During the 2.8% plunge two Friday’s ago, I stated that the data suggested bullish implications over the ensuing five and ten days. Although I heard the media discuss the volatility and difficulty of last week, the markets were up and they look higher in the pre-market. As I always say, check the narratives and spin at the door. Use non-emotional data for decisions and analysis. Seasonal headwinds start to lighten up at the end of the week and the indices look like they are heading back to all-time highs.
I saw an interesting piece on Bankrate.com over the weekend that was shared by a friend. Fully 25% of Americans have no emergency fund, no real savings. And 30% have some savings but not enough to cover 3-6 months of living expenses. More than half of the country is one mild recession from financial crisis. This is not new information. Post-Dotcom Bubble, Americans spent 105% of their income straight to the 2008 financial crisis, using leverage (borrowed money) to make ends meet. Only COVID interrupted that trend as the government’s free money and handouts rewarded bad behavior and let Americans party like it was 1999 again.
Today, this has become hot button, the “haves” and the “have nots”. Uber wealth has been demonized. Some want to invoke Robinhood but taking from the “rich” to give to the “poor” through wealth taxes and other aggressive tools. I can you categorically that so much has been tried around the world and all has failed. Punishing Bezos, Gates, Musk and Buffet isn’t going to solve our problems. And try counting the number of jobs their companies have collectively created.
I think it all starts with financial literacy which is something Americans overall do not have. On the other end, there should be incentives for companies to lift up their bottom wage workers with stock options and match plans. And while I am a low tax believer, I do think it’s absurd that generational wealth transfers come with a step up in basis, meaning that the embedded capital gains go away. The government need not punish wealth transfers at death with high taxes, but they should eliminate the removal of capital gains.
That’s it from my Monday morning soapbox. I was only planning on doing a brief mention of the Bankrate study, but I digressed.
On Friday we bought MRK, more TLT, more TOST and more XHB. We sold SSO and BOCT.
