Inflation: Rip or Ripple I have no opinion on “transitory” or “non-transitory”. Nor have I any opinion what folks should buy if it turns out to be the former or the latter. But Barron’s this week seems to confirm what I’ve been seeing for about a year when I grocery shop. (I like to eat. I eat very well. But I don’t eat ice cream.)
“The January consumer-price index confirmed what consumers have known for some time. Prices are rising across the economy, and fast, with the overall index up 7.5% from a year ago from a 7% pace in December. The narrative around reopening bottlenecks keeping inflation contained, if persistent, within a tight group of predictable, pandemic-affected areas has been stale for some time; January's report makes it worth shredding. From a year earlier, bread, meat, and eggs rose by double digits, gasoline surged 40%, and even banking services jumped 14%. As Grant Thornton chief economist Diane Swonk put it: ‘The only thing that looks like a good deal is ice cream.’ “
Excerpted from “Forecasts” - by Lisa Beilfuss / Barron’s (print edition) February 14, 2022
Yet another pundit in the same Barron’s issue writes …
“In the inflation forecasting Olympics, Team Transitory missed the first gate, fell on the first jump, slipped at the first corner … We now expect headline CPI to average more than 6% this year before fading to just below 3% in 2023, both a long, long way from the 1.7% average in the decade prior to the pandemic.“ (Credited to BMO Capital Markets)
A glimpse into the chip shortage (Barron’s) “About a week ago, I spent a few hours at my local Chevy dealer buying out the lease on my 2018 Bolt, with brand new LG batteries—the old ones were recalled because they risked bursting into flames. While working on the paperwork in the eerily quiet dealership, the salesman told me there were cars that had been sitting in the service department for weeks waiting for the arrival of parts—computer chips, in particular. He said sales at the dealership had dropped by about 90% from prepan-demic levels, and most of the sales staff had been laid off...”
“Meanwhile, Toyota Motor (TM) recently cut its vehicle production forecast for 2022 by 500,000 units, citing both uncertainty related to Covid-19 and the ongoing chip shortage. The bottom line? The case for owning chip fab stocks … is very compelling.”
From: “Feeling Better About the Chip Shortage?” - by Eric Savitz
Barron’s (print edition) February 14, 2022
Fascinating that the problem has persisted so many months. I’m always amazed when I take my 2018 Honda Accord back to the once thriving dealership for routine service and see the showroom and lots devoid of autos - completely barren.
50% of this fund is invested in 1 stock. “The top-performing growth fund since the end of 2019 is $7.6 billion Baron Partners (BPTRX). The fund gained 149% in 2020—just a hair behind ARK Innovation's 157%—and an additional 31% in 2021, while ARK lost 23%. This year, the Baron fund has also held up better than the ARK ETF, as growth stocks have tumbled. Investors should be cautious about the Baron fund, however: Most of its recent gains came from just one stock, Tesla (TSLA), which accounts for 50% of its portfolio. The fund bought Tesla shares between 2014 and 2016, and instead of selling to keep its weighting in check as the stock rose exponentially, the fund let it run.”
(I guess it depends on your definition of “fund”.)
Excerpted from Barron’s (print edition) February 14, 2022
Does the National Debt Matter? +1
More reasons to leave Vanguard I also experienced poor service at Vanguard. Also at Fidelity. As I stared in another thread, the experience I’ve had with TRP has been nothing short of outstanding. My only complaint at TRP is they use Pershing so it takes 1 day for funds to clear when selling which means you can’t sell a fund and buy another on the same day. Also, their choice of funds is more limited than Fidelity.
2022 YTD Damage I was searching for something like
@davfor’s chart last evening. Finally dawned on me this morning that the free Bloomberg ipad app lists YTD performance of many markets - domestic and international. Stuff like that helps me get my head around where we’ve been. Those aren’t particularly large drops for those of us who lived through 2008 or the one-day drop in the Dow of around 25% in
1987.
I’ve been thinking a lot that the “go to” areas of the U.S. market represented by S&P, NASDAQ etc. might well be overvalued but that there may be pockets of good value in some foreign markets and individual stocks here at home. Just a guess. No particular expertise.
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17% discount...
https://www.morningstar.com/stocks/xnas/ssb/quote-34% discount...
https://www.morningstar.com/stocks/xnys/ebr/quoteThis page might prove to be handy. i chose EGYPT on a lark. (EGX 30)
https://www.egx.com.eg/en/Indices.aspx
2022 YTD Damage I was searching for something like
@davfor’s chart last evening. Finally dawned on me this morning that the free Bloomberg ipad app lists YTD performance of many markets - domestic and international. Stuff like that helps me get my head around where we’ve been. Those aren’t particularly large drops for those of us who lived through 2008 or the one-day drop in the Dow of around 25% in
1987.
I’ve been thinking a lot that the “go to” areas of the U.S. market represented by S&P, NASDAQ etc. might well be overvalued but that there may be pockets of good value in some foreign markets and individual stocks here at home. Just a guess. No particular expertise.
