Random Thoughts on the New Spending

Burning Money photo by @jpvalery at Unsplash

The government has passed a $1.9 TRILLION spending bill, without much reason to do so. Other than to give away money. Fourth-quarter GDP was just announced to be up 4.4%, one of the strongest reads in years. The last jobs report shows a significant drop in new jobless claims. Sure $500 billion for extended unemployment and small business relief would have really helped a lot of people, but $1.9 trillion of newly borrowed money, in an economic expansion? 

Irrational Exuberance, or Just Stupid?

I’ve received more questions about the activity in GameStop (GME) than any other stock in over 30 years in the business. Simply put, GME is a company floundering near bankruptcy. A large number of individual investors following a Reddit post decided to start buying up the stock. GME is a heavily “shorted” stock by many professional investors, meaning they make money if the stock goes lower, ideally for them into bankruptcy. By bidding the price higher, the Reddit followers were creating losses for these professionals, many of whom had to buy the stock to close out their short positions.

The Good, the Bad, and the Ugly — Our 2021 Outlook

First my apologies for this being our blog of 2021, a full month into the new year. While we have been very busy since late December here at the office, the real reason I’ve procrastinated is that every time I start writing, something new happens that makes me question my outlook.

How to be a Millionaire, Part I

Photo by unsplash.com/@austindistel

There are more than 20 million people in the U.S. with enough assets to fit the definition of a millionaire, according to a 2020 study by Credit Suisse. Chris Hogan, radio host and author of the book “Everyday Millionaires,” surveyed more than 10,000 of those wealthy individuals to figure out their secret to success.

I thought I’d share some of his findings in our blog post.

2020 – Mid Year Outlook and Perspective

Photo by @nick604 on Unsplash

It’s been a crazy couple of months for the stock market. After falling into the fastest bear market in history in February, the S&P 500 is back near all-time highs. And that’s despite Q1 earnings for the index cratering 66%, one of the worst showings in its history.

Rally Under Way?

Photo by Adeolu Eletu on Unsplash

For those that are totally confused about the market's continued climb, despite the headlines and negative economic news, please read and take to heart the following quote:

"There is nothing more important to the markets than what the Fed is doing and is going to do. Nothing. This is applicable to both the bond and equity markets and to all classes of risk assets. When you are the only American institution allowed to print money then you are the only American institution that cannot be denied and so today, I focus on what these people are doing."

Coronavirus and the Battle of the ‘Bots

In 2009 I sent out a newsletter with the following quote: “I have never seen this kind of volatility or irrational activity in 20 plus years." I later went on to mention the "...large one day drop of 4.58%..." My how times have changed, or not!

My first comment certainly holds true today. The daily volatility, which I address below, would have been unthinkable just two or three years ago. And while I do not mean to minimize the seriousness of the corona virus, I cannot call the market reaction rational. 

Coronavirus 2020

Man wearing face mask

“Simply put, our economy is strong, unemployment is at a 50-year low, household income is at a 20-year high, consumer sentiment is near record highs, and corporate earnings continue to impress.” www.Zacks.com

Q: So what went wrong?

A: The Coronavirus

The stock market does not like uncertainty, especially uncertainty centers around a question like, “How bad can it get?” More and more experts and market pundits are answering that question with some variation of “Pretty bad?”

2020 Predictions - Briefly

Compass on newspaper stock page

Every year it gets earlier and earlier...not when stores start decorating for Christmas, but when the market predictions come out for the next year!

Not to be left behind, I added some of my thoughts to another excellent article by Ellen Chang over at the Street.com. You can read her entire article at: https://www.thestreet.com/markets/2020-stock-market-predictions

Ultra-Wealthy Preparing for Huge Sell Off

Photo by Markus Spiske on Unsplash

According to UBS, the ultra-wealthy hold on average 25% of their capital in cash. Their rationale is that the stock market will see big trouble in 2020. On the surface that seems like a scary warning for the rest of us. But before you make such drastic moves with your portfolio, consider the following: