2019

No Picture

When the Recovery Will End, Emotion, Controversy

When Will the Recovery End? (Spoiler Alert: It’s Already Over) After 10 years, surely the end of the recovery is near?  I still see investment products pitched with this kind of wording.  It turns out that the recovery ended 84 freaking months ago.  Since then, we’ve been in expansion.  84 months sounds like a long time (7 years!), but in the context of previous expansions, it’s not remarkable in either length nor size (there’s a joke here, somewhere).  The expansion following recovery from the tech crash was just 12 months, with a gain of 14.6% on the S&P 500.  However, the two prior expansions were 135 and 134 months long and gained over 400 and 500% (see graphic).  Should we be worried about the current expansion?  Let’s break 100 months first, then three years after that let’s start worrying.  In the meantime, stick to your financial plan. Taking the Emotion…


student loans

Student Loans

$1.6 trillion of student loan debt is spread among 44 million Americans.  More than even avocado toast or a daily latte, student loans are being blamed for Millennials not being able to afford housing (even though they are the largest home-buying cohort).  Some Presidential hopefuls say they’ve got the answer in just erasing the whole thing.  This is a case of finding a gullible voting bloc and riding them as hard as possible in the hopes of building a warchest to retire on, securing a book deal, and hitting the speaking circuit.  It is a proposal along the lines of the Green New Deal – not so much a serious piece of legislation as it is something to garner mentions in the media. Cynicism aside, I’d love to see student loans wiped out.  “But isn’t this unfair to people who took out loans and paid them off?”  Maybe, but it…


Zombie Apocalypse?

The bull market is (take your pick): in the late stages of the market cycle in the late innings long in the tooth Let’s get another cliche out of the way and say that bull markets don’t die of old age.  Are we headed for a recession or a bear market?  Yes. This is like asking if we’re headed for Christmas.  We’re headed for Christmas whether it’s December 24th or December 26th. It’s impossible to prove that we’re not and I’ve been around long enough to know not to put a deadline on predictions.  It’s one thing to say there will be a recession in the future and another thing to say there will be a recession next year #timestamp. So yes, there’s a bear market or recession on the horizon, but that doesn’t mean the current bull is over any time soon.  Even if you think the market is over-valued…


Barber

Do It Yourself or Visit the Barber?

Feed your kids when they are hungry.  Clean your kids when they are dirty.  That’s all that should be written in stone when it comes to parenting and even that cleaning them thing is not necessarily correct 100% of the time (I was the kid that would go straight back to the creek after getting hosed off for lunch).  There are tons of books about child-rearing, many of which conflict with each other.  They are not necessarily written to help parents make decisions so much as to make them feel a sense of control.  “Do this, don’t do that” – it all goes out the window under live action.  Kids do not understand where the boundaries of life sit.  They don’t “think outside the box” because they haven’t registered the existence of the box yet.  Any action is a viable option at any given time. My wife and I got…


One Trillion Dollars

ONE TRILLION DOLLARS *pinky*

The Trade War™ wiped over ONE TRILLION DOLLARS from the stock market on Monday.  Will the market ever recover from this disaster?  It turns out that a trillion bucks ain’t what it used to be.  Financial reporters showed Monday’s market movement as -2.41%.  Financial entertainers breathlessly echoed the ONE TRILLION DOLLARS talking point.  Being down over 2% in one day isn’t good, but it was a useful tool to separate news sources that are serious about their reporting from the click-bait farms.  Oh and will we ever recover?  The S&P 500 was down 0.11% on the week, as of Thursday’s close, but oddly we haven’t heard any stories of the market gaining ONE TRILLION DOLLARS over the last couple of days.  Weird. Trade War™ There is a lot of hand-wringing over the consequences of the very public negotiation with China.  Bad financial news of all sorts is inevitably traced back…


Kentucky Derby

Don’t Let the Kentucky Derby Pick Your Advisor

Horse racing can be a lucrative business.  This year’s Kentucky Derby winner will bring home $1.86 million.  The first Saturday in May is the only time America (outside of Kentucky) pays attention to horse racing.  This might be stretched out to several weeks if the same horse wins the Preakness Stakes, setting the table for a possible Triple Crown at the Belmont Stakes.  “The most exciting two minutes in sports” garners intense buzz, but is quickly forgotten.  Too many investors adopt the same strategy for choosing financial advisors. The Horse Race The investor allocates a little money across three or four potential advisors.  Whoever has the highest returns at the end of 6 months or a year gets to manage all of the investor’s assets.  In the biz, we call this a horse race.  The investor thinks they are choosing a financial advisor, but is this really the way to…


Cost of Money

How Much Does Money Cost?

The Federal Reserve Bank of St. Louis caught my eye with a tweet the other day: “If you would know the value of money, go and try to borrow some.”  This quote from Benjamin Franklin got me thinking about the cost of money and how it impacts a few different aspects of financial life.  The St. Louis Fed was looking at what it costs the unbanked to borrow their next paycheck, but it is instructive to look at interest rates as they relate to things like the pensions and housing, too. Pensions Despite ten years of stock market gains, many pensions are underfunded.  Much of the blame has gone to retirement systems overpromising unrealistic payouts.  Their assets haven’t returned as much as expected, providing a double whammy.  The investment research guy in me wants to dig into the underlying investments and asset allocation.  Many pensions got hurt by stocks during…


Garbage

Where Are We in the Current Cycle?

Glad you asked!  This is such a great question.  It makes you look smart for asking it.  You recognize that the market is cyclical and your question implies that you’re so savvy that you can sync your investing to take advantage of the market’s ebbs and flows.  You’re a force of nature and I commend you for it, especially since you preceded the question with several minutes critiquing the Federal Reserve and expressing concern about today’s geopolitical situation. I love that you asked me because now it’s a chance for me to cite a bunch of bullshit statistics that prop up my world-view and make us all feel better about ourselves.  Best of all, no answer I give is going to suggest taking any real action on your part.  It’s a win-win. So Where Are We in the Current Cycle? Definitely the late innings, but it may only be the…


Golden Paw

Golden Paw of Fairness

My older son’s school celebrates a positive trait each month (respect, courtesy, etc) and recognizes students that embody the month’s trait at an assembly.  For February, William earned a golden paw award for fairness.  I keep thinking about this because while William may display fairness to his fellow students, life has not been fair to him.  The kid was dealt a tough hand of cards from the beginning.  He has ARPKD.  He deals with it and tries his best to show fairness and compassion to others, though, which is mind-blowing because he could use his diagnosis as a crutch instead.  Will could whine about all the things he can’t do like play contact sports or ride roller coasters.  Instead, he plays the hand he was dealt.  To see him do this day after day is inspiring and humbling. Kidney Month March is National Kidney Month.  The Wall Street Journal has…


Bear Bottom

The Classic Bear Bottom

As I toasted a bagel in the kitchen at Fairway this morning, I heard a talking head on TV describe the Christmas Eve market drop as a “classic bear bottom”.  A couple of the show’s co-hosts nodded sagely in agreement, but one pressed him.  You recognized this as the bottom?  Seriously?  And of course he did.  Market breadth, IPOs, and the Federal Reserve all pointed to a “typical” bear bottom. Don’t Believe It The idea that you (or anyone else) can recognize turning points in the market is poison.  The conversation’s casual tone is noxious.  If this guy has figured out how to time the market, why is everyone yawning?  Financial professionals recognize this guy is just bullshitting for the cameras, but civilians might think he’s serious.  They might be tempted to ask their “money guy” why he doesn’t invest based on market breadth, IPOs, and Federal Reserve pauses.  The truth…