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Rising Rate Pitch

Rising interest rates have been a market bogeyman for almost a decade.  During that time we’ve gotten pitched all sorts of products that claimed to protect against this.  They never seemed to do well, mostly because rates never went up!  A couple of years ago that changed.  The Federal Reserve has finally moved toward rate normalization and we’re getting the rising rate pitch all over again. Rates are still very low Interest rates here in the United States are still very low.  Raising interest rates can be a bad thing, but I’m in favor of a modest campaign of slow rate hikes to get back to more normal levels.  That is what the Federal Reserve has been doing recently.  I like that the movements have been telegraphed well in advance and that the Fed is reducing its balance sheet.  When the next recession hits, the United States will be better…

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Random Task

The Thing to Keep in Mind About Knife Fights

Years ago, I had the opportunity to attend some self-defense workshops put on by military and law enforcement.  One class that changed my outlook on life was a knife course.  We were going to learn how law enforcement treats knives and how to work with a knife ourselves.  “The thing to keep in mind about knife fights is that YOU ARE GOING TO GET CUT.”  Wait, what?  This guy was supposed to show us how not to get hurt!  It turns out that it is just incredibly difficult to wrestle around with someone that has a knife and avoid the blade.  You can train all the disarming techniques you want, but in real life blood is drawn almost 100% of the time.  I’ve found that this is a useful way to view conflict in general.  In any conflict, expect pushback whether it’s in sports, telling your 8 year old to…

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Matt jr

Left of the Decimal

Dow Jones has removed General Electric from the Dow Jones Industrial Average (DJIA) and replaced it with Walgreens Boots Alliance.  GE was an original Dow stock and was part of the index for over 100 years.  The Dow is how your parents consume the stock market which is why newscasts tend to report that information in Dow points.  This is a huge deal, right?  Not from an investing standpoint. The DJIA is price-weighted, meaning that stocks with higher prices make up a larger portion of the index than stocks with a lower price.  This is different than an index like the S&P 500 which is market cap-weighted (the size of the actual company).  It’s interesting to note that GE is getting replaced by a company about half its size by market cap so it’s not like GE is getting the boot (pun intended) because of its size, it’s because the…

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Spot the Pattern and Let Me Lie to You

This is actually a post about two different lies.  The first is the lie your brain tells you because it can’t help itself.  The second is a lie investors need to keep an eye out for when presented with market data. Spot the Pattern We all know about the market cycle.  The market goes up.  The market goes down.  There’s a chart that’s basically a sine wave that starts with an upward trend, peaks, reverses, then goes down until it troughs and rebounds to begin the cycle anew.  The market is never that neat, though, right?   Okay, sometimes it is that neat.  This is a beautiful example of the S&P 500 starting in 1997 moving through the cycle.  The first euphoric peak is the tech boom in 2000 followed by the tech crash into despair.  The rebound peaked just before the global financial crisis sent the market back into…

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Run Rich Run

Pros Versus Casuals

One of my favorite events at the NFL Combine is when NFL Network’s Rich Eisen runs the 40 yard dash.  He uses the Run Rich Run event to raise money for St. Jude’s.  It also helps give perspective to just how talented the athletes at the combine are.  Viewed on the field of play, athletes usually don’t look all that different from one another so when someone sees that Denzel Ward is 5’11” and 180 pounds, they may be tempted to think, “I could compete with that guy!”  No, you could not.  Eisen runs a 6-second 40.  Ward is at 4.3 seconds.  Rich provides the average fan a service that should be available in every sport.  I want to see an average guy swim against Michael Phelps or a group of randoms take on an Olympic curling team. Seeing the difference between a professional and an amateur on screen is helpful. …

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