Wealthtrack - Weekly Investment Show Not sure about that
@Sven. I think it's a pretty current interview from comments made. He makes reference to "the
10 year treasury being under 2%... been there since last year 202
1..." A chart shown on mega cap 8 stocks is dated Feb.4, 2022. This interview may have been done a week ago.
Bearish on Bonds / a poignant comment ….. We have an entire generation of investors who have never been "weaned" off artificial interest rates. They have no clue about real interest rates. Many of them don't even know what a bond is, limiting their "knowledge and wisdom" to NFTs, crypto scams, trend chasing, paid-to-play idiots, forever fearful of falling behind their index bogies. Add in the "Robin Hood" generation of newly minted "geniuses", and you get a very toxic brew of ignorance, guiding the financial markets into a very nasty mess.
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Excerpted from: Bill Fleckenstein's “Market Rap” / Question & Answer Portion. Posted Friday, February 11 by an anonymous reader / contributor. It’s a paid subscription site and so I rarely quote from it. But I thought the above to be a particularly succinct and sobering take on bonds and today’s investment climate - whether you agree or disagree.
2022 YTD Damage True, YTD is somewhat arbitrary but has been interesting so far in 2022.
I also look at other periods, especially the Stockcharts panels for multiple timeframes. Below is one for S&P sector ETFs for 6 months (other clickable periods are 2 and
12 months).
https://stockcharts.com/freecharts/candleglance.html?$SPX,XLY,XLC,XLK,XLI,XLB,XLE,XLP,XLV,XLU,XLF,XLRE|C|0.
Does the National Debt Matter? An immigrant, a worker and a banker are sitting at the table with 10 cookies. The banker takes 9 and then tells the worker "watch out, the immigrant is going to steal your cookie".
The above pretty much encapsulates the policies of one major political party (and it has worked phenomenally well over the past 6 years)
2022 YTD Damage
Wealthtrack - Weekly Investment Show There are many current issues in the U.S. / world which are making investors nervous.
It's difficult to remain optimistic due to inflation, future rate hikes, COVID-19, potential invasion of Ukraine, etc. However, we have little control over these issues.
IMHO, it's best for investors to develop a decent plan they can live with and then tune out the noise.
Of course, this is easier said than done!
+
1. :)
Barron’s takes on gambling - in all forms Still wading through this lengthy feature piece. Good timing - the
Barron’s cover story coinciding with the 2022
Super Bowl. Sources tell
Barron’s that $7.6 Billion will be wagered on the game this year - an increase of 78% over last year. The increase is largely a result of the spread of online sports betting (and every other form of wagering) across the country as more and more states legalize it. Biggest players are DraftKings (DKNG), MGM Resorts (MGM), Flutter’s FanDuel (PDYPY) and Caesars Entertainment (CZR). Penn Gaming and Ballys are lesser players.
The article is a curious mix of statistics and psychology. It delves into the mind of gamblers as explained by psychiatrists. It cites a an addiction counselor telling of people in the U.S. betting on a tennis match somewhere in Eastern Europe in the wee-morning hours here - not because they cared about tennis, but because they needed the dopamine “fix” gained from having money on the line. But the article strongly makes a case that Americans are addicted to gambling in many different forms, citing trading in crypto, fungible tokens and stocks as other parts of the overall equation. And it hits hard at the cost to society.
There’s a lot said about Robinhood and how it has used targeted “cues” to spark risk taking by customers. Some of this has been toned down in the face of public criticism. The SEC is expected soon to unveil regulations to better prevent abuse - especially of inexperienced traders. One thing mentioned was the “herd mentality” of investors. So, here’s a parting quotation from the article on that point. Food for thought:
“About 35% of the stock bought by Robinhood users are concentrated in 10 companies, compared with 24% by retail investors overall, according to a forthcoming study in the Journal of Finance. Investors tend to congregate in stock “herding events” ….. The results don't look encouraging. Robinhood traders lose an average of 4.3% during each herding episode. After adjusting for market returns, losses hit 5.5%. Robinhood declined to comment to Barron's …”
WhassUp (This Year)? Yes K-1's are more work but I have been using Turbo Tax for years and it handles K-1's like waffles handle maple syrup. Zero problems or issues.
More reasons to leave Vanguard +1
WhassUp (This Year)? Thanks all for adding to my understanding. I knew K-1’s were an annoyance, but they could be much more than that for certain high rollers. I recall owning Blackstone (BX) for a short time and having to deal with the K-1. Talk about an opaque form…
Wealthtrack - Weekly Investment Show There are many current issues in the U.S. / world which are making investors nervous.
It's difficult to remain optimistic due to inflation, future rate hikes, COVID-19, potential invasion of Ukraine, etc. However, we have little control over these issues.
IMHO, it's best for investors to develop a decent plan they can live with and then tune out the noise.
Of course, this is easier said than done!
