Dalton — In June of 2007, when stock market indices were near all-time highs prior to the Great Recession, I started to short the market (i.e., buy investments that go up in price when stock prices go down). I made that first bet that stocks would go down not because of what I saw in stocks, but because of what I saw in bonds.
Dear Fellow Decision Maker,
Thank you for attending today’s live panel – Finders Keepers: The Search for Qualified Employees.
You want to hire qualified workers, but you can’t. We’re going to talk about that. We’re going to tell you a few things to give you some leverage over other potential employers who are trying to hire your candidates and even trying to take your current employees.
According to some of my colleagues in the financial advisory world, I’ve been disturbingly, even recklessly, blunt about saying that when it comes to investing, you don’t need me or any other financial advisor. Whether I’m right or I’m wrong is probably a moot point because most of you don’t want to work with us anyhow.
When I work with a business owner to improve their company, one of my main points is that whatever your industry looks like today will be much, if not totally, different in the not-too-distant future. Whether you, my dear reader, are a business owner or valued employee looking to climb the corporate ladder, it is of value to you see this pseudo-physician heal thyself.
On Thursday, March 21, the stock market celebrated the Federal Reserve’s Federal Open Market Committee (FOMC for short, but let’s just say “the Fed” to make it simple) decision to not just leave interest rates alone at that meeting, but to say it would leave rates alone for the year. On Friday, March 22, the stock market suffered a hangover after realizing it was possibly celebrating the wrong things.
-The economy has halted, and true to its mantra of being “data dependent” the Federal Reserve has responded by turning dovish from a recent hawkish stance.
-Such a quick turn on policy stance is sure to have investors asking, “What does the Fed know that we don’t know?”
-We expect the first half of 2019 will be as close to recessionary level as any other time in recent history, but businesses will keep hiring. (Since 2011 there have been seven quarters of GDP growth under 1%, three of which have been negative.)
-Timing is not imminent but we expect reasonably graceful resolutions to Brexit and the US-China trade war, which would reduce the probability of a 2020 recession.
-The economy will likely expand more robustly in the second half of the year, but will remain fragile and exposed to a recession within the next few years.
Financial advisors are the worst. And that’s coming from the guy who owns a financial advisory firm.
There are shades of “worst” for sure. For example, a couple decades ago, Paul Allen, co-founder of Microsoft, was being grilled about some bugs in the latest version of their software and he replied, “all operating systems suck; we just suck less.” And in that context. I’ll be the first to admit that my firm is far from perfect. Sometimes we take risks and instead of a reward, we see a loss. Sometimes we get defensive in anticipation of a market drop and the market doesn’t drop. The key is that, if you’re going to make a mistake, you make darn sure it’s a small mistake.
Prepare for a lecture. I assure you, its tough love—well, maybe lighter on the tough and heavier on the aggravating. I’m in the business of managing money. And when I see someone doing it wrong, l lack an appropriate level of social tact in expressing my frustration.
So I’ll tell it to you straight—stop getting tax refund checks!
The Berkshire Business Confidence Index (BCI), sponsored and analyzed by Berkshire Money Management, indicates that there is a high level of optimism among Berkshire County businesses, as well as non-profit organizations that are responsible for business decisions. We mailed out 4,000 surveys countywide, and received responses from the full spectrum of Berkshire industries—non-profits, retail, manufacturing, finance, lodging, real estate, construction, and more. Each brings their own voice to this survey.
The technology-heavy NASDAQ stock market index closed out last week with a perfect 10 weeks in a row of gains. The last time that happened was 1999, during the peak of the Technology Bubble. Since the index’s 1971 inception, this was only the ninth such streak. That’s a long winning stretch for the market to run without interruption and you might think it is due for a breather. However, of the eight prior streaks, six of them went to 11 or more weeks. I know—one more week is hardly something to write home about, as my mom is fond of saying.
Want your boss to give you a raise? Or are you the boss and want a raise yourself? Simple—identify a problem to be able to solve it.
Death to the resistance! That’s what happened to the S&P 500 stock index last week. We have been tracking the rally from the Dec. 24 low to determine its sustainability. Due to improving breadth, we had all but ruled out a re-test of those lows. But we still needed to see the S&P 500 break its 200-day moving average of 2,740 points for us to consider the rally to be on firmer footing. We had been bumping our heads on that resistance line, but with such a positive technical backdrop that we speculated any failure would limit a decline to about a 4-percent drop in prices before breaking resistance. Still the possibility existed of a larger decline, but now those probabilities have dissipated.
Two weeks ago, in the Capital Ideas article “A lower high and icicles,” I wrote that “…we’re still in a cyclical bear market until proven otherwise. If we can break the S&P 500 above the 2,740 level, its 40-week moving average, I’ll feel more comfortable [that the stock market’s rally is sustainable].”
There is a soon-to-be-released documentary called “Playing with FIRE,” which is about the “financial independence, retire early” movement, advanced by the millennial generation. FIRE has gained momentum with coverage in Forbes, the New York Times and on NPR. There are about a hundred “high-traffic” bloggers detailing FIRE journeys, many of those being listed on Rockstar Finance.
In Davos, Switzerland, the world of snow and icicles, the World Economic Forum’s annual meeting was held last week. Quarterly, my firm publishes a survey and sends it to 4,000 local business owners for what is called the Berkshire Business Confidence Index, or BCI (which, coincidentally is going out this week). It’s a formal assessment of owner confidence and intentions. Davos’ WEF is an informal assessment of more than a thousand global leaders and business titans.
Last week I had the opportunity to present to the Ladies Business Group, a local organization of female business owners and decision-makers. The agenda was to discuss investments by way of sharing the mistakes made by myself and others, the lesson being that risk management is more than preparing a portfolio for rising interesting rates or positioning it from a prolonged trade war, or even reallocating assets during a bear market.