The “Wall of Worry” refers to the propensity of financial markets to rise in the face of ostensibly insurmountable problems. The negative issues being revealed for investors are a true gut check. Q1 22 began by swiftly moving into a “correction” or 10% downswing. The S&P 500 was down over 12% at the low point of the quarter. A rally in March left US markets down 5% on 3-31-22. More market data is available at Bloomberg or WSJ. The pandemic of COVID-19 has declined dramatically and may … [Read more...]

Equity investors have become conditioned to gains. The post 2008 experience has embedded the idea that investing = gains. This may be true over longer periods, but we have become spoiled. The warning consistently given is to “buckle up” as downswings from the recent run up are likely. In addition to securing your emotional seatbelt, here are a few other coping mechanisms for the corrections that may arrive soon: Long walks Cycling Watercolor painting Meaningful volunteer … [Read more...]

Hopes for a fade of the Covid-19 virus are rising. As vaccination rates increase and the Delta variant burns itself out, we may be able to see light in the tunnel. Markets are getting volatile as the steroids (zero interest rates and $120b of dollars added to the financial system monthly) of the Federal Reserve are being slowly reduced. The economic consequences of the pandemic would have been much worse without the financial doctoring that was administered by the Fed and its peers around the … [Read more...]

“The master-economist must possess a rare combination of gifts .... He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must be entirely outside his regard. He must be purposeful … [Read more...]

I can prove anything I'll make you admit again and again That I can prove anything The way that it's read again and again… We are the angry mob We read the papers everyday We like who we like, we hate who we hate But we're also easily swayed “The Angry Mob” lyrics, by artist Kaiser Chiefs; Release date 8-20-2007 January 6, 2021 was an event that brought historic violence. The angry mob was as busy posting selfies, a blessing that likely stopped them from harming more … [Read more...]

...difference of opinion is not a difference of principle. - Thomas Jefferson, Inaugural Address 3/4/1801   We have two classes of forecasters: those who don’t know—and those who don’t know that they don’t know.  - John Kenneth Galbraith   The Great Disappointment is often referenced as March 21,1844 when it was erroneously predicted that Christ was to return and the world as we know it would end. In researching this moment of history, you discover that the prediction was … [Read more...]

BPS: Basis Points or units of a percentage point. A quick google search will define it as: A basis point represents the smallest unit of measurement for interest rates and other financial instruments. One basis point is equal to one-hundredth of 1 percent. The US 10 year bond new yields between 60 and 70 bps...you can lend money to the US Treasury for ten years and get a return of .7%. This low yield has been engineered via complex maneuvering by the Federal Reserve. The Fed works the … [Read more...]

“Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem which it was intended to solve.” ― Karl Popper “... three critical goals: First, we must detect outbreaks that occur anywhere in the world; second, we must protect the American people by stockpiling vaccines and antiviral drugs, and improve our ability to rapidly produce new vaccines against a pandemic strain; and, third, we must be ready to respond at … [Read more...]

The Affect Heuristic  The dominance of conclusions over arguments is most pronounced where emotions are involved. The psychologist Paul Slovic has proposed an affect heuristic in which people let their likes and dislikes determine their beliefs about the world. Your political preference determines the arguments that you find compelling. If you like the current health policy, you believe its benefits are substantial and its costs more manageable than the costs of alternatives. If you are a … [Read more...]

2019 has been a persistently positive year with a final move up in Q4.  For the year, the Dow ended 22% higher, the S&P gained 29%, and the Nasdaq rose 35% For further market coverage, see https://markets.on.nytimes.com/research/markets/overview/overview.asp Long term investors have been rewarded with a significant upswing for 2019. For those that believe in “Get Invested, Stay Invested”, this feels pretty good. Holding diversified mutual funds long term sounds simple, but it may be … [Read more...]