Monthly Outlook: October 2021  Markets took a breather in September after many months of grinding higher. The S&P500 sagged 4.7%, the NASDAQ dropped 5.6%, and the international stock index, EAFE, fell 3.3%. Bonds, usually a safe haven, were also soft, losing 1.0%. The good news is that the long-term trends of stocks and bonds remain upward and so we must call this just a normal correction for now. Will investors buy the dip again, or is there something else going on? We’ll consider the possibilities, below. I often use the expression, “When in doubt, zoom out.” It’s helpful to step back from the immediate view and consider the bigger picture that includes historical context and more inclusive framing. Today’s stock and bond market is really the culmination of stimulus policies and economic recovery since the 2008 Financial Crisis. Congress and the Federal Reserve (the Fed) have poured massive amounts of [...]

Monthly Outlook: September 2021  It’s almost Labor Day and the end of summer. Hopefully, we all had a much better summer than last year during the COVID lock-down. I’m sure we’ve all experienced the classic summer road trip with family and bored kids incessantly asking, “Are we there yet?” That’s how I feel every month with markets, today. We can plainly measure and see that global stock markets are factually over-extended, over-valued, and over-exuberant. Yet, they grind higher every month with not even a five percent pullback. Earnings are back to pre-COVID, 2019 levels and equity analysts expect continued earnings growth of 25% per year. Valuation metrics like price to earnings and market capitalization to GDP are at peak levels only seen two or three times in the past 100 years. Investors seem to have supreme confidence in the Federal Reserve and their never-ending printing press and stimulus programs. It’s [...]

Monthly Outlook: August 2021  Summer is in full swing, and the economy is booming! Here in Aspen, it’s hard to find parking, get a reservation, or find tickets. I hear it’s the same from coast to coast. Thanks to vaccines, the COVID crisis has subsided and pent-up demand for fun and adventure has been unleashed. It feels like people are cramming two summers of fun into one. Additionally, both the Federal Reserve and Congress have poured unprecedented trillions of dollars of stimulus into the economy to boost the recovery. Although it could be (and should be) argued that the stimulus was inefficient and sometimes misdirected, the effect is clear. The economy has certainly recovered and by all measures is back to pre-COVID 2019 levels, or better. And, importantly to us and our clients, stock, bond, and housing markets have fully rebounded and then some, thanks to all the stimulus programs. [...]

Monthly Outlook: July 2021 Confidence and exuberance are the watchwords of the day. And we’re as confident in the U.S. economy as everyone else. Thanks to science and vaccines, the COVID pandemic seems mostly behind us, and the economy feels as open as can be. Every restaurant and store seem crowded, and every airplane that I’ve been on is filled. Jobs are being created and the unemployment rate is steadily dropping. Stocks have fully recouped their COVID pandemic losses and added 25% more. House prices are spiking higher, up 14% over the past year, according to the Case-Shiller Index. Of course we’re all exuberant; happy days are here again, right? Yes, and no. It’s important to differentiate the mindset of Main Street vs. Wall Street, if you will. Main Street focuses mostly on the present, and on their own personal welfare. If individuals have a good job, good health, a [...]

Monthly Outlook: June 2021  Everything is opening up. Do you feel it? Vaccines have been widely distributed, COVID is on the way out, masks are coming off, graduations just happened, today is June 1st, and summer vacations are starting. And I can just hear a national exhalation, “Whew, we’re ready!” Meanwhile, on Wall Street, investors have been in party mode for a year already, enjoying massive stimulus and expectations of economic recovery. While Main Street is coming alive, Wall Street seems to be stalling. Why? Well, all that stimulus has created significant inflation and maybe too-optimistic earnings expectations. What if the Federal Reserve (Fed) is forced to taper their stimulus programs? What if Congress doesn’t pass any more COVID-relief stimulus plans? What if the economy has to recover from here by itself, on its own strength? That could have a major impact on investment prices and that is the reason [...]

Monthly Outlook: May 2021  The Kentucky Derby is run on the first Saturday of May every year. It’s the most exciting two minutes in sports, some say. Picking the winner is difficult even for horse racing experts. The pre-race odds tell us who the favorite is, but it’s still a horse race. The favorite horse only wins 35% of the time. Investing is even harder, in some ways. Investing is like picking winners from a field of thousands of contestants that can go forward, backward, or sideways. But unlike horse racing, we can change our bets, change our investment selection and allocation, at any time during the race. And that, makes all the difference. To build lasting wealth, we must do more than just assemble a portfolio of fast running investments. We need to balance the goal of making it with the necessity of keeping it. What is wealth? It’s [...]