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Jeremy Siegel, professor of finance and investment adviser, coined the phrase “Stocks for the Long Run” in 1994. Two dynamics of the last 40 years have turned his aphorism into an axiom of U.S. investing.

First, U.S. life expectancy has risen markedly in the last generation, increasing steadily until the COVID pandemic. Retirees can now require 30 years of income after their 40-plus years of working. Stock prices tend to rise on very long timelines, making equities attractive even for investors entering retirement. Especially given the low, fixed-income, security yields of the last decade, the total returns from equities, which have been unusually high, have become all the more attractive.

Continue reading “Stocks for the Long Run?” →

This week features a guest post by MCM analyst Lane Miller.

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The cyclicality of the recreational-vehicle (RV) industry is widely acknowledged. Whether it’s the best of times or the worst, the Wall Street Journal argues that northern Indiana RV manufacturers are a hyperbolic expression of broader economic trends.

Typically, the number of units shipped craters during recessions and booms between them. That business-cycle correlation is longstanding. The decline in shipments during the 1970s, however, proved to be secular—that is, shipments generally trended lower even during the subsequent business-cycle expansion—from which the industry took decades to recover. The last 10 years saw a secular buildup to the previous peak from the early 1970s. The recent decline in shipments begs the questions whether the recent weakness is cyclical or the early stages of another secular retrenchment?

Continue reading “The Collapse in RV Shipments & What Comes Next” →

“If I were to remain silent, I’d be guilty of complicity.” –Albert Einstein

On November 13 the PBS News Hour aired a five-minute segment on Donald Trump’s Veterans Day campaign rally in New Hampshire. Ruth Ben-Ghiat, a historian specializing in autocracy and Italian fascism, provided a scholarly assessment, which left me no choice but to sit through Trump’s two-hour monologue. After all, I was about to write a summary of the 12th and final lecture in a Propaganda and Persuasion Great Courses series on the capstone subject of misinformation, disinformation, and conspiracy theories.

Continue reading “On Silence and Complicity” →

Blogger’s note: Edward Chancellor’s monetary history tour de force, The Price of Time (August 2022), was sent to clients in the Christmas of 2022. It elicited more positive responses than any book gifted theretofore. Its theme continues in Chancellor’s latest Breakingviews column, provided below.

Continue reading “Why An Economic Soft-Landing May Prove Elusive” →

The investment of capital often takes one on a perilous journey through deep woods of at-times bewildering economic phenomena. The task of navigation is a never-ending quest that requires arriving at a rational estimate of the intrinsic value of assets or even entire markets. Executing this objective with relative success is the means to safe passage through the forest.

Continue reading “‘Price Is What You Pay, Value Is What You Get’: Navigating the Financial Forest” →

“Not everything that can be counted counts, and not everything that counts can be counted.” This quote, often attributed to Albert Einstein, means that not everything that one can measure has value and not everything valuable can be measured. This concept applies to various aspects of life, including economic indicators.

Continue reading “Why Is It That Some Things That Count—and Can Be Counted—Are Not?” →

In an episode of “The West Wing” (Season 5), an aide to Chief-of-Staff Josh Lyman starts to reassure his boss: “If the economy is headed into recession …” “No, no, no,” Lyman interjects. “We don’t ever use that word around the White House.” They settle on a euphemism instead: bagel. “So, if it is a bagel … the Fed thinks it’s gonna be a mild bagel,” says the aide.

Continue reading “The R-Word” →

It’s human nature. When there’s an accident on the interstate, traffic slows to a crawl as passersby crane their necks, gawking to see who-knows-what. When the same occurs in the capital markets, pundits opine just as instinctively. Some think they can add insights to the narrative; others want to be on record for some future marketing blurb.

The principal contribution of the undersigned is neither. Our investment strategy—indelibly displayed in our client portfolios—has already been articulated in an irreversibly public way for a long period of time.

Continue reading “Gawking and Hawking” →

As we wrote in April 2022, last year’s Super Bowl was the publicity peak of the crypto bubble. Celebrity-studded ads made the case for the rank and file to join the billionaire “crypto bros” surfing the wave of the financial future. The ignominious crypto exchange FTX, now bankrupt and synonymous with fraud, was a notable newcomer.

Headlining the blockbuster event is often a sign of waning popularity. For instance, most of the musical acts in 2022 were already in their 50s, well past their halcyon days of pop-world stardom. Crypto companies had already been weak for months and imploded later in 2022. The general malaise that settled over the equity markets for much of last year has been widely portrayed as taming animal spirits. With the return of nearly forgotten real interest rates in 2022, historic overvaluations have moderated, and the headline excesses manifest in early 2022 have failed to re-emerge. This has some hoping that the worst is over, that policymakers have successfully stabilized the post-pandemic economy and prepared it for steady growth, that there is virtually no cost to be exacted for the tsunami of monetary and fiscal largess dating back to 2008.

Continue reading “Super Bowl Jinx” →