client asked me what was “this Google thing?”  After explaining what a search engine does, I added that Google was the greatest shredder of privacy in the history of the planet.  Then, Facebook came along. If you have not yet read Wednesday’s article in The New York Times, it is well worth … Continue reading Treason!

Monday’s Autopsy

11/14/2018

The market was already nervous before the 9:30 AM open on Monday.  Higher and higher interest rates were bad enough, but the market was also frightened by a senior trade negotiator who predicted a long, slow fight with China, with no end to the trade war in sight.  Then, the world’s largest company, Apple, was … Continue reading Monday’s Autopsy

Weak Snorting

11/13/2018

My investment outlook is evolving.  Two months ago, the economic data was unrelentingly bullish.  Now, cracks have appeared (see both ISM reports).  This does NOT suggest the recession that investors fear.  Not all recessions are created equal. The stock market has been propelled over the past year or so by rapidly rising corporate earnings (EPS).  … Continue reading Weak Snorting

Busybody Advisors

11/10/2018

You should always shower and brush your teeth.  You should always respect your elders and do your homework.  And, you should always get a professional financial plan designed exclusively for you and then follow every detail. While I am a Certified Financial Planner professional, I haven’t prepared a written “financial plan” in years.  My initial … Continue reading Busybody Advisors

What’s Wrong With Young People?

11/08/2018

My parents were part of the “Greatest Generation” and had a rather low opinion of my generation of “baby boomers.”  We were a bunch of dirty, long-haired, pot-smoking, commie-hippies who were too self-involved to love our country.  Of course, that was before we got jobs, babies, and mortgages.  Now, we-boomers look down our boomer-noses at … Continue reading What’s Wrong With Young People?

And, The Beat Goes On

11/01/2018

It takes hip boots to wade through the governmental reports issued each day.  In one obscure report by the Treasury Department on Monday, they estimated that they will have to issue bonds (or take on debt) at a faster pace.  The debt to be issued in FY 2019 is 17% more than FY 2018 but … Continue reading And, The Beat Goes On

Cycles of Civility

10/31/2018

History teaches us that the current period of incivility we are experiencing is not unique.  In the 19th century, some Congressmen had fistfights on the floor of Congress and at least one pulled a gun on another.  Eventually, the cycle of civility returned to normal.  Regrettably, we have entered another cycle. I think President Trump … Continue reading Cycles of Civility

What Reality ?

10/30/2018

Robert Doll is the Chief Equity Officer of Nuveen and a CNBC favorite.  His latest Commentary is instructive.  He reminds us of ten things: 1.  U.S. economic growth remains solid. 2.  Manufacturing levels may come under pressure. 3.  The outlook for global growth may have weakened recently, but we see no near-term signs of significant … Continue reading What Reality ?

One More Insane Tragedy

10/29/2018

Somebody, please explain paranoia to me!  Every religion feels they are being persecuted for their faith.  The lunatic who slaughtered the innocent Jews in Pittsburgh did it because Jews were slaughtering Christians . . . What?  Like I said, lunatic! If any faith has a documented claim on being persecuted, it is the Jewish faith.  … Continue reading One More Insane Tragedy

Downward and Onward?

10/28/2018

Most investors were sorry to see the Dow drop almost 300 points last Friday.  However, I was sorry it didn’t drop 1,000 points.  Stock market corrections don’t hit bottom until there is some degree of panic, which flushes stock out of “weak hands.” I know this slump is not a financial crisis, as I watch … Continue reading Downward and Onward?

Paging P.E.T.A

10/26/2018

There are many colorful expressions on Wall Street.  One is a “dead cat bounce.”  Imagine your cat dies, and you toss its carcass out the second story window and watch as it hits the driveway below.  It doesn’t land motionless, like a towel.  There is a slight bounce when it hits the concrete.  Yesterday, you … Continue reading Paging P.E.T.A

Just Another Correction

10/25/2018

This is the worst month for the stock market since January of 2016.  But, they are very different corrections.  I was nervous during the first one but am just annoyed at the current one. Glencore is a huge London-based commodities trader, and they were struggling two and a half years ago.  Because they were the … Continue reading Just Another Correction

c-r-e-a-k-i-n-g

10/23/2018

That creaking sound you hear is the stock market struggling under the weight of both geopolitical troubles and political troubles.  Think about it — our colossal trade war with China, the increasing probability that England will have a messy crash-out of the European Union, the Mid-East is being realigned as we watch in real time, … Continue reading c-r-e-a-k-i-n-g

The Need To Break Noses

10/23/2018

Is it acceptable to punch somebody in the nose for insulting your late Mother? In an overly-long opinion piece inside yesterday’s Wall Street Journal, the writer alleged that leftists  hate “Mr. Trump’s vulgarity.”  Well, my Mother never used a vulgar word but prayed for those who did.  Vulgarity was not a small deal to her!  It … Continue reading The Need To Break Noses

Hunting The Killer

10/21/2018

Perry Mason always found the murderer, but he had a big advantage, because it was after-the-fact. While the economic data is as good as I’ve ever seen it, at least during my lifetime, we should remember that “Bull markets never die of old age.  They get killed first!”  Hunting the killer is easier with a … Continue reading Hunting The Killer

Quarterly Column

10/19/2018

While it is somewhat dated, here is the link to my latest column for Inside Business https://pilotonline.com/inside-business/news/columns/article_2d091de2-cb3c-11e8-b55e-83e28276fafd.html

Meandering Toward Brexit

10/17/2018

I understand patriotism.  I feel it from my toes to my nose.  I love our national identity, warts and all!  Britain also has a strong national identity, with minimal warts.  Of course, they feel pride in their national identity, and they should! My inner Republican imagines the damage to their pride when they had to … Continue reading Meandering Toward Brexit

A Geopolitical Diet?

10/16/2018

There is obviously a close relationship between the economy and the stock market.  Sometimes, it is not close enough.  During the second quarter, the economy grew earnings 25% year-over-year.  During the third quarter, earnings were expected to rise 15% and actually increased 21%.  The fourth quarter is running 20% up.  Does the stock market growth … Continue reading A Geopolitical Diet?

Thank You, Brett!

10/14/2018

Most of us realize that it is unhealthy to watch too much TV news.  Years ago, I declared my Saturdays as a news-free day.  It is important to recognize the toxicity of TV news, be it Red-tinted or Blue-tinted.  Both are toxic.  After the bitterly contentious news coverage on the elevation of America’s only available … Continue reading Thank You, Brett!

Supply and Demand

10/13/2018

Most everybody knows that prices are determined by the “Law of Supply and Demand”.  If supply of a product decreases while demand increases, then buyers will “bid up” the price.  Likewise, if demand increases more than supply increases, buyers will again “bid up” the price.  However, if supply increases more than demand, buyers will not … Continue reading Supply and Demand

The End Is Near? Nope!

10/11/2018

The stock market held a SALE today, with the Dow stocks getting over 800 points cheaper.  No, it is not the beginning of the end.  More likely, it is a normal bull market correction.  Here is what happened: The European markets closed down sharply.  They were understandably frightened of rising interest rates.  The impact of … Continue reading The End Is Near? Nope!

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly