As we discern our crazy economic landscape, it’s important to reflect on the cyclicality of the crises that have shaped the U.S. economy over the decades. From rising energy prices in the 1970s to today’s concerns over tariffs, each period presented challenges and adaptation opportunities. History proves that volatility cannot sustain, and things return to…
Fear of recession is causing current turmoil in stock prices. Recessions are often precipitated by an abrupt return to reality, a moment when the market corrects itself after a prolonged period of distorted perceptions and misaligned incentives. Historically, we have witnessed how such misalignments can lead to the mispricing of assets, which can ultimately culminate…
For over two years, economists have been predicting a recession. As their timing has proven quite poor, recent market gains were built on the expectations that they were flat-out wrong. Proper perspective is that recent market profits provide ballast to endure all the downside the market can throw at us, rather than letting our risk…
Clearly, investors see the coming year as one of change. I am asked with some frequency my predictions about what part of our economy will break first. The expectation is that the cracks we all see will accelerate into some type of economic explosion. I, too, see cracks in the wall, but I think they…
Last Friday’s non-farm jobs report was a blowout. Forecasts estimated that +200,000 jobs were added in January, but the number came in at +517,000. The market seemed to like it, but I don’t. The surprisingly strong job growth tells me that interest rate hikes are not having the desired effect. That’s the part I don’t…
Economist Paul Samuelson famously quipped that “the stock market has predicted nine of the past five recessions.” This tongue-in-cheek expression reflected his view of jumpy stock investors’ impact on the market, who pile in and out, often letting fear win out over fact. Current tea leaf readings might have one conclude that a recession is…
The poor economic policy of the past is coming home to roost in the form of rising rates and spiraling inflation. To make matters worse, policy leaders spent months gaslighting us all, denying inflation’s presence when the signs were in plain sight. This lag in taking action has surely exacerbated the situation because it’s best…
I was going to begin this musing with “don’t get me started,” but it’s too late for that. I could rant all day about how unfair it is to take money from one group and give it to another, especially when blue-collar taxpayers will end up footing the bill for white-collar kids. Giveaways like student…
Hapless or Inept? Webster’s Dictionary defines Hapless as “Unlucky or unfortunate;” whereas they define Inept as “Lacking in judgment, sense or reason; Foolish.” In the case of the Fed, I’m going with inept. We expect ineptitude at the county DMV office. However, we should expect more from the highest offices in the land. The Federal…
In my last musing, I wrote about the current odd situation where the 30-year Treasury bonds yields 2.58%, but inflation is running at 8% annualized. Who would loan their money to the government for three decades while it is currently depreciating at a rate three times that? To add insult to injury, Treasury bond interest…
As the tragedies in Ukraine and other Russian surprises have unfolded, I was most amazed by how unprepared the Russian army seems and that a ragtag team of civilians defending their homeland could put up such a fight. I always love an underdog. Along with showing the scrappiness of the Ukrainians, this serves to expose…
It is surely apparent by now that a confluence of events is causing energy prices to spike like none seen before. In 2008, when oil prices breached $140, the recession that followed quickly brought it crashing back down to the $30s. Prices today would need to be $200+ to match 2008 in inflation-adjusted terms. Rising…
Twenty-five years ago, I had an archery deer lease in Refugio County, Texas. One time, I headed down there after a long day at work and arrived at Two-J’s Restaurant just at closing time. The place was empty, but they seated me anyway and promptly delivered my order. The waitress asked me what I did…
Signs of inflation abound with chip shortages, car shortages, and sky-high lumber prices, among others. Many forecasters are predicting 70s style inflation or even stagflation. Given the similarities in Jimmy Carter’s and Mr. Biden’s policies, it’s a valid concern. Yet, I feel there are extenuating circumstances this time that give me hope that we can…
In times of crazy market gyrations, there are always reasons. Those reasons seem imperative at the time and often portend a terrible fate. Yes, there have been some dark times, particularly around times of war. Other times excessive valuations are the cause of necessary and painful realignments. Whatever the cause, the rationale at the time…
Stock prices have been plunging for the last three weeks as coronavirus fears shut down many swaths of the global economy. Conferences and festivals are getting cancelled and surely cruise lines and airlines have no lines. There will be repercussions. Talks of recession may prove true, but that may also be brief. A vacuum of…
Yesterday was a complicated day in the stock market. It was dealing with coronavirus fears, along with coming to grips with Bernie’s surge in the Nevada primary and what a socialist US president would do to markets. I’m feeling the Bern already. Particularly hard hit were health insurance stocks, and it’s difficult to decipher which…
Sign up to receive Gil’s periodic musings about investment trends, the stock market, investor behavior and current affairs. Join today and receive a handful of Gil’s favorite past musings, and be the first to receive his freshly penned thoughts