I said a couple of years ago that I thought that once all the distortions were past, we'd be back to where we started prior to COVID, but with more debt. The decade from 2010 to 2020 was the slowest decade of nominal GDP growth since WWII and the prospect of another decade of that wasn't all that appealing but [...]
The employment report on Friday seemed like a good one. The unemployment rate was unchanged as the economy added 336,000 jobs in September. The gains were widespread with additions in manufacturing, construction, wholesale trade, retail trade, transportation, warehousing, leisure and hospitality, healthcare and education, and government. Average hourly earnings were up 0.2% for the month and 4.2% year-over-year. It was [...]
Most strategic asset allocation strategies have produced negative returns over the last two years. A 60/40 allocation of Vanguard Total Stock and Vanguard Total Bond is down over 6%. John Bogle's 3-fund portfolio, a global approach that includes an allocation to Vanguard Total International is down nearly 9%. Morningstar has a diversified portfolio that includes 11 different ETFs and it's [...]
"Higher for longer." That's what the Fed says they intend to do with interest rates and investors finally decided to believe them last week. Bond yields, which have been stagnant since peaking last October, finally broke above the trading range they've been in for all that time. Short-term rates also moved higher but not as dramatically and the result was [...]
Everybody loves dividend stocks. Some prefer stocks with high dividend yields and some prefer stocks of companies that have grown their dividends consistently, but dividends are an essential component of many (we think it should be all) investors' portfolios. The two methodologies produce quite different portfolios but over the long run, they both perform very well on a total return [...]
Every weekend I sit down at my desk and write the title of this post at the top of a legal pad. I make a list of everything I can identify as trading at an extreme in markets. If an investor is to make tactical changes to their portfolio, it is in the extremes where they will find their greatest [...]
There were some very smart people a year ago saying that you couldn't kill inflation without a big rise in unemployment. Last October, Larry Summers - former Treasury Secretary and President of Harvard - said we'd need a recession and an unemployment rate of 6% to kill inflation. In the summer of last year, he said we'd need 5 years [...]
Why, man, he doth bestride the narrow world Like a Colossus, and we petty men Walk under his huge legs and peep about To find ourselves dishonorable graves. Men at some time are masters of their fates. The fault, dear Brutus, is not in our stars, But in ourselves, that we are underlings. Julius Caesar, Act I, Scene II The [...]
Stocks are now down from their late July peak by about 5%. It has been a very orderly pullback with most of the major averages shaving off about the same amount. The exceptions are the NASDAQ, which peaked a little earlier than the S&P, and REITs, both down about 7.5%. The NASDAQ is more volatile than the S&P so it [...]
The 10 year Treasury yield has been in an uptrend since the summer of 2021 which is obvious to anyone who can see. It has stalled a couple of times and moved sideways - consolidated in Wall Street technical speak - but the trend is obvious (see below). It seems only a matter of time before we break above the [...]
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