2024 Q2 letter

David MoonUncategorized

July 2024 Dear clients and fellow shareholders: Our original intent was to avoid any reference to politics in this quarter’s letter and wait until our October missive to make fun of the two candidates – that is, assuming we would have some clarity on whether either nominee might be confined to a prison cell or nursing home. But the dominant investment theme of this year has clearly been Artificial Intelligence, which is only fitting, given we see so little of the natural variety exhibited in this year’s election process. Wall Street apparently prefers the artificial kind, evident in the S&P … Read More

Economic growth requires order

David MoonBlog

It irritates me when politicians take credit for having created jobs. As president, Joe Biden hasn’t created 15 million jobs, nor did Donald Trump create the six million he claims during his first three years in office. Governors and mayors don’t create jobs, either. Unlike businesses – where willing buyers and sellers engage in a swap at an agreed price – governments are mostly conduits, either moving money from one group to another or spending borrowed funds that will ultimately be paid by future taxpayers. If you disagree, send me an email and change my mind. If I’m wrong, convince … Read More

Today’s politics civil by historical comparison

David MoonBlog

If your news diet looks anything like mine, every day you run across multiple articles proclaiming that the United States has never been more divided than it is now. That’s 20 or more times each week, or at least 500 times since the start of the year, that you (and I) have been told that the incivility of current political discourse is unprecedented. It would be natural to start believing this narrative. And it would also be wrong. Most people know that the murder of our country’s first Treasury Secretary by the sitting Vice-President is the most famous duel in … Read More

Even the Fed can’t predict Fed actions

David MoonBlog

If the people responsible for setting interest rates in the U.S. can’t successfully predict interest rate changes, then you don’t have a chance at being able to do it. And neither does anyone else, including presumably really smart people who get paid a lot of money to predict such things. When the Federal Reserve left the target for the Fed Funds rate unchanged at its most recent meeting, it also signaled that it expects to cut rates only once this year, most likely either the day following the November 5 presidential election or at its December meeting, a week before … Read More

Shiny new thing no guarantee of success

David MoonBlog

When the University of Tennessee hired Tony Vitello in 2017, he was not the Vols’ first choice. Only after University of South Alabama head coach Mark Calvi declined UT’s offer did (then) UT Athletics Director John Currie turn to Arkansas assistant Tony Vitello, one of his fallback candidates. Vitello, a 14-year assistant coach at Missouri, TCU and Arkansas, had never been on a team that had won a conference championship. As a player, Vitello’s only personal awards were related to his grades, as he was named to the Big 12 Commissioner’s Honor Roll twice in his three years as a … Read More

Conflicting conclusions on housing affordability

David MoonBlog

According to the Federal Reserve, Americans only spend 4% of their disposable income on mortgage debt service. However, real estate brokerage Redfin has determined that the typical American household would require 35% more income to afford the median-priced U.S. home. A third source, the National Association of Realtors (NAR), produces a Housing Affordability Index, which measures “the degree to which a typical family can afford mortgage payments on a typical home.” Based on the current index level of 101.1, the NAR data signifies that the typical American family has slightly more than enough income to qualify for a mortgage on … Read More

Finding wisdom in dreadlocks

David MoonBlog

There are a few things I learned for certain growing up in rural 1960s and 70s Alabama, one of which was that anyone with dreadlocks was a thug. A hoodlum, not to be trusted and, ideally, to be avoided. I knew this was true, because it was the opinion of most adults in my daily life – and they certainly would never lead me astray. But they never knew Deanthonie Summerhill. I’m not sure when or how Deanthonie and I met, although we had a couple of things in common. We both grew up in Alabama and came to Tennessee … Read More

Is artificial intelligence a threat or a tool?

David MoonBlog

Elon Musk recently said that artificial intelligence will probably take all of our jobs, prompting observers to debate whether that is a good or bad thing. Comparing the 19th century workday to today, I wonder if a middle-class worker from 150 years ago might argue that technology has already done it? While long days of hard physical labor haven’t entirely vanished, they have for most Americans. Back in 1850, the most predominant middle-class profession was farming, where the average American worked 6 days a week, for a total of 69 hours. Today, the average American work week has fallen by … Read More

A letter to the class of 2024

David MoonBlog

Focus. Make a list of the ten most important things you want to achieve in the next decade, ranked by importance. Now, delete all of them except the top two. Most people can’t fully commit to even two primary life purposes, but no one can effectively commit to ten. Making a bunch of money isn’t the best goal in the world, but it’s not the absolute worst, either. The most reliable way to increase your income is to do more work than you are currently being paid to do. The most lasting and fulfilling ways to make money all involve … Read More

Chief economic advisor struggles with economics

David MoonBlog

The debt of the U.S. federal government topped $34 trillion this week, a number so large that it is easily boggles the mind. This may explain why in a new documentary titled “Finding the Money,” Jared Bernstein, Chair of the U.S. Council of Economic Advisors, sounded like a third grader who didn’t do his homework when trying to explain the differences between monetary policy, fiscal policy and printing currency. Here is Mr. Bernstein’s answer, which I think I have transcribed verbatim, except for removing 13 “ums” and “uhs.” “Well, I mean, again, some of this stuff gets … some of … Read More