Unbiased, Unsolicited Thoughts on Political Discourse

How does a nation of 330 million people with diverse backgrounds, cultures and political views heal and move forward together peacefully?

This great nation has been extremely polarized for quite some time now, and it seems to be getting worse each year. I attribute this to two main causes:

    1. social media, which magnifies many of our differences while making it far too easy to disrespectfully engage with each other. We are far more civil when chatting with our fellow humans face-to-face than through a screen.
    2. growing government power. The more power a government wields the greater the impact politicians can have on our lives. If someone we don’t like gets elected to office the potential negative impact on our lives is much greater (whether perceived or real). In other words, the more power a politician holds the more that is at stake in each election, which naturally exacerbates our differences, fears and insecurities, and leads to greater polarization and heightened tensions.

Note: This is why it is SO important that government power be as localized as possible. The Founding Fathers understood this deeply and intended for the powers of the federal government to be strictly enumerated. Continue reading “Unbiased, Unsolicited Thoughts on Political Discourse”

Strong Secular Trends

There have been very strong secular trends in play for the last decade. So, I wanted to take a moment to highlight those for you.

The last ten years have been largely characterized by a domination of U.S. large cap growth stocks over every other major asset class.

  1. The U.S. stock market has dominated foreign markets and commodities
  2. Within the U.S. market, large cap stocks have dominated small cap stocks
  3. And within U.S. large cap, growth stocks have dominated value stocks.

Continue reading “Strong Secular Trends”

$27 Trillion National Debt and Counting, How It Gets Paid and Who Pays It

The debt of the US government recently crossed $27 trillion. Additionally, there are talks for another $2 trillion of stimulus (which the stock market is loving by the way). So, if passed, that would put the US national debt at around $29 trillion!

We should note that the US National Debt was about $20 trillion at this time in 2016. So, the debt was doubled to $20 trillion from $10 trillion (2008-2016) during President Obama’s two terms and looks to be on pace to double again over the subsequent two terms based on the increase thus far in President Trump’s first term.

A $29 trillion debt represents almost $90,000 per US citizen. That means a household with four people has about $360,000 as their share of the national debt in addition to their own private debt and their state and local government debt. Consider that total US household debt is about $14 trillion so that’s another $42,000 per citizen, or $170,000 for that same household of four on average.

Let’s consider what this really means. Continue reading “$27 Trillion National Debt and Counting, How It Gets Paid and Who Pays It”

Quarterly Market Update – 2020.Q3

Below you’ll find the returns for various asset classes spanning stocks, bonds, precious metals and the U.S. Dollar for the last month, quarter and year-to-date.

We observe that the dispersion year-to-date is extremely interesting. For example, there is a massive discrepancy in the performance between U.S. large companies and U.S. small companies. The S&P 500 (large companies) made 5.57% on the year while small caps lost 8.64% on the year. Foreign developed country stocks haven’t fared much better as they’ve lost over 7% on the year. I’ve talked about the recent concentration of returns in the five major tech names previously (Apple, Amazon, Google, Facebook and Microsoft) here and here.

The performance of silver has also caught my eye. It was by far the worst performer in September suffering a 15.5% loss but, even with that loss, silver remains the best performing asset on the list for the year making almost 30% in nine months!

The best performer in September was the U.S. Dollar with the USD ETF (Symbol: UUP) returning 1.68% in the month. Continue reading “Quarterly Market Update – 2020.Q3”

Debt and Valuations

The U.S. stock market was able to set a new closing all-time high last week exceeding the prior record set February 19th before the 34% selloff.

In other words, the market is now higher than it was when GDP was positive / expanding and unemployment was at 3.5% even though GDP contracted by about 33% in Q2 and millions and millions of people have become unemployed, the national debt has exploded and many businesses have since declared bankruptcy. Continue reading “Debt and Valuations”