After one of the worst December’s in history, it was followed by one of the best January’s in history. The S&P was up 8.01% in one month. (Of course, it is still down 2.31% over the last twelve months, attributable almost entirely to the disastrous December.) MidCap stocks were up 10.46% and SmallCaps were up 10.64%. This is a more normal relationship, with SmallCaps leading…
When cigarette companies report record profits, do you celebrate that they are selling so many cigarettes and that more people are getting lung cancer? Of course not! Yet, that is the way I see the record profits reported yesterday by Facebook and other tech giants. Does anybody say it’s really great that more privacy is being violated, albeit legally? Of course not! Some say it…
Did you ever wonder about the relationship between the economy and the elected children in Washington? Of course, you did! Normally, consumer confidence increases as the job market improves. However, even with a continuing good job market. consumer confidence has fallen for three straight months. This is unusual. Three months ago, consumer confidence was approaching 140. Now, it is 120, which is still good, but…
I respect and appreciate whatever religion, spiritual faith, or philosophy that helps a person to find meaning or serenity in life. Recently, I took an elderly person to their church, as they were too feeble to attend by themselves. While I would never jump up to interrupt a service in anybody’s church, it was difficult to restrain myself when the minister said “the love of…
Feelings are intense about building the Trump Wall, and will remain that way. But, keep the money in focus! Our national debt is approaching $22 TRILLION. If interest rates increase a mere one-quarter of one percent on that debt, it will cost us another $55 billion each year. If we would shut down the government over the $5.7 billion one-time cost of Trump Wall, why…
Generally speaking, increasing money supply causes prices to rise. “Too many dollars chasing too few goods” is widely accepted as inflationary. So, after the enormous injections of money by the Fed since The Great Recession, why is there still so little inflation? A year ago, I wrote there are signs that inflation is breaking out. But, it didn’t. While Trump’s tax cut last year massacred…
Despite repeatedly failing the physical exam, I have often been called with a girl’s name of Pollyanna, due to my natural optimism. Glasses are always half-full, not half empty. Probably, that optimism derives from my undying love of country, my naive love of democracy, my enormous respect for capitalism or my well-studied belief in globalization. I have been through wars, numerous recessions (including The Great…
The three greatest names in investment history are Benjamin Graham, Harvey Markowitz, and Jack Bogle. Benjamin Graham literally wrote the original ground-breaking book on Security Analysis in 1934. He advocated the accounting or fundamental approach to investing. You must know all the details of the company’s financial statements. You must interview management, as well as the firm’s auditors, and visit its major facilities. He mentored Warren…
I have a great deal of respect for Dr. Jeremy Siegel of the Wharton School, but I have zero respect for Goldman Sachs. Yet, they agree that there will be a significant economic slowdown in 2019 — but NO recession. They also agree that 2019 faces unusually great political and geopolitical risks, which could easily precipitate a recession. So, how can I agree with Dr.…
One of my favorite thought-leaders is Bob Doll of Nuveen. He has written six reasons for optimism in 2019 and six reasons for pessimism in 2019. The six reasons he is optimistic are as follows, with my thoughts in parenthesis: 1. The economy may be slowing but doesn’t appear headed for recession (Agreed) 2. Likewise, earnings growth is slowing but should remain positive for 2019…
The CFP Board regulates Certified Financial Planners (r) professionals like myself. They provide the Code of Ethics, which we are required to follow. The latest version says: 1. Act with honesty, integrity, competence, and diligence. 2. Act in the client’s best interest. 3. Exercise due care. 4. Avoid or disclose and manage conflicts of interest. 5. Maintain the confidentiality and protect the privacy of…
It is not everyday that both Republicans and Democrats will agree with Maxine Waters, the new fiery Chairwoman of the House Committee on Financial Services. Among other agencies, her committee is responsible for the Securities & Exchange Commission, which has furloughed a whooping 94% of its employees. There are now less than 300 employees responsible for the complex regulation of 26,000 registered investment advisors. Equally…
Do you remember the “great dress controversy” in 2015 when a dress appeared to be two different colors. My wife and I sat next to each other and looked at the dress on TV. We saw the same dress but each of us saw it in a different color. I thought it was blue & black. She thought it was white & gold. We looked…
