I hear it all the time. “I don’t understand bonds.” So I’m going to clear that up for you. But first, let me just say, it’s a real disservice to successful Americans like you to be told, ad nauseam, that we’re in a “bond bubble of epic proportions.” Listen, I want you to be a calm, cool, and collected investor, not a mad man. Talking stocks is a holiday tradition. But the reason you own bonds—wait for it—is so you can own stocks. That’s it. Period. End of story. That’s all you need to know to understand bonds. Look, the stock market discounts everyone’s best and worst ideas. Putting your … [Read more...]
Archives for December 2021
Fed Still Way Behind the Curve
Despite the Fed's stated pivot toward removing COVID stimulus measures, its policy is still very accommodative compared to those of the past. Colby Smith and Eric Platt report for the Financial Times: US financial conditions are near the most accommodative on record, even as the Federal Reserve has begun stepping up its exit from coronavirus crisis-era stimulus measures in a bid to battle elevated inflation. Measures of financial conditions have only marginally tightened since last week’s Fed meeting, according to economists at Goldman Sachs, who produce a closely followed index that takes … [Read more...]
Even CNN Admits Biden is Failing WORSE THAN CARTER on the Economy
You know that throughout his campaign and so far during his presidency, CNN has coddled the Biden administration like a newborn. Never seeking to offend, only to deflect, defend, and defuse any criticism directed at Biden or his inferiors. So it's with some surprise that you may have seen CNN's Harry Enten write an article highlighting new polling showing that Biden is failing Americans on the economy even worse than Jimmy Carter. Enten writes: President Joe Biden is struggling in the minds of the American public. While his approval rating is down on a slew of issues, his difficulties are … [Read more...]
Record Buybacks in 2021 as Companies Plan Even More Next Year
Companies bought back a record-breaking $850 billion worth of shares in 2021, and are planning even more buybacks in 2022. Mark Maurer reports in The Wall Street Journal: Sitting atop a haul of strong earnings, companies are planning to spend even more in 2022 on share buybacks and dividends, a trend finance executives don’t expect to slow despite a proposed 1% excise tax on repurchases. Many companies have bounced back from the blow dealt by the coronavirus pandemic and are in a period of hale growth, giving them ample leeway to reward their shareholders, said Howard Silverblatt, a senior … [Read more...]
NO MATTER WHAT: You Need to Get Paid
Let’s stay on the subject of making sure you get paid in times of trouble no matter what, just like Tony Soprano. Because any time you invest, you’re using your own money to create interest, dividends, or rent, and preferably all three. I’m not interested in price increases and selling assets. I want you to think like an owner of a multitude of assets. I remember my dad telling me how, as a teenager, he would collect for his dad’s rental properties. Some of them were in rougher neighborhoods, and his dad would tell him: “You stand to the side of the door when you knock. You never know … [Read more...]
Why Are Investors Worried about These Five Big Tech Stocks?
Five big tech stocks are worrying investors, as they have gotten a harsh dose of reality over the last few trading sessions. Michael Wursthorn reports for The Wall Street Journal, writing: The stock market’s rise this year has narrowed around a short list of big tech companies, a sign of possible weakness heading into 2022. Five of the biggest stocks in the S&P 500 account for more than half of the broad benchmark’s gain since April, analysts at Goldman Sachs found. Of the S&P 500’s 22% advance this year, those stocks— Microsoft Corp. MSFT -1.20% , Nvidia Corp. NVDA -0.29% , Apple … [Read more...]
Meet the Tony Soprano of Your Portfolio
"I like people who don't need everyone to like them." -Tony Soprano, 'The Sopranos'. There’s been some yappin’ lately about bonds. Why own bonds when yields are so low? Let me explain. In times of trouble, look at who gets paid first, and you realize why bonds tend to do fine when the stock market falls apart. Look how Treasuries saved portfolios earlier this century. When you invest your cold hard cash, you’re lending your money to the street, if you will. Think about your bond money like it’s Tony Soprano. Do you think Tony liked it when he wasn’t paid? Does anybody? No. But … [Read more...]
Will the World Buy Electric Cars Made in China?
China wants to sell cars to the world. As the country's industry moves up the value chain, the next stop it wants to make is electric automobile exports. Jacky Wong reports in The Wall Street Journal: Chinese electric vehicles are speeding ahead in the country in 2021. Next they may want to make inroads overseas. Sales of new-energy passenger vehicles in China, including plug-in hybrids, have nearly tripled from a year earlier in the first 11 months of 2021, according to the China Association of Automobile Manufacturers. And that is against the backdrop of a sluggish overall car market. … [Read more...]
YOU DESERVE FREEDOM: Your Hard Work Will Make It Happen
In my conversations with you, you tell me how you hiked all 48 of New Hampshire’s 4,000 footers. You were a lot younger, but it feels like yesterday. You and I know one of the secrets to life is simply putting one foot in front of the other. It’s putting food on the table, the kids through college, and retirement checks in the bank. You tell me how much you learned from your dad. How he could build anything and how your kids feel the same about you because you’re always at their house working on something. I remember like it was yesterday a conversation we had where you said, “Dad helped me … [Read more...]
JUST BELOW THE SURFACE: Stock Index Strength Hides Danger Below
If you're only looking at the movement of the major stock market indexes, you're missing out on what's going on under the surface. A divergence in the performance of the biggest stocks by market cap, which have more influence over the index's movements, and that of smaller stocks is a signal that trouble may be ahead. Eric Platt reports in the Financial Times: On the tech-heavy Nasdaq Composite the figures are even more striking, with more than 1,300 stocks down 50 per cent or more from their highest level of the past year. And roughly 80 per cent of the more than 3,000 stocks on the exchange … [Read more...]