2022 Q3 letter

David MoonUncategorized

October 2022 Dear clients and fellow shareholders: Following the worst January-September stock performance in 20 years, worldwide equity indices have clearly entered into bear market territory. The US benchmark S&P 500 is down 25 percent year-to-date, with the Nasdaq Composite down a whopping 32 percent.  (Our stock portfolio has declined approximately 15 percent this year.) The biggest shock to many investors in the third quarter wasn’t the miserable return of the stock market; it was the revelation that the supposed risk mitigating portion of their portfolio – the “safe bonds” – turned out to be not quite as safe as … Read More

Estate planning observations

David MoonBlog

A news article caught my eye recently when it matter-of-factly declared that at some point in life, nearly everyone can benefit from a trust. Although that’s a pretty broad statement, it’s also a bold one, especially from a news organization. Except it wasn’t from a news organization. The “article” was a sponsored placement by a company that provides trust services. I’ve been around way too much death recently, and one of the things I’ve been reminded of is that some estate planning professionals (lawyers, bank trust departments) turn two-dollar problems into hundred-dollar solutions. Simplicity is too rare in an industry … Read More

Fed move is slow window dressing

David MoonBlog

The only anticipation regarding this past Wednesday’s Federal Open Market Committee meeting was how much the Fed would increase rates – with the consensus expectation somewhere around one full percentage point. To me, the Fed’s actions seemed a bit like a 400-pound diabetic guy ordering a Diet Coke at Mr. Gatti’s. The Fed’s attempt at window dressing doesn’t shock me, but the reaction of Wall Street does. The collective wisdom of investors seems to be that inflation really is mostly transitory – even if a bit more persistent than the use of that term originally suggested. That’s the only reasonable … Read More

Price controls would worsen inflation

David MoonBlog

When the head of the European Commission recently said that the European Union (EU) would break the link between natural gas prices and electricity prices, I was surprised her comments didn’t receive widespread media coverage. Natural gas is the source of 24 percent of electricity in the EU, so eliminating the effect of natural gas prices on electricity prices seems like a pretty significant feat. If the EU shuts down its natural gas fuel electricity plants, that would certainly decouple natural gas and electricity prices, but I don’t think that’s the plan. Instead, it appears that European Commission President Ursula … Read More

Hidden incentives dangerous

David MoonBlog

At a recent “Invest in Women” conference in Atlanta, radio host Ric Edleman was speaking to a group of investment helpers. Edleman’s presentation was titled “Digital Assets: How to Use This New Asset Class to Gain More Clients and Assets – Even if You Hate Bitcoin.” Among other things, Edleman advised his audience of financial professionals that they should spend $649 to get the newly created certificate in blockchain and digital assets offered by the Digital Assets Council of Financial Professionals. By the way, the founder of the Digital Assets Council of Financial Professionals is … drum roll, please … … Read More

Who most benefits from student loan forgiveness?

David MoonBlog

I know that merely posing this question is an open invitation to criticism of out-of-touch privilege, but it’s not obvious to me that the big winners from the college loan forgiveness program will be borrowers. Sure, up to 27 million people are about to enjoy a taxpayer-funded $10,000 increase in their net worth, but unlike some silly claims, it won’t lift a career killing millstone from around the necks of millions of would-be entrepreneurs. Borrowers over the age of 60 experienced the greatest percentage growth in their student loan balances over the past 15 years. Since 2004, student loan debt … Read More

Loopholes depend on perspective

David MoonBlog

According to meme economists, Amazon made $29 billion in 2020 and paid no U.S. federal income taxes. If this is so, why isn’t Amazon CEO Jeff Bezos arrested and jailed for tax evasion? Simple. Because Amazon is following the law. Members of Congress who rail against “unfair loopholes” conveniently overlook the point that they created the loopholes. Calculating the amount of tax due on a certain level of income is simply and quick. If that is all the IRS required, the entire tax code would be a page or two long. Almost all of the U.S. tax code defines what … Read More

Cancelling debt, Spam and other pestering questions

David MoonBlog

If William Devane and Rosland Capital are so convinced the price of gold and silver are going to increase, why are they selling precious metals instead of buying them? And why does Tom Selleck need a reverse mortgage? Why don’t all investment advisors own the same securities they recommend or sell to their clients? When CNBC says investors sold stocks and there is now a record amount of cash “sitting on the sidelines,” to whom did they sell their shares? How does a lifetime elected official amass a multimillion-dollar net worth? Why are there 7,000 pages in the US tax … Read More

Old Apple ad offers timeless lesson

David MoonBlog

Last week I read a 1987 Sports Illustrated article about John Madden and two things stood out to me. The articles were much longer and some of the ads were comically naive. The article length probably shouldn’t have surprised me. Attention spans are almost certainly shorter today than 35 years ago, despite a doubling of US prescriptions for ADHD in the past decade. Images on television shows (or whatever they’re now called) change about every 5-to-7 seconds, even on news programs. I think Walter Cronkite and Bill Williams would sometimes be the primary or only image during a newscast for … Read More

Unintentional confusion or intentional misdirection?

David MoonBlog

The last time I remember anyone of even moderate significance trying to redefine the word “recession” was then-president George H. W. Bush in the spring of 1991. His efforts to ignore the universally accepted (until a month ago) definition of recession was evidence to voters that he was out of touch with the plight of normal, non-millionaire Americans. Little more than a year later, voters made Bush 41 a one-term president, replacing him with Bill “it’s the economy, stupid” Clinton. The current effort to redefine the word recession is similarly futile, but it isn’t the only economic silliness coming out … Read More