Everybody knows there is a difference between the economy and the stock market, but they are so closely related – think brother & sister – closely related but still different. Wearing my economist hat, I see good data points follow good data points. Yes, the most recent ISM reports slipped slightly but are still very expansionary. Plus, the creation of new jobs is almost amazing,…
In Greek mythology, Cassandra was the daughter of the King of Troy. Legend says she had dark brown curly hair and coal brown eyes. By all accounts, she was extremely beautiful. In fact, the god Apollo fell in love with her beauty and wanted her as a lover. They agreed he would give her the gift of foreseeing the future, if she would become his…
The stereotype of an existentialist is that of a nerdy, 98-pound weakling who contemplates his navel or broods endlessly about death. However, existentialists see ourselves as intellectual free spirits, untethered to many burdensome conventions. The death cult characterization is unfair and stems from our casual attitude toward death. After all, how can death be important to me, if I’m not even here? There is a…
If there was even a remote prospect that you could do something to help a sick child, how could you NOT do it? That’s one of the promises of Big Data – the more data that is analysed, the more we can learn about science and medicine, the more we can help future people. Seems reasonable to me? I visited a new shoulder doctor last…
A surprisingly small percentage of people serve in the military, and an even smaller percentage actually experience the horror of war face-to-face. For others, war can be clean, antiseptic, and even academic. Yesterday, Apple announced that their revenues were suffering due to the trade war. Suddenly, a trade war is no longer clean, nor antiseptic, nor academic. When American companies start losing revenues, profits will…
I agree with the President’s new Acting Chief of Staff, Mick Mulvaney, who famously said “Trump is a terrible human being.” However, the devil does deserve his due. For decades, China has abused trading relationships with everybody, not just the U.S. Being reasonable men, Presidents Reagan, Bush, Clinton, Bush II, and Obama assumed that China was also reasonable. They forgot that history molds the future,…
Along with sixty thousand of my closest friends, I had the pleasure of watching the Dallas Cowboys beat the New York Giants in the Meadowlands. However, whenever there was a change of possession, I noticed there was a lot of just standing around by the players on the field. To my economist eyeball, that represented enormous waste. The individual team payrolls are about $170 million…
To read my latest column in Inside Business, please go here: https://pilotonline.com/inside-business/news/columns/article_5ed0af4e-0ab5-11e9-9a89-cf89b7c2e6bb.html
I firmly believe there are just as many nice people in the Republican party as the Democratic party. Conversely, I firmly believe there are just as many jerks in the Democratic party as the Republican party. But, they live and work in parallel universes. So do their families. My 2019 wish is for the partisan “leaders” in Congress to require some minimal human integration of…
We barely hit a bear market, which means the market is down 20% from its high. It is widely assumed that a bear market signals a recession. Maybe or maybe not! Of the last thirteen bear markets, there was a recession only 7 times. There was no recession almost half of the time. From the economist standpoint, there has some weakening in the data but…
Wall Street pundits have called the current market correction “a collapse without a cause.” I agree this December collapse has been illogical but no more illogical than the record 1,086 jump in the Dow during one day. As I type this, Dow futures are down 344 points. The individual opinions of economists and analysts did not cause this volatility. There is no explanation for this…
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 funds will close their books this Friday. Since the best…
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. Your face explodes in tears. You are so happy to…
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. Your face explodes in tears. You are so happy to…
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 that immigration helps the country more than it hurt. Today,…
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 this when I was a small boy, and I hung…
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 for targeted advertising was more important than privacy. I have…
A bear market is usually measured by a 20% drop from its high. By that measure, the NASDAQ companies are now in the dreaded bear market. Even worse, the Dow and S&P are close behind. Investors are understandably frightened. First, this is not the end of the world. The stock market will recover! Never forget — corporate profits are “the mother’s milk” of stock prices. …
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 for $1,000 paying 5% or $50 annually. Now, what happens…
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 untrustworthy and . . . If my only friends were…